Why Consumer Brands Should Care About Blockchain

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At the Consumer Goods Forum Global Summit in Berlin this June, I spoke alongside Frank Yiannas from Walmart about how blockchain is a collaborative solution that can help increase the traceability and transparency of food across the supply chain.

In our digitized world, consumers are demanding accurate, real-time inventory information, faster service, and low or no-cost shipping, all which require an efficient and agile supply chain.

Today, supply chains are mostly analog. Transactional data is still paper-based or uses tools such as Excel or e-mail and often have to be reconciled by the various parties at different points in time. And it comes at a huge cost to brands. Recent estimates of disruption and lack of visibility in the supply chain are around USD 300 billion globally.

Blockchain technology simplifies our complex global “system of systems.” This shared, immutable, online ledger tracks all kinds of transactions from product codes to serial numbers to contracts, images, videos and more to establish one single version of truth between the entire ecosystem of suppliers, distributors, transportation providers, retailers, banks, governmental agencies, and ultimately, consumers.

The C-Suite is starting to realize how blockchain may help their operations. In the largest study to date among C-Suite executives seeking their perspective on blockchain, IBM found one third of almost 3,000 executives surveyed are using or considering blockchain in their business—and 100 percent of those surveyed expect blockchain to support their enterprise strategy in some way.

For example, IBM and Walmart are using blockchain to make today’s food system safer. Currently, no single end-to-end view of food delivery exists, making it difficult to manage safety issues within the supply chain and causing costly delays. But with blockchain, there is shared value in an ecosystem of suppliers, manufacturers, and retailers to be more collaborative and transparent.

Early trials of this blockchain food safety pilot in China and the United States have shown how the technology can digitally track food products from pork and mango suppliers to store shelves, and then ultimately to consumers.  Product information–such as farm origination details, batch numbers, factory and processing data, expiration dates, and shipping details–is digitally connected to food items and entered into the blockchain at every step of the process. Each piece of information provides critical data points that could potentially reveal food safety issues with the product.

The results of the pilots have shown blockchain can accelerate the tracing of food from days and weeks, to mere seconds, a very important factor during health crises like E.coli outbreaks. By sharing information across the supply chain with all participants, the entire ecosystem can function more efficiently and safely. And consumers can know their food better including the source of production and how it was handled in the supply chain. This can also help reduce the USD 990 billion in food waste per year.

There are other use cases for blockchain technology in the consumer industry. For example, by creating a chain of data that cannot be altered, blockchain is well-suited for tracking high-value, luxury goods and other items where buyers want full insight into the origins and ownership trail of the goods.  And for global trade and shipments, blockchain can digitize and share documentation such as letters of credit, or customs documents so when members of the supply chain network complete transactions for the invoicing process others in the supply chain can see it. This results in faster payment for suppliers.

Blockchain makes operations more efficient and transparent, putting suppliers and consumers front and center. This also allows traditional retailers to step up, be accountable, and better able to compete with disruptors.

Consumer industry early adopters are already creating ecosystems and deploying blockchain to strengthen their supply chain.  These organizations are setting a fast pace and charting a direction for early advantage.

Two weeks ago in Berlin, C-Suite executives from Danone to the Lego Group gathered to discuss the seismic shifts in our industry; blockchain is already disrupting the volatile consumer world. Blockchain technology may not be a panacea but it is certainly a tool to make the world a better and more transparent place to reestablish trust with consumers.

IBM Global Managing Director and General Manager Consumer Industries

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