Everyone’s talking about blockchain technology. To understand how this innovation could be a serious game changer for global supply chain management, our Head of Business and Marketing, Robin Bishop, caught up with the makers of Provenance, a new blockchain product.
Provenance is a software service for product-making businesses to share the story and impact behind their products at the point of sale. It helps businesses be transparent on three levels:
- business level (e.g. where’s the company based?),
- product level (e.g. supply chain mapping), and
- item level (e.g. when was this batch made?).
Provenance enables businesses to easily collate their data, along with open data, and also verify key information (e.g. is this product organic?) on an immutable data ledger called a blockchain. The blockchain holds the most important information and allows anyone to check its validity.
1.First of all, what exactly is blockchain?
Blockchain technology is believed by many to be the next phase for the internet. Essentially what a blockchain allows to happen is that rather than data being guardianed by one person or system administrator, it allows a network to be the administrator or guardian. It’s a shared, networked system that allows us to take control of data from the few, and to the many. The most well-known example may be bitcoin. Bitcoin allows money to be controlled just by a central authority – the bank and the ledger of financial records is maintained by everyone in the network, rather than by one central authority (i.e. like a bank).
We find it helpful to think of a blockchain like a hyper-secure public Google Doc (a collaborative word processing tool). Everyone can collaborate on a Google document and see real-time edits, as well as the history of edits. However, unlike Google Docs, a blockchain does not belong to any of the participants, neither is it controlled by a large corporation. At Provenance we’re very excited about blockchain technology; it underpins our work on making product supply chains more transparent and sustainable.
2. You started in this space a few years ago and this really seemed like a no-brainer of an idea – giving shoppers data to help inform responsible buying decisions, giving businesses the opportunity to gain better traceability and transparency of products…so why isn’t every company and consumer using this technology? What are the barriers to uptake? Or is it just a case of a matter of time?
We were the first company to use blockchain for a non-financial purpose, so whilst we have been working with the technology for a number of years it is still nascent in many ways. That means that it can be expensive and few people or organisations have the capability to really make use of it. If you liken blockchain to the internet then you could say it has yet to have its ‘browser’ moment. The interface to exploring blockchains whether in an app or web page is still undeveloped and this is an important part of blockchains development – helping everyone understand this new way of storing and trusting data.
There are a range of limitations that are being worked on by the blockchain community at large, Among them, scalability (which currently leads to high transaction costs) and privacy. The good news is that those issues are not specific to supply chain use cases: they are a common goal for the ecosystem, and solutions start to emerge, such as sharding or zero knowledge proofs.
3. Do you see brands developing an interest that results in them putting their money where their mouth is to pay for this?
They already are – we’re working with brands like Unilever and Coop who are investing in pilots and projects to prove how this technology can help them. Our mission is to see more businesses use transparency and sustainability to drive competitive advantage. We know that sustainability decreases risk for businesses and many will use this technology to drive growth and brand loyalty in the future.
4. Labour exploitation is obviously a huge issue impacting supply chains in every sector, in every industry. What is special about the way that Provenance uses Blockchain that can be used to reduce this?
In the regular sales processes, it’s almost impossible to find out what a farmer receives for the goods he produces. Our work with Dutch NGO Fairfood brings greater transparency to the coconut industry, using blockchain to prove fair pay.
Provenance has been used to verify proof of payment for living wage to 55 farmers whilst tracking coconuts from South East Asia to Europe. The initiative has demonstrated the possibility of using blockchain technology to track ethical claims, and digitally prove fair trading practices.
5. How are consumers engaging with Blockchain?
In recent years there have been terrible scandals in the food and fashion industries. Unfortunately, these aren’t isolated incidents. These scandals have exposed a complex web of untruths, inequality and the reality that opaque supply chains are devastating environments and livelihoods around the world. With the internet and rise of social media, information is shared more easily than ever before. It’s become harder and harder to remain ignorant to the lack of equality in global supply chains.
As a result, we’re finding that there’s a new type of digitally savvy consumer who is demanding more information about the food and goods they buy. People want assurance that the things they’re purchasing have not caused harm to the environment and societies from which they originated.
Consumers will gain access to trustworthy data direct from the product and can benefit from shopping online or in store and knowing claims are genuine. We believe this can also create new ways to discover products by their provenance.
We recognise user experience is lagging behind in the blockchain space. Blockchains offer new trust architectures for the internet, and the right ways to communicate that to consumers is still very much work in progress across the board.
6. Is Blockchain safe? For example, could you guarantee that conflict minerals not enter the market if the market was managed via blockchain technology?
There is a “garbage in, garbage out” aspect to blockchains: they may make data transparent and keep sources accountable, they do not enforce data quality. Instead, we see them as a connecting piece of the puzzle, with some other pieces being mechanism design, trusted hardware and IoT.
Provenance itself does not audit or certify businesses. What we’re building is an ecosystem to let businesses, consumers, certifiers, etc., share claims and verifications. From there, how robust a verification is depends on the method used (DNA samples, simple attestation, GPS data, etc.) and the reputation of the verifier.
7. What are the challenges for the future and on the flipside where do you see the next big opportunity?
Thanks to the wealth of information now accessible and unprecedented consumer influence social media has enabled, our ability to unearth truths and hold companies to account has never been stronger, but there is a long way to go. Open data, social networks and mobile technology are changing the game and ground-breaking technologies could enable true transparency in supply chains.
Beyond traceability, there are other advantages of blockchain in supply chains:
- Integration of payments is a logical step after the supply chain is made transparent. Practical applications of this will require robust so-called “stable coins” which would solve the volatility problems of current cryptocurrencies.
- Another extension beyond traceability is to feed supply chain data into supply chain finance. Businesses that can prove sustainable practices are likely to be less risky for supply chain finance providers, therefore qualifying for lower rates. Provenance is leading a new collaboration of fintech start-ups which will supply the technology to test whether blockchain technology can help unlock financial incentives that improve transparency and sustainability in supply chains. The group, which also includes Landmapp, FOCAFET Foundation and Halotrade, will be working with partners including the Department for International Development (DFID), Unilever, Sainsbury’s, Sappi, and global banks: Barclays, BNP Paribas, Standard Chartered.