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What will blockchain mean for retail supply chains?
Blockchain, the underlying ledger technology for bitcoin, is being hyped as the way retailers can finally bring holistic visibility and control over their entire supply chains.
A method of recording, safely storing and tracking complex digital transactions, Blockchain’s one major advantage is that once a record is made, it cannot be altered.
“The database’s strength lies in its trustworthiness: the difficulty of reversing or changing what’s been recorded,” writes Bloomberg. “The blockchain database can also hold much more data than what retailers get today, providing tools for more detailed analysis.”
Walmart, for instance, last fall in an ongoing trial partnered with IBM and Tsinghua University in Beijing to digitally track the movement of pork in China on a blockchain. Details related to farm origins, factory data, expiration dates, storage temperatures and shipping were tracked across producers, processors, distributors and grocers.
In the event of a foodborne outbreak, Walmart should be able to receive the data and respond quicker, possibly even pinning down the issue to a single pallet or package. Speaking to Fortune, IBM’s global supply chain expert, Paul Chang, said the process showed marked improvement over past projects that used barcodes and radio ID tags. Mr. Chang stated, “The missing piece was a shared forum where companies could begin to see each others’ transactions and develop trust.”
At the NRF Show, Microsoft partner Mojix showed how the technology can be used to let retailers automate their supply chains. Speaking to Redmond Magazine, Scot Stelter, VP of Products for Mojix, said a grocer could designate what day an order of blueberries should be picked, the day they’ll arrive and a desired temperature range throughout the stages of the shipping process.
The technology could answer demands for greater transparency.
“Consumers could trace the seafood they eat from boat to plate,” wrote Accenture in a report. “Or, verify that the wool sweater they just bought came from sheep that are humanely treated.”
Like others, Accenture sees benefits for retailers across any record-keeping process, including payments, product warranties and shipping documentation.
- Wal-Mart Tackles Food Safety With Trial of Blockchain – Bloomberg
- Blockchain Wave Headed Toward CPG And Retail Industries – Accenture
- Microsoft Pitches Blockchain To Help Troubled Retail Supply Chains – Redmond Magazine
- Top 5 Retail Trends to Watch in 2017 – Retail Dive
- The Impact of the Blockchain Goes Beyond Financial Services – Harvard Business Review
Discussion Questions
DISCUSSION QUESTIONS: Does blockchain or similar cryptocurrencies offer the potential to transform supply chain management for retailers? Does it offer more potential in other areas?
Poll
BrainTrust
Meaghan Brophy
Senior Retail Writer
Lee Kent
Principal, Your Retail Authority, LLC
We are a long way away, but yes blockchain does have the potential to make the supply chain a transparent process for retailers and consumers. Consumers are increasingly concerned with where products are coming from, the conditions they are being made in, and that the claims made on packaging match reality. Alleviating these concerns will boost consumer confidence in retailers who make their supply chains transparent, ultimately making them a top choice for many shoppers.
We are not a long way away, blockchain will be the dominant hype phrase for retailing in 2017. If NRF did not have enough blockchain exhibits, there is a reason why. In 2016, we discovered that blockchain is more disruptive to the retail industry than any other industry, including finance, and it’s a low-key race going on.
Blockchain allows multiple entities to share a common data ledger that can be trusted through encryption verification. Blockchain creates a new paradigm of participatory data sharing models not seen before that will boost brick-and-clicks retailing models.
Loyalty programs no longer have to be maintained by one store; multiple stores can share the same customers’ identifier on a blockchain-distributed ledger, saving cost and provide deeper analytics on the customer who may shop at multiple stores.
Next, coupons and discounts can be placed encrypted on the same blockchain-shared ledger and triggered based on activity recorded on the blockchain. Again, this is technology smaller retailers can leverage cheaper and with little technology cost that took bigger players years and millions to implement.
In addition to supply chain, there can be blockchain-based exchanges similar to eBay that allow retailers to buy/sell from each other as well as distributors from the blockchain-shared ledger. If an item is out-of-stock in one store, maybe they can buy the item from another store that has overstock of the item and this data can be viewed and transacted on in near real-time.
Blockchain is already here and we are just in the first few weeks in 2017. If you are in retail, bet on blockchain in 2017 to deliver.
I agree blockchain could be a dominant hype phrase for 2017. However, there are a lot of logistics and integration challenges to be worked out. So although the technology is there, I think it will be some time before we see it fully implemented.
I have been looking at blockchain for a while and wondering when and how retail might embrace the concept. The beauty is in its simplicity. Bottom line, every movement of the item is recorded and can never be altered.
I spoke with Mojix and Microsoft about what they are doing and it is very cool. The concept eliminates intermediaries and creates viability to all players across the supply chain. Cryptography is used to create each transaction.
All eyes are on the diamond business to see how blockchain will play out but it’s the right time for retail to take action too.
And that’s my 2 cents.
Blockchain would allow for secure, immutable, traceability throughout the supply-chain — it’s just the ledger. A retailer’s supply chain would still require all of the many enabling technologies and integrations to provide the required visibility, in addition to enforced partner agreements, in order to ensure the capture and posting to the chain. The article alludes to a database, as if there were a single clearinghouse per implementation. However, what makes blockchain secure and immutable is that it is actually a number of distributed individually-owned servers, called miners, which coordinate in the validation of a transaction “block” and then write it to the ledger “chain” with a unique hash or key value. You could see a manufacturer, transportation company and retailer having their own miner servers. If you tried to alter a transaction by changing a block’s contents, which has already been stored in the distributed blockchain, that block’s hash would change, invalidating it. Blockchain will also have applications for eliminating counterfeit items from trusted markets. You would be able to verify chain of custody from the manufacturer to a retailer, and then also in subsequent third-party sales.
Blockchain can be part of instilling consumer confidence in products, but I for one do not have the confidence that brands will put in the effort to realize this benefit. The squeeze is worth the juice in using blockchain to limit liability. Quick action on product recalls, choosing alternative vendors and supporting supply chain litigation are all outside customer awareness and support business-building.
As a globally-distributed, decentralized digital ledger of all the information pertaining to a transaction, blockchain has a very real potential to transform the retail supply chain.
The most impactful feature of blockchain is the ability to create trust around a transaction. Retail and CPG supply chains are ideally suited for blockchain technology. The possibility to accurately trace movement from farm to fork or sea to plate (and freshness), or ensure the authenticity of a high-value item or ownership attribution of created content.
Retail may not see a big push in 2017 with blockchain, but the ongoing adoption within financial services will begin to bleed over to retail in 2018 and beyond. While current discussion is focused on the supply chain, the most valued benefits of blockchain in retail and CPG will be the impact it has on engendering consumer trust in the product and the brand and by extension the value they place on their engagement and experience with your brand.
I think businesses of all types can more closely manage the flow of goods and related payments with greater speed and less risk than in previous business models. Pieces of this technology can enable retailers and CPG brands to remove costs and enhance product visibility in the near term. We are seeing huge potential long term. I believe, ultimately that blockchain can have the same impact on transactions that the Internet has had on information.