Every time customers order products from their preferred stores, be they agro-based products or pharmaceuticals, the primary question they want to know after ascertaining quality is, “who is the producer?” Traceability allows consumers to select quality products from regions, companies, or countries of choice.
However, tracing back products has been a huge challenge, and people have found themselves using what they do not want, including counterfeits. The best way out of this challenge is using blockchain technology. In this post, we will demonstrate how blockchain is changing the concept of traceability in business.
Why is Traceability Important?
Today, the logistics industry uses close to half of the shipping costs on inventory. Furthermore, studies have also highlighted concerns in food products. Other issues include the danger of counterfeiting in the luxury goods segments. Blockchain technology is promising to promote traceability to improve operating efficiency through a better understanding of the product supply operations while engaging customers with immutable and verifiable information.
Traceability in the blockchain further relies on the ease of gathering the crucial data, including certifications and claims. Therefore, it becomes an important attribute for strengthening trust, and enabling open access to information. Once you register on a blockchain, data points’ authenticity is verified by nodes (third-party attesters). You also get to enjoy real-time updates about the products on the production and supply chain.
How Does Blockchain Enhance Traceability Work?
Today, companies all over the world can sell any asset and move them to specific clients. The same route used for the supply chain is also responsible for product recalls if products are declared harmful or illegal in a selected market. When a product is declared unfit for human consumption, the entire process of getting it off the shelves is complex and can be dogged with lawsuits and huge replacement costs. This is one of the areas where blockchain technology comes into play.
Blockchain works as a “chain of blocks” of data from different transactions. When a transaction, such as the purchase of products or execution of smart contracts, is completed, the information is added as a hash function. To access the data stored in the blocks, you are required to have the right keys for decrypting the hash function.
Another important attribute of every block is a timestamp of the transaction, alongside other details, such as participants and the particulars of the data. Therefore, it is easy to follow the entire journey that was followed by a selected asset/product from the producer to the consumer.
One important attribute of the blockchain is that the data is permanent. Therefore, you are sure that it cannot be stolen, deleted, or tampered with because such actions would require over 50% of the nodes spread on the network to agree. Such an action would be impossible. So, whether it is one week, months or years down the line, you are sure that the information about the products or transactions will be there and available.
Real Application of Blockchain Traceability
Blockchain can help to enhance traceability in a wide range of sectors, which is the primary driver of its rapid adoption today. Apart from the supply chain sector, here are other industries where it is applied:
- Agriculture: Traceability is used to improve the efficiency of crop production alongside the application of good agricultural finance practices.
- Fashion: Here, traceability is mainly used to help address the challenge of counterfeiting.
- Food processing: Traceability comes in handy to help consumers know where the products were sourced and practices used in processing them.
As you can see, blockchain traceability comes with many benefits, and we have just scratched the surface. When implemented correctly, you will also enjoy other benefits, such as faster transaction times and low cost of transactions.