Blockchain: A Cop That Stops Goods from Going Rogue

You open the packet of your favourite Darjeeling tea you picked up from a local shop, and you look forward to a relaxing evening sipping it.

The tea comes to a boil, you strain it into a cup and bring it to your living room where a plateful of hot pakodas awaits you to complete the moment. As soon as you take your first sip, you instantly realise it doesn’t have the satisfying taste of your regular tea.

You take a look at the packet again. It looks original. But you're reasonably sure it's a fake, though you can't prove it.

Tracking the Truth

Counterfeit products have flooded the market, posing a significant threat to intellectual property rights and legitimate businesses. Every now and then we’re woefully reminded of how easily authenticity can be compromised.

The lack of transparency and proper regulations in supply chains is considered to be the biggest reason fake products are reaching our homes. But with blockchain, transparency in supply chains is no longer a distant dream. And it works flawlessly. Even for an ordinary packet of tea.

Here is how:

A tea packet, part of the blockchain-powered supply chain, has a barcode that you can scan with your phone to check its authenticity. The scan result of an original Darjeeling tea packet should ideally give you its detailed journey of the tea — from its provenance in the hills of Bengal where it was grown, to the warehouses where it was stored, all the way to the shop or supermarket you bought it from. Absolutely no gaps.

A counterfeit packet, on the other hand, will give you none of that.

Supply-Chain Challenges

In India, supply chains are inherently complex, inefficient and opaque. Goods change several hands, and sometimes their identities as well.

Take medicines, for example. From manufacturers to local pharmacies across the country, medicines pass through multiple middlemen. Each change of hands creates opportunities for fraudsters to play their games.

The result is that you have no way of knowing whether your strip of antibiotics is genuine or a copy that sneaked into the supply chain at a murky checkpoint.

Seal of Truth Via Blockchain

Blockchain offers a solution to this problem by securely tracking the goods. Once an entry is recorded in the ledger, it cannot be changed or deleted. As a result, if a consignment is tampered with on its way, the chain of records will break, giving a clear message to the buyer that something is not right.

A few years ago, NITI Aayog, Oracle, Apollo Hospitals and Strides Pharma Sciences came together on a blockchain platform to end India’s battle against fake drug distribution. Oracle’s blockchain software logs a drug’s details in the manufacturer’s supply chain, and prevents any possibility of record tampering.

Similarly, Amazon teamed up with Nestle to develop a blockchain system that tracks the journey of its products, while Alibaba requires fashion brands to upload their designs into its blockchain platform.

Where Else Can It Work?

Reverse logistics — goods moving back from consumer to seller — is another murky corner.

When the reverse pickup of a damaged or defective product is initiated, it becomes challenging to determine where the problem occurred: at the manufacturing level, the warehouse or in transit.

To deal with this problem, Wipro has created a process that uses blockchain to generate a unique encrypted identification number for any product. This number gets into the manufacture, assembly and distribution of the product, preventing counterfeits from entering the supply chain.

During the product returns by the consumer, WPIN is scanned which helps to verify the authenticity of the product. If the returned product is authentic, the system triggers a mail to the customer with an apology and a refund.

Cutting Bureaucratic Interference

Apart from that, blockchain can also make life easier for businesses that are required to comply with several regulatory requirements, and adhere to a multitude of standards, such as FSSAI regulations for food products and Good Manufacturing Practice, or GMP, standards for pharmaceuticals.

Blockchain will provide details of every batch and shipment, which can be observed, audited, and evaluated by all parties—manufacturers, distributors, regulators, retailers, and customers.

This transparency means three things:

One, there is zero risk of non-compliance; two, arbitrary and unnecessary bureaucratic interference will be out of the picture; and three, businesses won’t need to go out on a limb to maintain credibility with both regulators and consumers.

Final Words

The logistics sector in India is ready for disruption, and in need of change. And blockchain can help with that without requiring you to bulldoze the existing systems. It can be layered into existing supply chains—starting with pilots for high-value or perishable goods, and then expanding as familiarity with the system grows.

But let’s not forget the fact that no technology is a silver bullet. Adoption can’t happen overnight; it takes time and investment.

If you’re thinking about adopting blockchain, start small, and scale it depending on the feedback you get.