Production & Operations

Why is traceability so important?

A Blockchain solution could provide an interoperable system for production traceability and provenance

Production traceability with blockchain-based solutions has been especially discussed in the context of food traceability and pharmaceutical product traceability. These areas intuitively seem to be a perfect area of application.

Food traceability

In the past years, food safety questions have become more prominent in the public debate following several food safety scandals, as for example the Chinese milk scandal of 2008 and the E. Coli outbreak in the US in 2015.

Food security is mainly ensured through national and/or regional standardisations in food production, as well as regulations and regular quality checks by companies and public health departments.As food production and retail is becoming more international, food security is often dependent on the importance retailers ascribe to it and difficult to manage.

To ensure a stricter control and give manufacturers, retailers, as well as consumers the opportunity to trace back the origin and production steps of goods they purchase, major food manufacturers, among them Nestle, Unilever, and Walmart, have started looking into potential blockchain-based solutions.

Blockchain solutions could be applied to foster food security, ensure manufacturer compliance in regard to conditions at production facilities, track food items and food volumes, as well as improve product recalls.

Conditions at production facilities for example could be tracked with a blockchain by allowing self-reporting from production facilities and manufacturers. But also general factors that influence production processes could be tracked. In addition, product recalls could be better managed in case products are tracked through a blockchain, as barriers like not-standardised product IDs and not-automated recall campaigns could be reduced.

Necessary traceability information could be rapidly acquired in a system in which all steps of the value chain are recorded on a blockchain. The speed of detecting products that are harmful can be vital to assure consumer protection.

Drug provenance to fight counterfeit drugs

Counterfeit drugs have become a serious issue with catastrophic consequences. In many countries, cases of counterfeit drugs being sold to patients even resulting in patients’ deaths have been reported.

Counterfeit drugs could be tackled through reliable value and supply chain traceability.

A blockchain-based traceability system would allow for a transparent record-keeping of drug’s origins, composition, and the chain of ownership. Every step could be recorded and sensitive information could be cryptographically secured and/or access limited to information providers, who could then share it with involved and affected stakeholders. Generally, traceability information could be publicly accessible. For example, consumers could scan the drug’s barcode with their cell phone and check the medication’s information on the blockchain. This would increase trust in medication provenance and give patients a chance to verify the drugs they depend on.

A blockchain solution could also help to fortify adherence to regulations regarding drugs as compliance monitoring could become less complex.

Overall improved manufacturing traceability

Blockchain applications can be especially interesting in manufacturing traceability.

Manufacturing has become a transactional and complex process nowadays. A blockchain network would give companies the possibility to verify production processes and the chain of custody by better overseeing among others compliance to company standards. Furthermore, companies could increase efficiency and with it reduce cost. Aspects of asset, logistic, and warehouse management would be easier optimised. For example, manufacturing downtime and warehouse costs could be drastically reduced by implementing more just-in time production.

Production and transport of goods could be digitally recorded in each step of the value chain. Each recording could also track other important aspects such as the state of the product and production specifications it is going to be subjected to. This electronic tracking could be automatically uploaded to the blockchain.

With it the blockchain would offer an immutable and shared database in which all information is easily accessible and the complete chain of custody of a product could be traced back to its origins. This database would allow retailers to conduct recalls, but also monitor production. In addition, a solution could be established that allows consumers to request provenance information from the blockchain.

The need for better and more reliable traceability has become visible in cases of food fraud and regulatory and legal demands, and as aspects such as provenance and ecological sustainability have become more important for consumers buying decisions. NGOs, consumers, governments, etc. have strongly voiced concerns regarding the current system. Moreover, most stakeholders involved and/or affected in food manufacturing and retail have voiced a necessity for increased transparency.

As mentioned before, international food manufacturing and retail has led to an increased value chain complexity and made many aspects influencing and determining for example food security in-transparent. To establish full transparency and traceability is seen as vital by many stakeholders, but high implementation costs have hindered developments.

Traceability based on a blockchain application could provide high control and better monitoring while tackling fraud and enforcing regulatory requirements such as production standards and sustainability demands. It would deliver reliable provenance tracking hindering the existence of counterfeit, pirate, stolen, or diverted goods, and reducing the potential for fraudulent transactions in regard to production and supply chain management by recording all events and transactions related to important items/assets.

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