A new digital transformation? From click & mortar to brick & software
09 May 2022
At the time of software companies, or rather "Brick & Software", the decisions to make or buy must be completely reviewed, giving the better part…
Technological, economic and social disruption, the blockchain remains poorly understood, because it is complex and unique. It heralds a revolution on the scale of the Internet.
On the 10th of August 2000, the daily newspaper Le Monde published the headline “Mad Cow Alert”, thus relaunching the 1996 food crisis, during which images of mass slaughtered cattle herds had already shocked the public. The trigger for this crisis was the discovery of the possible transmission of bovine spongiform encephalopathy (BSE) to humans, a disease that causes the degeneration of the nervous system of cattle. Surveys conducted to understand the origin of this disease made the general public aware of an unfortunate reality in the agri-food industry: abuse, the presence of animal meal to feed vegetarian animals, opacity in the value chain, etc. As a result, there was greater public pressure to demand more transparency within the sector, and the theme of traceability emerged as the alpha and omega of food safety. Larousse defines it as the “possibility of following a product through the various stages of its production, processing and marketing, particularly in food chains.”
Initially, traceability took the form of an obligation to label food products, as evidenced by the creation of the Viande Bovine de France (VBF) logo in April 1996. But, almost 20 years later, the results of this labelling are mixed, as many health scandals have continued to plague our lives. The most significant was undoubtedly the Spanghero case. This French company for the canning and production of meat-based food products had to close its doors in February 2013 after falsifying the origin of its meat, passing off horse meat as beef. In this context, consumer doubts about the food industry remain high.
Doubts have now largely spread beyond the food industry to many other industries involving complex and globalized value chains: fashion, children’s toys, wine, diamonds, cosmetics, etc. No brand is now immune from a scandal that could tarnish its image. So how can we recreate a relationship of trust between manufacturers and consumers?
To meet this new challenge, more and more brands are trying to take advantage of the emergence of new information and communication technologies to offer more transparency in their supply chain. Among these technologies, one of them arouses as much mistrust as fantasy: Blockchain. The latter appeared in 2008 at the same time as the Bitcoin protocol, the description of which is given in the white paper of the now famous (under its pseudonym) – Satoshi Nakamoto: Bitcoin: A Peer-to-Peer Electronic Cash System. Blockchain technology is defined as an exchange infrastructure for the transfer of digital data. This infrastructure is completely decentralized, inviolable and completely transparent. Blockchain technology therefore allows individuals to exchange digital data and values without the need to delegate to a third party, the trust inherent in an economic exchange. Moreover, its construction in chains of blocks, where each block contains all transactions at a given time, makes it possible to reconstruct all past flows, thus creating a unique transparency in economic exchanges.
While the first use of this technology was to create the famous Bitcoin, whose ambition is to become the first transnational cryptocurrency, many other uses have emerged in recent years, particularly to reinvent supply chain management. Indeed, the complex and globalized supply chains mentioned above can be considered as a succession of economic exchanges involving producers, carriers, distributors and consumers. Blockchain technology offers the ability to transparently track all flows in a supply chain by storing them on a decentralized infrastructure.
This last point is essential to understand how Blockchain technology brings a new paradigm to transparency. Indeed, it is not necessary to develop a Blockchain to trace a set of flows since this can be done with a traditional computer system. However, in the latter case, the accuracy of the data recorded in the computer system is guaranteed by the entity at the initiative of its creation. From then on, this entity becomes judge and party, since the information stored can be modified a posteriori. In other words, the story told by a traditional computer system can be rewritten according to the circumstances, as was the case with Spanghero. In contrast, decentralized Blockchain technology provides information that is unchangeable over time.
However, what is the requirement for transparency and traceability without the conviction that the information provided is accurate? Not much. Blockchain brings both and it is in this respect that it can become a catalyst for transformation in supply chain management by providing a new way to generate trust between the producer and consumer.
Many players have decided to take advantage of Blockchain technology to offer an improved customer experience. For example, you can discover the different stages of a product’s life through a QR code. Labeyrie announced in November 2019 a partnership with IBM to implement a Blockchain to better control information along the taming chain. This project comes to life around two of the brand’s flagship products, “the large Norwegian Arctic Circle smoked salmon 4 slices” and “the Norwegian smoked salmon 4 slices”. The information written in the Blockchain can be read using a QR code located on the packaging package. The consumer, by scanning it, has access to a lot of information about the product such as the farm where it was raised, the food with which it was fed, any treatments it may have received, the date it was prepared, etc. Confidence in the accuracy of this information comes from the fact that each actor in the supply chain is responsible for the data they enter in the Blockchain since it is dated and signed. Nevertheless, it is here that an important point should be stressed: it is not possible a priori to certify the accuracy of the information entered in the Blockchain. The only certainty offered by Blockchain technology is that once registered, the information can no longer be altered.
For example, there is nothing to prevent a dishonest intermediary from entering incorrect information about the origin of the salmon. On the other hand, will he do so if he knows that the day a scandal breaks out, we can trace it back to him? If he cannot answer in the negative with certainty, it can be agreed that he will think about it at least twice.
Despite this restriction, implementing a Blockchain allows brands to launch a global reflection on the digitalization of their supply chains and to make the different stakeholders work together towards a common objective. Blockchain technology is thus transformed into a test laboratory to test innovative solutions in order to improve the traceability of information. For example, diamond dealer De Beers has developed Tracr a Blockchain technology to authenticate the origin and authenticity of a diamond through its characteristics providing it with a unique signature. This platform makes it possible, on the one hand, to fight against blood diamonds and, on the other hand, against possible forgeries or imitations, thereby preserving the brand’s image.
The globalization of supply chains that emerged in the second half of the 20th century has led to an increasing complexity of supply chains, making the notion of the “origin” of a consumer object more and more complex. This phenomenon, accentuated by the many health and social scandals and greater consumer demand, has resulted in a breakdown in the bonds of trust between brands and consumers. To address this, Blockchain technology, whose fundamental principles are based on the decentralization of trust and the inviolability of the information contained therein, offers an appropriate solution to accelerate the digital transformation of supply chains.
Morand STUDER and Clément TEQUI
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