How to improve trust in supply chains – by blockchain
The main purpose of this blog post is to state how Blockchain Technology influence the role of trust and how it might solve the challenges in tracking and tracing products throughout its supply chain, by identification of opportunities with blockchain as a platform of traceability, information and documentation sharing regarding Extra Virgin Olive Oil (EVOO). The case partner was COOP Trading. This blog post is an executive summary of a master thesis on the matter.
We know surprisingly very little about most of the products we eat every day. Before even reaching the end consumer, products travel through an often-vast process flow of retailers, distributors, transporters, storage facilities, and suppliers, yet in almost every case these journeys remain unseen. This can lead to fraud of adulteration and tampering with the products we consume everyday. Which the The Danish Veterinary and Food Administration action team found, by adulterated EVOOs at Dagrofa and Dansk Supermarked. Out of the 35 tested bottles, only 6 could be classified as EVOO.
The identified challenges from the gathered data, were the difficulty to qualify trust as it’s very ambiguous of what it entails, but is key to have an effective supply chain. Regarding the actual process of EVOO, the law requirement of only knowing “one step back, one step forth” of where the product came from, the lack of interoperability of systems along the supply chain, formats rangning from paper slips, oral communication to large ERP systems. The low traceability and documentation sharing hinders an effective supply chain, especially when fraudulent behaviour seems a great concern.
One of the outcomes where what kinds of trust might be influenced by blockchain. Contract trust, predictability and dependability was chosen from 21 different kinds (Seppänen 2005). After a workshop with COOP Trading employee’s, they deemed contract trust as a central aspect of trust in a supplier out of the 21. It was found that blockchain and smart contracts inherent qualities that might qualify the technology to accomplish a form of digital trust, by managing one of the approaches to measure trust, contract trust.
The outcome for COOP Trading was conceptual UML blockchain design, illustrating the possibilities of enhanced traceability, information, documentation sharing along the supply chain of EVOO. The challenges depicted was information quality, legal implications and digital trust.
- With information quality, is the issue with garbage in, garbage out as data transferred to the blockchain needs to be truthful and of high quality for the blockchain platform to work. This might be solved by RFID tags to get quality data.
- Legal implications is the current legislation challenging greater traceability and information sharing, due to contractual bindings between buyer/supplier (FPA), and on blockchain application legislation as it is highly unregulated.
- With digital trust would be a form of calculative trust, that one can place trust in a technology to handle what is to be expected of it, and thereby handle aspects of trust.
Blockchain have great opportunities to influence the role of trust, by developing a form of digital trust, and be a platform for greater traceability, product information and documentation sharing among supply chain participants. With any new technological improvements it should sprout internally, teaching management of the possibilities, internal meetings and identify other areas where the technology can be applied in the future. Take time to do a simple test, gain knowledge and grow from there.
If this has your interest, raised some questions or just got you curious for more, please contact me. I have a 12 page summary that gives a lot more detail, and of course the 109 page long full thesis on the matter, if you´re really into it.
Looking forward to hear from you.
Below is the illustrations made, first the current supply chain of EVOO and then with blockchain as a platform.
Blockchain supply chain
© 2017 Kristoffer Just Petersen