Blockchain for Supply Chain: Track and Trace

Gain end-to-end visibility of production with blockchain

Today’s supply chains are global networks that generally include manufacturers, suppliers, logistics companies, and retailers that work together to deliver products to consumers. As modern supply chains continue to expand, they also are becoming more complex and disparate. Typically, traditional supply chains use paper based and disjointed data systems that lead to information silos and make tracking products a time consuming task. Lack of traceability and transparency is an industry-wide challenge that leads to delays, errors, and increased costs. Modern supply chain participants need a unified view of data, while still being able to independently and privately verify transactions such as production and transport updates.

Supply chain solutions built using Amazon Managed Blockchain can provide the end-to-end visibility today’s supply chains need to track and trace their entire production process with increased automation efficiency.

What is Track and Trace?

In the supply chain industry, track and trace refers to the ability to identify the past and present locations of all product inventory, as well as a history of product custody. Track and trace requires following products through a complex journey from raw material, through multiple geographic regions for processing and manufacturing, through regulatory control, and finally, to retailers and consumers. Tracking provenance throughout this journey is crucial to ensuring product authenticity.

Track and trace is often a challenge for today’s supply chains due to outdated paper processes and disjointed data systems that slow down communication. The lack of data compatibility exposes supply chains to problems like visibility gaps, inaccurate supply and demand predictions, manual errors, counterfeiting, and compliance violations.

Track and Trace with Blockchain

Blockchain technology can be used to build applications on which multiple parties can transact directly via a peer-to-peer network, without the need for a central authority to verify transactions. Each network participant has access to a shared ledger that immutably and cryptographically records all transactions, and there is no single network owner.

With blockchain, supply chain companies can document production updates to a single shared ledger, which provides complete data visibility and a single source of truth. Because transactions are always time-stamped and up to date, companies can query a product’s status and location at any point in time. This helps to combat issues like counterfeit goods, compliance violations, delays, and waste. In addition, immediate action can be taken during emergencies (e.g., in the case of product recalls), and regulatory compliance is ensured by the ledger audit trail. Moreover, by combining blockchain with smart technology like Internet of Things, supply chains can automate tracking the conditions of production, transportation, and quality control. Companies can also choose to share track and trace data with their customers as a way to verify product authenticity and ethical supply chain practices.

“Transparency in supply chains is increasingly important to consumers, who want to know what is in their food and where it comes from. While Nestlé has begun to release information on its supply chains for its 15 key commodities, using blockchain technology enables a more precise tracking,” said Armin Nehzat, Digital Technology Manager, Nestlé Oceania. “With Amazon Managed Blockchain, we are able to set up our Hyperledger Fabric network and easily invite our partners to collaborate in our supply chain transparency efforts. Amazon Managed Blockchain will enable our customers to track their products on the blockchain from the farm all the way through to consumption.”

Armin Nehzat,
Digital Technology Manager Nestlé Oceania

Nestle

Traditional Supply Chains

Blockchain challenges

Supply Chains with Blockchain

Blockchain benefits

Industry Use Cases

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Food and Agriculture

Track products throughout the supply chain to respond quickly in the event of food safety emergencies. Differentiate your brand from the rest of the market and empower customers by providing detailed food supply chain insights. Compensate small farmers quickly and equitably.

Food Safety
Improved traceability is a large opportunity in the food and agriculture industry. The Food Safety Modernization Act (FSMA) currently requires food companies to know “one up and one back,” where the product came from and where it is going next. This system obstructs visibility of the entire food product life cycle. For this reason, it can take companies several days, or even weeks to trace foodborne illness outbreaks to their original source. This time sensitive process is slowed further by paper based records and visibility gaps. With Amazon Managed Blockchain, food companies can have end-to-end visibility of the supply chain and can audit the immutable ledger to trace unsafe products almost instantly. With a shared ledger, brands can quickly identify the source of contamination to limit the number of affected customers. Companies can also reduce financial loss by only discarding the affected products,
while retaining positive brand reputation.

Empower Customers and Sustainable Small Farmers
Today’s customers prioritize factors like sustainability, quality, and brand ethics more than ever when making food choices. Yet, small producers in global supply chains continue to be undercompensated. For example, small scale Fair Trade coffee producers receive $1.30 for a pound of coffee that retails for $20 per pound in the US. In addition, small producers aren’t paid until their products are delivered several days and rounds of paperwork later, leaving them in financial limbo. Transparency on a blockchain network empowers farmers with the ability to track their produce throughout the supply chain, while document automation can quicken the payment process. Brands can also use blockchain applications to connect customers directly with the source of their food products, which is a valuable opportunity for market differentiation and to promote small farming communities.

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Pharmaceuticals

Reduce counterfeit medicines. Minimize patient risk by reacting quickly to medication recalls, and reduce overall pharmaceutical costs.

Counterfeit Medicine
Counterfeit medicines are a pervasive issue that cost the pharma industry hundreds of billions of dollars each year, while putting millions of people at risk. With blockchain, pharmaceutical companies can closely track medications throughout the entire supply chain by individual serial numbers. The network ledger records production updates by serial number, and serves as a tamper-proof source of truth that eliminates opportunity for nefarious actors. Top-to-bottom visibility on a blockchain network also allows pharmaceutical companies to identify the weak points that present opportunity for counterfeit medicines to enter the supply chain.

