| By Eric Carlson | Senior Packaging Consultant | Chainalytics |
There has been a lot of ‘buzz’ in the media lately around “blockchain” or “blockchain technology,” and so I thought I would share my perspective on how this new technology will impact packaging and some specific supply chains.
First, a primer on blockchain technology seems in order to ensure we’re all grounded. The basics are pretty simple, the details under the hood are something else. For starters, there is no single universal blockchain, but rather blockchain is a technology named to describe an open-source system to ensure the transparency and security of a series of actions/transactions. Thus, there are many blockchains based on need, with the most widely recognized one used for Bitcoin.
Often blockchain technology is described as a decentralized ledger using a peer-to-peer (P2P) network in which new ‘blocks’ are added to the ledger with each action/transaction. Often, the response I get when asking my colleagues if they know what that means, I see hunched shoulders, raised hands and blank stares. Seeking to decode this, I will pull the pieces apart a little. The phrase ‘decentralized ledger using P2P networks’, merely means that an action/transaction is recorded in parallel on a series of publicly accessible computers (similar to cloud storage). When executed, the ‘action/transaction’ is recorded as a ‘block’. The sequence of these blocks is a blockchain. The P2P network is used and programmed to ensure that each action/transaction is valid by comparing each parallel copy of the blockchain to sister copies. In the world of financial transactions, this technology ensures that you can only buy, sell or ‘spend’ the individual Bitcoin currency once.
Simple … huh? So, what the heck is the big deal?
In the past, to ensure an action/transaction was valid, a centralized authority to govern and manage the system was required. In the case of a nationally minted currency, the government serves as the centralized authority. Perhaps the phrase “full faith and credit” sounds familiar? This is a short phrase in a clause in the US Constitution (4th Amendment for those of you keeping score at home). In short the “full faith…” clause means an unconditional guarantee or commitment by one entity (in this example the state or US government) to back the interest and principal of another entity’s debt, typically used in state’s rights. That probably went a little too deep, but stick with me.
The ‘so-what’ of blockchain is that secure transactions no longer need a centralized guarantor or governor; the system is public and transparent, and no single entity can corrupt or con the system, making it even more secure than previous systems whether they be financial systems or not. You may recall the mortgage fiasco that drove the economy into a deep recession in late 2008. Perhaps had there been blockchain transparency over those transactions, we may have avoided the economic meltdown.
The technology currently proves pretty hard to access, similar to the original internet prior to the access technology of the World Wide Web (Web); the Web set up the protocols that allowed for very simple access with standard protocols. Similarly, companies are now jumping in to provide simpler access to the blockchain technology, so expect to see a very rapid adoption rate soon, with surprising, and often unusual, applications.
Now, how can blockchain technology and packaging have any connection?
The most relevant ways I see blockchain technology can influence packaging and supply chains are:
- Consumer awareness (communication & transparency of producer values, authenticity, origin)
- Track & Trace for food, medical devices, pharmaceuticals and other critical markets
- Ensure brand protection from counterfeit production in combination with Industry 4.0
To leverage blockchain technology to achieve the above goals is based on the ability for the package to communicate to the Web, the consumer and the supply chain. In the past, maintaining control of product identity and integrity meant paperwork that would travel with the shipment (BOL, packing lists, etc.). Additionally, physical security measures are employed to ensure the shipment is not tampered with during its journey in the global distribution network.
More recently barcodes, serial numbers, security features (holograms, etc.), RFID and other measures are being used to communicate authenticity. These technologies are often passive and in order to confirm this authenticity, communication with the Web or other private network was required to ensure integrity, etc. Most lately, the use of QR codes and the use of smartphones have allowed a richer entanglement between producer and consumer. However, the counterfeiters have kept pace, often including more security features on a package to confuse the consumer.
At this time, all these technologies are pointing back to a centralized, governed, private and highly managed database to ensure authenticity or provide some other information such as nodes in a traceability query. Once blockchain technology leverages similar seamless access like the internet did with the Web, we will likely see blockchain technology be fairly ubiquitous for Tack & Trace for food & pharmaceutical safety.
As manufacturers leverage interactive product marking systems that may be triggered to point to a blockchain for authentication, then perhaps we witnessing the very beginning of a highly secure supply chain of goods. Perhaps we will see newer technologies like ‘Near Field Communication’ NFC (similar to Apple Pay or in credit cards ‘tap to pay’) or active printable RFID tags lead the way to safer and more secure supply chains. The technology is still in its infancy but demonstrates a lot of promise for future supply chain innovation.
A lifetime IoPP (Institute of Packaging Professionals) certified packaging professional, Chainalytics’ Senior Packaging Consultant Eric Carlson helps clients manage packaging challenges with a high degree of complexity that stems from their unique combination of scale, variability and geography.
Read more on how the Packaging Optimization team has helped drive supply chain improvements:
- (Blog) Crunched for Warehouse Space? Think Packaging!
- (Blog) The Physical Internet Sets its Sights on Revolutionizing Global Insights
- (Success Story) Chainalytics Provides Packaging Solutions for Major Motorcycle Manufacturer
- (Success Story) Chainalytics Reduces Cost and Carbon Emissions through Packaging Optimization for Consumer Packaged Goods Manufacturer