The challenge of authenticity: Blockchain in the supply chain

Abstract

Today’s complex and dispersed supply chains create significant challenges for supply chain managers. ‘Organic’, ‘non-GMO’, ‘fair trade’ and ‘conflict free’ are just some of the claims that require a transparency in the supply chain to maintain and verify. Product origin and authenticity are similarly at risk from a lack of transparency in supply chain data. Traditionally, supply chain managers use cumbersome and unreliable auditing to validate supply chain data to substantiate product information and provenance. But errors and fraud in supply chain information remain and threaten the brand reputation of affected products. Supply chain data is no stranger to technological enhancement. Enterprise resource planning systems have expanded the volume of real-time actionable data available. The reliability of that data is, however, still in question from its susceptibility to errors and falsification. Distributed ledger technology, best known as blockchain, offers the promise of greater transparency and reliability of supply chain data. Ultimately, that reduces the risks associated with product claims and provenance based on supply chain data. This paper examines the operation of blockchains and their resistance to falsification by looking at the mechanics of the bitcoin blockchain. The paper explores private blockchain alternatives to the bitcoin blockchain that can facilitate distributed data in a closed supply chain. The paper then describes several supply chain challenges where blockchain technology is being used to improve the reliability and integrity of the underlying supply chain data. Finally, the paper looks to the blockchain regulations that may have an impact on the adoption of blockchain in the supply chain. At the end of the day, substantiating supply chain product claims, minimising counterfeiting and enabling product recall all rely on the traceability and integrity of supply chain information, for which blockchain solutions are well suited.