Is blockchain the answer to supply chain visibility?

Discussion
Sources: Auburn University RFID Lab
Mar 13, 2020
Tom Ryan

Using live data from three brands, Nike, PVH Corp. and Herman Kay, as well as two retailers, Kohl’s and Macy’s, the Auburn University RFID Lab has proven that a blockchain network was capable of sharing item-level data encoded in RFID tags.

In past research dating back to 2018, the RFID working group found improved supply chain visibility could solve “three chronic pain points”: claims/chargebacks, shrink/unaccounted inventory and counterfeiting/gray goods. These issues cost U.S. retail $181 billion in 2017.

According to the new white paper, “Chain Integration Project (CHIP),” previously existing networks for exchanging data were built for “antiquated internet technologies” and are unable to handle today’s massive volumes of serialized data that came with the arrival of RFID tags and QR codes. The study noted, “The item-level visibility supplied by these systems is constrained by the industry-wide ineptitude for sharing serialized data.”

Communication between systems is often the holdup. For instance, one stakeholder may use a different vocabulary, such as the term “carton” versus “case,” or a different methodology, such as the metrics they use for counting contents.

In the study that used a Hyperledger Fabric-based data exchange mechanism, item-level data streams were able to be traced from source to store, creating a history for each product that passed through the supply chain. In all, 222,974 products were recorded on the blockchain from 12 different supply chain nodes.

Such automation promises to eliminate the need for human audits. The study concluded, “While there are still many opportunities for improvement, each partner pair was able to record transactions containing serialized data in a common language and share that data with their appropriate trade partners.”

Allan Gulley, RFID Lab research fellow, told coindesk.com that a more robust network of service providers will likely be necessary to support blockchain’s potential for supply chains. “The system as it stands right now can process what we need it to, but in the long term we’re talking about billions of products flowing through the retail supply chain with these RFID tags,” he said.

Last year, New Balance, LVMH and Coca-Cola all began experimenting with blockchain to support traceability in the supply chain.

DISCUSSION QUESTIONS: How confident are you that combining blockchain and RFID technologies will eventually enable retail trading partners to share granular, item-level data with one another? What hurdles does blockchain face as a practicable supply chain tool?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I don’t think this is a big priority for retailers. Visibility is, but I don’t think the blockchain revolution is going to make it happen."
"One worry I have about Blockchain is its reliance upon data redundancy as a foundation of its security."
"To be honest I have more confidence in blockchain than I do in RFID technology."

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15 Comments on "Is blockchain the answer to supply chain visibility?"


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Bob Amster
BrainTrust

Blockchain is not the only method of communicating granular data along the supply chain. It happens to be more secure and more auditable. If the industry is suffering from a lack of information pass-through, it is because there is insufficient commitment from companies that should be willing participants and, for one reason or another, have not fully committed to be involved.

Suresh Chaganti
BrainTrust

Blockchain is going to be foundational to ensuring supply chain visibility and integrity. Some categories are more critical than others – Food, military grade circuitry, items sourced from overseas with a high risk of fakes. But the barriers are also massive — high levels of investments required and lack of common standards.

Art Suriano
BrainTrust

If done correctly, combining blockchain and RFID technologies may make things a lot easier for retailers. Today we have tons of data. But how much of that data is being read, understood, and used in a benefiting way?

We need to find ways to streamline data, simplify it, and make it a usable tool that will help businesses make the right decisions. We have come a long way in finding out how to identify customers, their shopping habits, their likes and dislikes, and how we can market to them. I see this through technology as only getting better and better. Through combining blockchain and RFID technologies and having retailers share data, it will make the whole process more manageable and a lot more cost-effective.

Dave Wendland
BrainTrust

As Hamacher Resource Group continues its journey to offer a comprehensive suite of services to track and trace pharmaceutical drugs under the Drug Supply Chain Security Act (DSCSA), we have found that there is significant discussion about the value, security, validity, and applicability of blockchain to this process. Although we feel that this will be the direction that is ultimately taken, there are numerous other lower hurdles that must first be addressed and compliance across all key stakeholders remains short of the anticipated objective. Costs involved with blockchain, compatibility of systems and integration of communication, and questions regarding security remain at the center of the decision.

Erik Bergeman
Guest
21 days 21 hours ago

Dave, As I looked at DSCSA I saw some really big gaps, like it stops at the Pharma supplier vs taking it all the way back to the contract manufacturer that the big Pharma uses. If we are truly worried about the health of patients, don’t we want to be able to trace the drug back to the original manufacturing plant? Sure they are manufactured under license with a recipe. Take Zantac for instance. Who decides what inert ingredients go into the pill and where that stuff came from? Is it Sanofi or a generic drug manufacturer in India? Maybe if some stiff fines start coming out they will start looking to push liability deeper into the supply chain and thereby create transparency.

