Blog - Does supply chain traceability require blockchain technology?

Traceability deserves our attention

Industrialists and distributors in all sectors have been interested in traceability for over 40 years. It is usually agreed that traceability means constantly knowing and being able to control where a product is, where its components come from, its condition in transport and storage, to name a few.

Yet, in 2016, more than one product in 15 imported into the EU (6.8%) was a counterfeit, this includes all product types (general public, industrial or professional). This figure increased by 36% when compared to 2013 (source OECD, 2019).

Yet, today, illicit trade represents between 1,000 and 2,000 billion dollars of business worldwide (source ICC 2019).

Yet, in the United States, in 2018, an E. coli bacterium was found on romaine lettuce, which lead to an enormous recall in Walmart, Costco and Kroger.

Yet, in France, recent product recalls have been particularly long and difficult to manage, sometimes leaving dangerous products on the shelf for several weeks.

Yet, again in the United States, 21% of sold fish are incorrectly named and 30% of restaurants and shops are affected by their distribution (sources Oceana and World Economic Forum 2019).

So what is traceability?

On the one hand, everyone does traceability. On the other hand, evidence shows that no one really knows exactly where the products come from or where they are located. In reality, what we can qualify as “classic” traceability, is essentially based on two processes:

1. The physical marking of products (magic label, tamper-proof cap, RFID tag, etc.)

2. Audits which, by definition, are done on the premises and routinely, sometimes once every 5 years for some labels.

3. Traceability information is very often "in paper format", so it is difficult to use[1].

Clearly, this is not enough anymore. These two approaches basically provide "sampling" of the supply chain (a product or a specific information in the global flow), and a theoretical vision of the supply chain (a set of specifications in relation to a regulation).

This system works very well in tightly controlled flows. But when 20% of the fish sold are incorrectly named, this assumption proves to be inaccurate, and therefore this "classic" approach alone is no longer effective.

More generally, in a context where products are transformed, supply chains are increasingly complex and trade is done in an international scale, global visibility and real-time visibility of the product’s life cycle are required.

Modern traceability and factual transparency

“Modern" traceability, as we understand it at Tilkal aims to manage products in terms of "flow", end-to-end along the supply chain and through the various organizations that make up the supply chain. It aggregates, strengthens and analyses as many data sources as possible along the supply chain, including traditional traceability sources such as audit, tag, IoT.

To build this data infrastructure, one of the necessary building blocks is blockchain technology, for two reasons.

First of all, ability to deploy operationally: because of its distributed characteristic, it makes it possible to decentralise the collection of digitised information to each supply chain actor independently.

Furthermore, it establishes the data’s proof of origin along the chain, so, it places responsibility on the actors with regards to what they declare. This ensures the auditability of the data collected. What anyone declares, whether it is right or wrong, voluntarily or not, will be analysed and processed thanks to the undeniable auditability of the source of each data.

It is not the blockchain alone that makes it possible to improve traceability, but it coupled with other tools. Blockchain is the essential foundation that makes it possible to move from traceability based solely on sampling and specifications, to real-time and end-to-end traceability of flows, reinforced by real-time analysis. This paves the way for a factual transparency, so much demanded by consumers.

[1] By Walmart's own admission, it is exactly the unusable nature of this "paper traceability" that prevented the identification of the origin of E. coli-infected romaine lettuce in 2018, triggering a major recall.

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