How Blockchain in Retail can ensure Product’s Authenticity?
Today, the socially-active customer is more conscious and demands well-sourced and authentic products. Therefore, the retailer has no other choice than improving the visibility of the movement of goods from production to sale.
The enhanced visibility across the entire retail supply chain can benefit all the stakeholders involved in the system.
The blockchain technology has the potential to revolutionize the retail supply chains by managing the supply data, autonomous transactions and chain-of-custody information. The blockchain enabled system can help build trust among the retail supply chain stakeholders.
Traditional retailers face a challenging business environment, due to continuing margin pressure, greater global competition and complicated record keeping. Also, they contend with issues such as lack of supply chain visibility, high transaction fees, empowered consumers and counterfeit products.
This article puts light on the following content in the article:
- Poor Inventory Management
Currently, every stakeholder involved in the retail market maintains or stores the information in different systems, which raise the issues of data silos. Everyone stores the data related to the supply and demand of materials either in their systems or a centralized server, which is vulnerable to hacks.
Also, with the growing needs and complexity of stock keeping unit management, it has become complicated to perform sales prediction. Therefore, the traditional retail system requires an innovative solution to enhance their inventory processes.
- Lack of Authenticity
The increasing growth affects the quality of the items, which then results in the production of fraudulent products. The survey done by the Organization for Economic Co-operation and Development (OECD) says that the counterfeit products accounted for about $461 billion in 2013.
Since there is no authenticity and information about the origin and production of goods or raw materials, people have started selling pirated products in the market.
The lack of authenticity creates trust issues among the stakeholders involved in the retail industry, which is also one of the biggest challenges. Because there is no transparency of retail data in the system, the customer always has a concern about the quality of the product and where it has been manufactured.
Also, the different stakeholders involved in the system currently do not have information about the details added by others in the network during the entire process.
- Regulatory Compliances and Complicated Contracts
From bills of lading to sales agreements, deposit clauses and many other contracts, the retail process includes various lengthy contracts to be signed from different stakeholders. It takes weeks and sometimes months to agree upon the legal contracts which cause delays in the entire process.
Blockchain can address the above issues faced by the retail industry by enabling a peer-to-peer network and replacing the role of a centralized authority.
Here’s how Blockchain in Retail could bring transparency in product’s supply chain
Stakeholders involved in the Retail Supply Chain Network
- Logistic Service Provider
Step 1: Producer adds the production details to the blockchain
A producer or manufacturer who produces the product to be sold in the market can add the production details like raw materials used, the origin of production, manufacturing date, the procedure of manufacturing, and quality standards followed to the blockchain.
Once stored on the blockchain, production information can be accessed by the participants of the retail supply chain network.
The details added by the producers/manufacturers can help bring fairness to the system by making information transparent to everyone in the network.
When a product gets manufactured and passes the quality tests, quality assurance team adds the quality check certification to the product ID, which is then stored in the blockchain.
The team of manufacturers distributes the products to the packaging company.
Step 2: Packagers add the packaging details to the blockchain
After the product is manufactured, it is sent to the packaging company to make the item look more organized and appealing.
While packing the items, packagers add the essential details like the type of carton box, packaging date and packing materials used to the blockchain.
The information provided by the packagers can help ensure retailers and consumers that the product’s packaging has not tampered and the product is safe to use.
Once the product is packed successfully and the details are added to the distributed ledger, the distribution request is sent to the logistics service provider for transporting it to the wholesalers and retailers.
Step 3:Logistic Service Providers add the carrier details to the blockchain
The product can be transported via IoT-enabled vehicles having different types of sensors. While shipping the items to the wholesalers, logistics service providers can add transportation details like the number of products to be delivered and types of products (fragile or non-fragile and food products) to the blockchain.
Also, the sensors installed in the IoT-enabled vehicles can gather information like temperature under which items are stored in a vehicle and real-time location and directly send it to the blockchain.
The information shared by the transportation service providers can help wholesalers/vendors confirm if the number of products delivered is the same as that of the transported and if the items were kept at the right temperature.
Step 4: Wholesalers/Vendors add the sales details to the blockchain
Wholesalers/retailers can add the details related to sales such as products bought/sold, the maximum retail price and selling price of the product to the blockchain. Adding all this information on the distributed ledger will bring fairness and trust to the system.
Retailers can be ensured about the number of products sold or available. Also, it will enhance the inventory management system by bringing transparency and traceability.
It can also help auditors and government bodies to conduct taxation audits quickly and easily with blockchain.
Step 5: Consumers can trace back the entire supply chain
Blockchain Supply Chain solution in retailing can enhance the trust level between a consumer and a retailer.
Due to the transparency in the retail operations, a consumer can track the whole product life cycle along the supply chain. With a blockchain-based application, they can quickly get to know if the product is manufactured appropriately or not and it has passed the quality checks or not.
From bringing transparency in the product lifecycle to managing inventory, handling payments and bringing security to the consumer’s data, blockchain in retail can resolve a wide range of business issues.
Benefits of implementing blockchain in retail industry
- Enhancing inventory management
With the increased complexity in SKU (Stock Keeping Unit) management, sales forecasting has become a challenging task for retailers. From real-time location to the exact source of origin and number of products produced or sold, every piece of information related to the retail operations can be stored on the blockchain.
With the potential of blockchain to offer traceability, it can drive efficiency to the inventory management process as it can become easier to track the availability of products.
- Detecting thefts
The involvement of multiple stakeholders also leads to the problem of thefts. According to FBI, cargo thefts cause a loss of around $30 billion per year.
Since IoT sensors can generate the data captured about the products at each step of the retail supply chain process, blockchain can help store the permanent records so that thefts can be detected at any point of time.
- Provenance Tracking
Grocery retailers who are specialized in organic and GMO-free food products can be benefited from the ability of blockchain to bring trust in the system. It can help to shore up the confidence of consumers who feel that organic label is a strategy to charge high costs.
The blockchain solution deployed in the supermarket chains or other retail businesses can allow customers to trace the journey of a product from manufacturer to the store.
- Improving customer rewards/loyalty programs
Around $117 billion are issued by US businesses every year to offer customer satisfaction and reduce their liability. It becomes impossible for consumers to track the loyalty programs they are registered with and the loyalty points which go unused each year.
A blockchain-based application can enable users to redeem points across multiple channels and platforms, reducing liabilities and enhancing customer satisfaction. It also cuts down the operating costs and reduces the chances of frauds.
- Proving product’s authenticity
By allowing consumers to scan a code etched into the product to access the history of the product lifecycle, implementing blockchain in retail can renew the trust and make customer relationships better.
The transition to blockchain has the potential to bring transformation in the retail operations. By establishing trust between consumers and retailers and within the entire retail supply chain, a blockchain-based solution can provide product provenance and quality.
If you are looking to integrate blockchain in retail operations, contact our team of blockchain development experts.