Blockchain Technology: Revolutionising Provenance
Global Supply Chain
Sui Jin KON (Executive Director, TRST01)
11th July 2024
Increasing global trade complexity and consumer demand for transparency call for the business community to embrace innovation as a panacea to improve our risk profiles and stay ahead of the competition in the search for better shareholder value. Blockchain technology has emerged as a game-changing solution for ensuring provenance in supply chains. This article will explore how blockchain is transforming the agricultural and mineral sectors, creating safer, cleaner, and more sustainable supply chains while enhancing regulatory compliance and reducing business costs.
Enhancing Transparency and Traceability
Blockchain’s decentralized and immutable ledger provides unprecedented transparency and traceability throughout the supply chain. Each transaction is recorded, creating an auditable trail of all activities from origin to consumer.
Real-world examples: TRST01Chain & IBM Food Trust
TRST01Chain collaborates closely with cash crop producers, including those of rubber, coffee, and cocoa, as well as multinational FMCG (Fast-Moving Consumer Goods) customers. The goal is to ensure that supply chain traceability aligns with the United Nations Sustainable Development Goals (UNSDGs), ensuring that the crops entering the supply chains, whether directly or indirectly supplied to multinational FMCG, Rubber and Tire Majors to fully comply with the European Union Deforestation Regulation (EUDR) across nine countries. The blockchain-enabled platform allows each party in the supply chain to focus on their core competencies while benefiting from a transparent and completely auditable supply chain.
IBM Food Trust, a blockchain-based platform, has partnered with major food suppliers and retailers like Walmart to revolutionize food traceability. This initiative has dramatically reduced the time needed to trace the origin of food products. For instance, Walmart can now trace the origin of mangoes in its U.S. stores within 2.2 seconds, compared to the previous 7 days. This rapid traceability enhances food safety, reduces waste, and promotes sustainable farming practices.
Ensuring Safety and Cleanliness
The ability to provide real-time, accurate data on a product’s journey significantly contributes to ensuring safety and cleanliness in supply chains.
Real-world example: Provenance
Provenance, a blockchain startup, has partnered with various food producers to track the journey of products such as coffee, fish, and meat. By scanning a QR code on the product, consumers can access detailed information about its origin, production methods, and journey through the supply chain. This transparency builds consumer trust and encourages sustainable farming practices and fair trade.
Combating Corruption and Promoting Sustainability
Blockchain’s immutable records make it an excellent tool for fighting corruption and promoting sustainable practices.
Real-world example: Everledger
Everledger, a blockchain-based platform, tracks diamonds’ provenance to ensure they are conflict-free. By recording each diamond’s journey from the mine to the retailer, Everledger helps prevent the sale of blood diamonds and promotes ethical sourcing practices. This technology has been extended to other minerals, helping companies maintain clean and sustainable supply chains.
Regulatory Compliance and Company Longevity
Blockchain’s detailed, immutable records are a boon for regulatory compliance. Companies can use blockchain to demonstrate adherence to various regulations, from food safety standards to conflict mineral laws.
Real-world example: Circulor
Circulor, a blockchain platform, tracks the provenance of minerals like cobalt used in electric car batteries. By ensuring that minerals are ethically sourced, Circulor helps companies like Volvo maintain clean and sustainable supply chains, thereby ensuring regulatory compliance and enhancing their long-term viability. The system tracks minerals through all supply chain participants, from miners and buyers through refineries, shipping companies, and manufacturers all the wayto distributors.
Cost Reduction and Efficiency
Blockchain can significantly reduce operational costs by streamlining processes, reducing paperwork, and automating various tasks through smart contracts.
Insurance Costs
Blockchain can reduce insurance costs by providing a transparent and immutable record of all transactions, reducing the risk of fraud and enabling more accurate risk assessment.
In agriculture, blockchain-based crop insurance solutions are emerging. These systems use smart contracts and data from IoT devices to automate payouts based on predefined conditions, such as rainfall levels or temperature. This reduces the cost of claims processing and enables farmers to receive faster payouts.
Financing Costs
Blockchain can improve access to financing by providing lenders with greater visibility into supply chain activities, mitigating risks associated with lending.
Real-world example: We.Trade
We.Trade, a blockchain-based trade finance platform developed by a consortium of European banks, facilitates cross-border trade for SMEs. By providing transparency and reducing risk, the platform enables easier access to financing and potentially lower interest rates for businesses.
Environmental Sustainability
Blockchain can record and verify sustainability metrics throughout the supply chain, providing concrete evidence of environmental commitments.
Real-world example: Bayer CropScience
Bayer CropScience is collaborating with IBM to leverage blockchain for tracking soil conditions, weather patterns, and fertilizer application. This information enables farmers to make informed decisions to optimize yields and resource management, promoting sustainable agricultural practices.
Financing Costs
Blockchain can improve access to financing by providing lenders with greater visibility into supply chain activities, mitigating risks associated with lending.
Real-world example: We.Trade
We.Trade, a blockchain-based trade finance platform developed by a consortium of European banks, facilitates cross-border trade for SMEs. By providing transparency and reducing risk, the platform enables easier access to financing and potentially lower interest rates for businesses.
Environmental Sustainability
Blockchain can record and verify sustainability metrics throughout the supply chain, providing concrete evidence of environmental commitments.
Real-world example: Bayer CropScience
Bayer CropScience is collaborating with IBM to leverage blockchain for tracking soil conditions, weather patterns, and fertilizer application. This information enables farmers to make informed decisions to optimize yields and resource management, promoting sustainable agricultural practices.
The utilization of blockchain technology offers a robust and secure solution for verifying the authenticity of products within the agricultural and mineral sectors. Blockchain achieves this by enhancing transparency, bolstering safety measures, combating corruption, advancing sustainability practices, and ensuring compliance with regulations. This technology has the potential to establish dependable, efficient, and adaptable supply chains.
Businesses that integrate blockchain technology into their operations position themselves for long-term success by benefiting from reduced costs, heightened trust from stakeholders, and improved overall cost structures. As more companies embrace this technology, we foresee an evolution towards more responsible, sustainable, and efficient global supply chains.
Good for Shareholders. Good for Communities. Good for the Planet.
write to us journey@trst01.com
