Tracking and Tracing: Blockchain for Supply Chain

Blockchain is a technology that is not that entirely new, but it is becoming more mainstream as each day passes. As you may already know, the focus has been shifted a lot to the cryptocurrency world recently, and since the Blockchain is the running mechanism under it, it was inevitable for it to be a topic to talk about. 

At first glance, Blockchain technology might look a little bit complicated. But in reality, the main logic behind it is pretty simple, and you will understand it better as we go more into detail about its usage areas of it. We will also briefly discuss what Blockchain is; however, one thing to note here is that it is not only and all about cryptocurrency mechanisms. There are many different usage areas of Blockchain technology, providing many different advantages to the users out there.

There is a lot to talk about, but we need to first start off with a brief definition of Blockchain. Without further ado, let’s get started!

KEY TAKEAWAYS

• Blockchain, as a brand new network tech, is a method of storing data in such a way that it is nearly impossible to alter, manipulate, or deceive it.
• One of the most popular usage areas of Blockchain is cryptocurrencies. 
• There are many different usage areas of Blockchain, and the supply chain is one of them. 
• The “hard-to-manipulate” nature of Blockchain makes it a functional technology to be used for tracking products, making inventory control, and so on.
• A blockchain is a distributed ledger of transactions that is reproduced and shared across the blockchain’s complete computer network mechanisms.

What is Blockchain, and Why is it so Popular?

The usage areas of Blockchain might not make a lot of sense if you did not fully grasp the idea and logic behind Blockchain. In the most basic terms, Blockchain can be described as a technology that is designed to record information. It is nearly impossible for that information to be changed, hacked, or transformed by any means possible. 

The most common metaphor for Blockchain technology is a notebook. Imagine you have a notebook, and so does everybody else within that network. As you (or anyone else in the system) writes down something in the notebook they hold, it will be shown in every other notebook in the system; and the ink you write is indelible. 

So, if we need to imagine a “hacking scenario,” the hacker has to have access to and change every single chain in the system. Well, this is technically possible; it is also technically possible to count the sand grains in the world.

Of course, there is a lot more beyond Blockchain, but this information would be enough to understand the usage areas, and as we mentioned earlier, as we talk about them more in detail, it will make more sense to you. Moving on to the part about why it is so popular, we can talk about the influence of many things, all coming back to how secure it is. 

We are so used to digital currencies now, but there has been a long time in which people tried to achieve such a concept. The main issue that blocked them to set a digital money system was mainly the security issues. Why do you think that Bitcoin and hundreds of other currencies came after it gained so much popularity, and they are trusted by people with their eyes closed? It is because of the foolproof nature of the Blockchain system. 

When nobody is “in charge” of something, there is also no chance for the system to be fooled. Everybody can see what is going on, and as we mentioned earlier, in order for the system to be hacked, every single chain in there should be somehow hacked, which is nearly impossible. 

Usage Areas of Blockchain: It’s Everywhere Excluding Your Heart!

So, how can exactly this technology help us? We have already discussed how is it useful in the cryptocurrency context, but it might not be obvious to see at first glance how beneficial it can be. Before moving on with the tracking and tracing, let’s see the usage areas of Blockchain in a broader sense to understand the concept as a whole. The following are some of the common usage areas of Blockchain:

• Healthcare
• Real Estate
• Media
• Identity Management
• Voting
• Record Management
• Cybersecurity
• Big Data

Of course, there are many other usage areas besides those, but we believe there should be somehow an image of the usage areas from those aspects. The benefits of Blockchain technology provide great profits to the areas where it is applied, and many sectors are gaining awareness in those terms. 

Tracking and Tracing in the Blockchain Context: New Rules for Supply Chain

One great advantage of using Blockchain technology is tracking and tracing the supply chain. The supply chain is not getting any simpler, so the resolution is to use a technology that will simplify the process. In a typical supply chain, it is most likely to find the following: 

• Suppliers
• Manufacturers
• Logistic Companies
• Retailers

Remember that those are the broad categories and include many other elements within. The current ways of tracking and tracing have many deficiencies, which can be resolved with Blockchain technology. Since every piece of information is in a disjointed data system, it takes a lot of time and effort to keep track of everything. Moreover, in the traditional methods, one major lack is accurate traceability and transparency; it goes without saying that Blockchain technology can provide those two crucial concepts for tracking and tracing. Moreover, the lack of transparency and traceability might look like unimportant details to some – even though it sounds important, you may not understand how crucial it is. 

Understanding Tracking on Supply Chain

We cannot highlight how much value Blockchain technology brings to the supply chain regarding tracking and tracing. Giving up that much place to human decisions inevitably results in many irreversible errors, misunderstandings, delays, which are also resulting in increased costs. 

So, how does exactly Blockchain plays a role in tracking and tracing? 

Coming to a few steps backward here to define “tracing and tracking.” 

Tracing and tracking mean spotting the past and present positions of all products present, in addition to the record of product custody. This process involves each and every step in the supply chain, from the raw material to the delivery of the final product. As you may already know, this process can occur across regions, countries, and even continents. So, tracking carries a significant value when it comes to keeping on “track” of what is going on in each step. 

