Blockchain technology is becoming an increasingly important feature for brands to communicate their standards and authenticity. More and more businesses are peeling back the curtains on their supply chains in order to give consumers assurance that their suppliers and systems are all above board. Through a list of registers or ‘blocks’ containing information, blockchain technology permanently records transactions in a digital database. It acts as an ‘open’ ledger which is managed publicly
cly rather than controlled by one party, so information cannot be changed or tampered. “The information is distributed across a network of computers and is not controlled by a single entity. The database is accessible to anyone in the network but cannot be altered or deleted,” explained Haggai Alon, founder and CEO of brand protection company Security Matters. Last year, William Grant & Sons’ premium whisky brand, Ailsa Bay, launched the world’s first-ever blockchain whisky. Consumers can trace the full distilling and manufacturing process of their whisky by scanning a QR code to unlock an innovative web experience, which is individually tailored to each bottle. Proving provenance Jenny Richards, founder of Victorian dog treat business The Paw Grocer, is using blockchain technology to show the quality of her ingredients. “I take a lot of my cues from the human food market rather than looking at other pets,” Richards told Inside Retail. “I had been reading a bit about blockchain technologies in human food and it really struck a chord with me.” Richards sources protein from Australian farmers and fishermen before freeze drying the produce meaning no additives are required. With both a domestic and export market, she plans to use the technology in a slightly different way for both. “For the domestic market, it’s really about proving the provenance of the produce. Our packaging for IGA has the Australian Made logo on it, but that doesn’t necessarily guarantee 100 per cent Australian produce. Because that’s really a cornerstone for the business, I want to prove that.” Richards is particularly interested in how the technology can assist in the event of a product recall. “Going forward, each individual pack will have its own encryption on it, so if someone’s pet falls ill from something, we can very quickly recall very specific products without having to recall the whole lot. So from that point of view, it’s amazing.” Unpicking complex supply chains But blockchain means different things for different businesses. For Queen of Raw, an online marketplace that connects buyers and sellers of unused fabric, it’s about getting a clearer picture of its complex supply chain. “When you start to grasp the scale of the textile waste problem and you’re trying to connect the dots between a tier one supplier and a tier 14 supplier, and keep track of who changed what, and when, and why… a centralised database isn’t going to fix that,” explained Stephanie Benedetto, Queen of Raw CEO and co-founder. “When it comes to securing the integrity of the supply data you’re collecting and creating a story around, I think it’s a game changer. We’re building a system of record that can add real accountability and traceability to the history of a roll of fabric. And that’s something the industry has never had before, so it’s fitting that we’re doing it in an entirely new way.” Capturing data Blockchain technology allows businesses to gather data from existing and potential customers, and some brands use mobile location services to determine where their product is being purchased. Benedetto said it’s critical for businesses to capture the right data, analyse it, act on it and communicate the findings. “To me, it makes no sense to collect that information, make sure it’s transported from tier 14 all the way downstream, and then not talk about it. If you do that, you’re missing a chance to improve your brand reputation, customer loyalty, and top-line sales at the same time as cutting your costs and waste. I just don’t see a downside!” Potential pitfalls While Richards believes blockchain provides a great opportunity to connect with consumers through fun marketing while they are still in store, she is concerned that opening up The Paw Grocer’s whole supply chain could expose the intricacies of the business to potential rivals. “We could literally name the farm, name the freeze dryer, you can see the whole logistics chain from the farm through to the supermarkets. Where I’m a little bit nervous is that if I do that sort of detail, then it’s making it very easy for someone to pick up my business model and run with it, so I’m just figuring out the finer details around that,” she said. Benedetto also pointed out that the database is only as good as the information entered into it. “Blockchain as a system of record makes sense, but that record is only ever going to be as good as the information that’s added to it in the first place. Having integrity of data from tier 14 all the way downstream is only valuable if the data added at tier 14 is accurate,” she said. This was a sentiment echoed by Security Matters CEO Haggai Alon. “A blockchain ledger won’t prevent a supplier of cotton falsely claiming to have sourced from organic farms, or a warehouse logistics manager from accidentally listing 1000 t-shirts instead of 100. Once the information is lodged on the blockchain, the inaccurate information cannot be altered or removed,” he said. To circumvent this, he said it’s important to create a clear, permanent and tangible link between the actual physical item with its “digital twin” that is recorded on blockchain. Circular systems According to Alon, more and more brands are realising the benefits of merging the use of blockchain together with additional technologies to transition successfully to a sustainable circular economy. “When the product is at its end-of-life stage, the recyclers will be able to extract the data and identify the exact material composition like the type of plastic in the product. By being able to do so, this will enable the recycler to efficiently sort the waste and the brands will be able to reuse this recycled material to manufacture new products,” he said.