Retail Executive

JAN-FEB 2018

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blockchain technology creates better transparency between buyers and sellers as shipments are tracked in real time, improves security, and reduces the risk of fraud. The technology will also allow the company to pinpoint the exact source of a particular package that has been sold, so a product that is subject to a recall can be identified easily. Blockchain technology can also be used for logis- tics. For example, Walmart recently filed a patent for a drone-delivery tracking system that integrates block- chain technology. In this case, the blockchain would hold certain information such as the location, supply chain transition, authentication of the courier and customer, and temperature of the container and product. In simple terms, Walmart aims to leverage blockchain technology to enhance the security of unmanned drone delivery, as well as the supporting authentication system. IS YOUR COMPANY READY FOR BLOCKCHAIN? The first question a company needs to consider be- fore implementing blockchain technology is, "Does the business need the technology?" Since blockchain offers a new method of storing information that is ac- cessible by multiple parties, the technology is naturally suitable for businesses that operate in a network en- vironment, which requires both security and identity management. Our report on the retail applications of blockchain features a decision flow chart posing key questions for your process. When blockchain technology is applied to supply chain management, it addresses traceability issues by enhancing the transparency and solving the problem of trust. Transaction records on a blockchain are im- mutable and can be traced back to their origins with certainty. In a supply chain context, using blockchain technology offers traceability to track physical value in the supply chain. Enterprises that use blockchain technology to log the steps in the production and sourc- ing of products gain visibility across the entire supply chain ecosystem, enabling agility and improving plan- ning capabilities. That said, we believe blockchain technology will be the key driving force behind improvements in how sup- ply chains handle transaction data. However, we see this as a mid- to long-term prospect for the industry rather than adoption in the immediate future. R We believe this new technology has the potential to revamp legacy supply chain management systems and streamline transaction processes, while at the same time improving supply chain visibility. Since blockchain offers a new method of storing information that is accessible by multiple parties, the technology is naturally suitable for businesses that operate in a network environment, which requires both security and identity management. Demand for transparency in production is increasing in the retail industry. Before reaching the end consum- er, consumer goods have already traveled through a vast network of suppliers, producers, logistics provid- ers, distributors, and retailers, but in many cases, the processes in between are not visible to all participants. By combining smart contracts—computer protocols built on top of blockchains and ledgers—blockchain ap- plications can automatically execute contracts between parties, in a completely transparent manner, once cer- tain criteria have been met. As mentioned, blockchain improves security through the power of many eyes watching the system. Decen- tralized ledgers can enable identity verification and authentication. By pairing hardware chips with block- chain technolog y, a digital history can be attributed to physical products, which allows users to trace and verify their origins, attributes, and ownership. Block- chain technology can allow retailers and consumers to validate a product's provenance and guarantee authen- ticity, helping identify counterfeit goods and reinforce the value of premium products. End-consumers can gain visibility into the entire production history, which tracks subassemblies, parts, and raw materials used to make the finished product. The ability to trace back the origin of the raw mate- rials is a crucial feature for suppliers and retailers in order to guarantee the safety of consumers and the sus- tainability of the production process. It is particularly important in fields such as medicine and luxury goods, where products must meet very strict standards, or with precious metals and jewels. One example of this type of usage is Chronicled, a blockchain and IoT tech- nology company that combines near-field communica- tion (NFC) chips with seals and blockchain technology to track and secure prescription drugs. The seal of each prescription bottle contains secure information about its contents, registering the information on a block- chain, while also recording the registering party and location data. This tamper-proof technology solution adds a key layer of visibility, ensuring patients and phy- sicians that the medication is authentic. In another anticounterfeiting application, Alibaba joined forces with AusPost, Blackmores, and PwC to explore the use of blockchain technology to tackle food fraud. Because the ledger is immune to tampering, the D E B O R A H W E I N S W I G is managing director of Fung Global Retail & Technology, a retail think tank. She can be reached at DeborahWeinswig@ fung1937.com RETAILEXECUTIVE.COM JANUARY/FEBRUARY 2018 27

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