Where does Blockchain Help in Tracking and Tracing?

Up to now, hopefully, you understood the idea behind using Blockchain technology in tracking and tracing, but since the concepts are pretty intangible, it might take a moment or two to understand. Let’s dig a little deeper and give real-life examples so that you can fully understand what is going on. 

We mentioned how a simple supply chain looks like and the basics of Blockchain. When you combine those two, you are getting a single shared ledger in which all the data about the supply chain will be visible. That means that the company can get the necessary information about the product, whenever or wherever. 

• For example, with the tracking and tracing feature of Blockchain technology, the companies have control over spotting the location and finding out the status of the product from a single source of truth. As we mentioned many times earlier, the information provided in Blockchain technology is nearly impossible to change, so there is no place for hacking or something like that. This would provide significant benefit to companies, since some problems such as counterfeit goods, delays, human errors, waste, and compliance violations. 

• Moreover, it is also possible to intervene more easily in emergency situations. For example, suppose that there is a case of a product recall. In such cases, regulatory compliance will be ensured through the ledger audit trail, again smoothening the process and eliminating the lack. Some companies combine Blockchain with some other smart technology (one example is the “Internet of Things”) to automate all of the processes mentioned and have a much more simplified and easy process. 

• Automation may involve many things in the supply chain, from product conditions to transportation. Moreover, some companies prefer to share the data from track and trace to their customers so that everything can happen as transparent as possible. The companies prefer this transparency because they want to gain the customers’ trust and provide proof about the ethical conditions in the supply chain.

Companies Employ Blockchain for Supply Chain Management

So, which companies use Blockchain to improve supply chain management? Here is a brief list: 

Blockchain Solutions to Tracing and Tracking Problems

Up to now, we have discussed many aspects of tracing and tracking, in addition to providing evidence about how can Blockchain help. To take this one step further, let’s take a look at some real problems in the supply chain and how can Blockchain come up with a solution for those.

Fraud-Free

Until the supply chain is ended (as known as the product being delivered to the customer), the products are tracked with the Blockchain system. This eliminates the risk of fraud, and up to now, we have been mentioned a couple of hundreds of times – Blockchain is nearly impossible to be hacked! Well, at least for me. 

Root Cause Determinations

As we mentioned earlier, supply chains are typically complex and include many different elements. When there is a problem detected in the chain (this problem can be basically anything, such as product shortages or deficits), companies generally have no choice but audit the supply chain partners. Of course, this is a valid method to detect any problems in the supply chain, but we need to highlight that this is a valid method to detect problems, not the root or source of those problems. Finding the problem will eventually result in finding a solution, but the chances of this problem being present again is still high. 

For example, there might be a shortage of products, in which there are fewer products in the middle of the supply chain in comparison to the beginning of it. It is possible to complete the lack that had gone missing in between, but how can you know where does those products went? There can be many reasons for how those products went missing, and only with auditing it might be impossible to detect the reason and who is responsible for that.

So, here is the solution: If all supply chain elements are a part of Blockchain technology, the root of the problem can be detected easily. Each transaction within the supply chain would have a timestamp, and you can see step by step where the products went missing – or find the root of any possible problem. This provides great benefit for both supply chain elements and companies by decreasing the costs of auditing and the possible costs caused by unsolved problems. 

Unintegrated Systems

One big issue about today’s technology is that some systems are not able to integrate with others. For example, imagine Airdrop technology by Apple – you cannot Airdrop something to another device that is not Apple. Even some companies are using digital systems for tracing and tracking in the supply chain; such problems still can arise – because there are many other people and elements in the supply chain, we cannot expect that all of them would use similar technologies that are integrated with each other. At this point, Blockchain becomes quite handy because it can create the perfect integrated technology for all parts of the supply chain. Moreover, this can go way beyond the supply chain, from resource planning to customer relations, manufacturing execution, and even reports. 

Duplicative Records

As we mentioned earlier, companies are indeed using some technologies other than Blockchain for tracking and tracing, but they are in centralized databases. Keeping data on centralized databases puts companies at great risk for duplicated copies in addition to inconsistent records in their transactions. Since Blockchain uses a decentralized technology, such worries are getting eliminated. The information recorded in the Blockchain system is in an immutable ledger, which can be accessed by all members of the supply chain. This would ensure that the data you are receiving is one hundred percent true.

Supply Chains of Industries Use Blockchain

We have talked a lot about how can Blockchain technology take supply chains one step further. For the sake of wrapping things up and summarizing, let’s take a look at the elements of the supply chain and how can Blockchain technology help you out there. 

1. Supplier: It is needed to be ensured that the product’s source is ethically derived.
2. Manufacturer: Environmental damage or influence is measured, and the data is shared within the ledger.
3. Regulator: The need for regulators or audits is significantly reduced since smart contracts are responsible for quality checks within the supply chain. 
4. Logistics: Real-time location checks and automated responses are provided.
5. Wholesaler: The stock data can be accessed in real-time. 
6. Retailer: The certainty of the product authenticity can be provided.
7. Consumer: The insight into the supply chain can create an empowered and decisive customer profile.