Ron Margulis
BrainTrust

I was at the Modex show this week in Atlanta, where vendors were showing off the latest and greatest in product handling systems (my report from the conference will be posted next week). In the past few shows, blockchain was a key trend with several sessions devoted to the topic and exhibitors highlighting it in their booths. This year, not so much. While much of the attention in the industry has been grabbed by robots, I suspect the real reason for the temporary demise is the priority companies are placing on productivity improvements and blockchain has limited proof points in this area.

Paula Rosenblum
BrainTrust

Blockchain works, though its scalability has yet to be proven (rather it has been disproven several times — I assume tweaks continue). However…

Besides that, while I get that the ledger nature of the history provides opportunities for automated and better accuracy, there are other ways to solve the problem. Many have existed for a while and yet inaccuracies are on the rise, not decline. I mean, EDI has been around forever. It works. When used.

And if I look at similar types of initiatives in merchandising over the years there’s always a reason why adoption doesn’t quite happen. I don’t think this is a big priority for retailers. Visibility is, but I don’t think the blockchain revolution is going to make it happen.

Ryan Mathews
BrainTrust

To be honest I have more confidence in blockchain than I do in RFID technology. That said, combining the two is ONE way to share granular, item-level data. As to barriers there is the obvious (cost) and the less obvious (separating what is possible today from all the hype about what will be possible tomorrow).

Doug Garnett
BrainTrust

Blockchain isn’t the issue here — it’s basic communication. As with any effort of this type, the cost of unifying the communication could be far higher than any potential improvements warrant.

Retailers should be cautious about this effort. It’s not clear that it’s anything more than a committee report delivered to committees.

Ralph Jacobson
BrainTrust

I have more near-term confidence in blockchain technologies than I do in RFID, based upon all the RFID stumbles over the decades. Blockchain is a path toward trust, most importantly, not just visibility. As more supply chain ecosystem participants understand the potential of the immutable record that blockchain is currently providing across the globe, more will jump on the train to blockchain.

Paula Rosenblum
BrainTrust

Technically speaking, blockchain is meant specifically for untrusted parties. I think the words you really mean are verification and validation.

Gene Detroyer
BrainTrust

I have great confidence that the technology will prove to be every bit as beneficial as the hype, in time. The big hurdle I see is the willingness for retail users to adapt and the lack of confidence regarding getting a return on the investment.

James Tenser
BrainTrust

RFID has its place, but not for high-velocity packaged products. Decades of painfully slow progress in this area are one clue.

The Blockchain has value for secure, transparent data-sharing, but that would still depend on common definitions among supply chain partners from farm to table. (Remember those EDI transaction sets?)

At this time I see limitations for both technologies, but the potential is tantalizing.

One worry I have about Blockchain is its reliance upon data redundancy as a foundation of its security. For very large trading networks the scale could grow exponentially. I’m not expert about this, but I wonder if there is enough silicon in the cloud.

Craig Sundstrom
Guest
22 days 21 minutes ago

Wow! What a technical discussion … I think a would-be adopter who isn’t awed by this might be a little intimidated; and with that in mind perhaps a little skepticism: “eliminate … audits”? The point of audits, of course, is because the reality of systems is never quite 100% of the theory. So I think it would be an optimistic or naïve retailer who would abandon them completely.

And the point of chargebacks I find even more implausible: at least in my business most chargebacks are related to quality issues, so I’m unclear on why blockchain would help.

The technology probably has much to offer, but there’s a danger of overselling the advantages.

Erik Bergeman
Guest
21 days 20 hours ago
To me there is no doubt that this is a better way to execute retail. The apparel supply chain is abysmal in the way it is being run with billions in waste. We have spent so much time looking for the magic algorithm for demand forecasting so that we have the right product in the right place at the right time. No matter how good we get, we will never be right. Traceability and transparency are much more effective in matching real-time demand to real-time supply in the stores, especially as more demand goes online. That can’t be done when the inventory accuracy at a SKU/location level is 65%. It becomes even more imperative when you look at the variety of INCO terms that retailers and brands use. Depending on who pays what with respect to transportation dictating the visibility is not going to give you the transparency necessary to meet consumer demands for information. If trust was ubiquitous between merchants and brand sellers this would be done already on the existing technology. Blockchain technology… Read more »
wpDiscuz
Braintrust
"I don’t think this is a big priority for retailers. Visibility is, but I don’t think the blockchain revolution is going to make it happen."
"One worry I have about Blockchain is its reliance upon data redundancy as a foundation of its security."
"To be honest I have more confidence in blockchain than I do in RFID technology."

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