Medication Recalls
Pharma supply chains operate under particularly high stakes due to the risk of patient endangerment, strict FDA regulations, and the high cost of drug development. Medication recalls can occur when medications are mislabeled, contaminated, have compromised efficacy, or suffer from manufacturing defects. Pharmaceutical recalls must be carried out quickly, as any of these causes can lead to patient endangerment and loss of life. Recalls can also mean financial loss; particularly if the company is unable to pinpoint the compromised drug batches and unnecessarily discards safe products. With an Amazon Managed Blockchain solution, pharma companies can respond more efficiently to recalls to minimize patient risk, reduce financial loss by precisely identifying unsafe medications, and discover the point of contamination during manufacturing. Blockchain can also help reduce recalls associated with quality through automation. For example, a pharmaceutical company can integrate blockchain with temperature sensors to ensure the medications are properly refrigerated throughout the entire supply chain process.

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Manufacturing

Inform consumers about the provenance of their clothes and shoes to demonstrate authenticity and ethical practices. Track spare auto parts and streamline auto safety recall processes to save money and reduce the number of affected customers.

Retail Transparency
Apparel and shoe companies have intricate multinational supply chains that transform raw materials into wearable finished products. Clothing items and shoes have short product life cycles that quickly pass through several manufacturing sites and processors before arriving to retailers. The complex and fast-paced nature of the textile and shoe industry makes it hard for companies to verify product provenance. Inbound supply chains need a more efficient way to track and trace incoming shipments, while consumers want to ensure their apparel and shoe purchases align with their ethics. With Amazon Managed Blockchain, retailers can document and share the sustainable and ethical provenance of their apparel and shoes. This openness preserves brand reputation, promotes customer loyalty, and ensures compliance.

Automotive Manufacturing
Auto manufacturers lose billions annually due to damaged, lost, stolen, and counterfeit car parts. With complete visibility on a blockchain network, auto companies can trace spare parts to their original manufacturer and query exactly where they were lost or damaged. Blockchain solutions can address the infiltration of poorly made counterfeit spare parts that put consumers at risk while costing auto companies money and customer satisfaction. Current efforts against the threat of counterfeit parts include QR codes and holographic labels, but there is still a chance experienced counterfeiters may outsmart these efforts. With blockchain technology, parts are tracked by their individual QR codes on a tamper proof ledger, which fundamentally ensures part authenticity. More broadly, Amazon Managed Blockchain solutions can address the dispersed and complex nature of auto manufacturing by providing complete oversight of production.

Safety Recalls
Safety recalls are a common burden in the automotive industry that are costly to automobile manufacturers and inconvenient for customers. Auto companies frequently issue recalls to thousands of cars because they are unable to confidently narrow down the unsafe vehicles. With Amazon Managed Blockchain, companies can know exactly which vehicles had defective parts installed, and issue recalls with precise and accurate scope. The network ledger can also be audited to track which phase of production produced the error.

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Mining

Ensure ethical sourcing and authenticity of raw materials. Accurately track environmental impacts of production, revealing new opportunities for sustainability.

Ethical Sourcing
Minerals like cobalt and tantalum have become essential to the future of technology, causing their value to increase. These “conflict minerals” are at risk of being mined and sold illegitimate groups that violate human labor rights. Companies have a responsibility to ethically source the materials that make up millions of smart phones, computers, and cars. Yet, achieving high traceability of raw materials is difficult when mining regions often have outdated paper-based systems that are susceptible to corruption. Amazon Managed Blockchain empowers companies to closely track provenance of raw materials from cultivation to consumer, and limit the opportunity for unethically sourced minerals to enter the supply chain. The network ledger immutably records that material was extracted from a legitimate location by a certified employee, the quantity extracted, and any changes to the material’s custody and composition over time.

Ensure Authenticity
The diamond industry suffers from supply chain inefficiency that makes it difficult to ensure stones are conflict free and authentic. Laboratory grown diamonds are sold as natural ones, and diamond qualities can be fabricated or exaggerated. With the current state of supply chain management in the diamond industry, consumers can’t be certain of the origin and quality of their diamonds. Diamond companies have adopted blockchain to track diamond provenance and ensure they are compliant in only selling authentic and conflict free diamonds. Blockchain also makes it possible to track diamonds individually instead of by the case, which means being able to record individual level details of the stone’s condition for customers.

Sustainability
Mining is one of the largest contributors of carbon emissions. Blockchain can be used as a tool to track waste, emissions, and environmental impact at each stage of the supply chain. Improved supply chain visibility can reveal new opportunities for waste and energy reduction. Companies can record environmental data to the ledger to demonstrate compliance with sustainability and environmental regulations. Amazon Managed Blockchain applications can also help to highlight and reward artisanal miners with certified sustainable and ethical mining practices.

Track and Trace on AWS with Amazon Managed Blockchain

Amazon Managed Blockchain is a fully managed service that allows you to set up and manage a scalable blockchain network with just a few clicks. Amazon Managed Blockchain eliminates the overhead required to create the network, and automatically scales to meet the demands of thousands of applications running millions of transactions. Once your network is up and running, Managed Blockchain makes it easy to manage and maintain your blockchain network. It manages your certificates and lets you easily invite new members to join the network. Get started building a blockchain network in minutes with AWS on Amazon Managed Blockchain here.

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