A Product's Tale: Revealing its “Life” and Fighting the Fakes
By Minnie Rous, Yasir Aheer, Varun Rao and Rahul Rao
Summary:
Mass production took away product individuality. Today, most take it for granted that any two items of the same product would be identical.
Consumers are demanding that brands be more transparent and share detailed information about each individual product item.
Then there is the “fake” economy. Counterfeit or pirated goods cost the global economy billions of dollars annually. Stakes are even higher when it comes to fake medicines.
Blockchain technology is being applied to track, trace and confirm authenticity of products as they traverse the complex global supply chain.
While mass production took away product individuality, Blockchain together with Augmented Reality may be able to bring it back.
Mass production was fueled by the industrial revolution in the second half of the 18th century. Goods that were painstakingly crafted by hand could now be manufactured in bulk using machines. This unleashed an exponential degree of productivity gains, propelling industrialised countries to new heights of wealth and economic might. Then came globalisation, spreading manufacturing around the world. This allowed businesses to reduce production costs, gain access to regions with specialised labour and achieve geographical proximity to various destination markets. Driven to reduce costs, control quality and support scale, companies forced uniformity across the manufacturing process resulting in items of the same product to be indistinguishable.
And so, products lost their “individuality”. Today, most take it for granted that any two items of the same product would be identical. But, of course, individual product items are unique. Items could have been manufactured in different countries, with raw materials sourced from many more. They can travel thousands of miles, be handled by several entities within the supply chain and traverse many state or national borders before reaching the shelves for our consumption.
Modern challenges
With increasing interest towards movements such as sustainability, organic food, fair trade, supporting local businesses and safe labour conditions, consumers are demanding that brands be transparent and provide detailed information about their products. This could include information such as manufacturing location & conditions, raw materials & their origins, transportations & logistics etc. The need is not merely for awareness, but for business survival. According to a 2018 study, the vast majority of consumers (74%) say they would switch from their regular brand to another that provides more in-depth product information. However, thus far it has been easier said than done. Given the many players involved in the complex global supply chain, it is difficult for any single entity to manage (or be entrusted with) information regarding products' end-to-end journey through the supply chain. Hence, a more collaborative or distributed approach may be needed.
Then there is the “fake” economy. Counterfeit or pirated goods have been rising steadily in recent years, costing the global economy over half a trillion dollars, or 3.3% of the total world trade in 2016 alone. For years companies have waged a battle against counterfeiters, lobbying governments to empower law enforcement agencies against counterfeits, along with maintaining armies of lawyers. Louis Vuitton alone allegedly employs over 60 lawyers and spends $17 million annually on anti-counterfeiting legal action.
Stakes are even higher when it comes to counterfeit medicine. A study by the World Health Organisation (WHO) uncovered that 1 in 10 drugs in low and middle-income countries are fake or substandard resulting in preventable deaths. According to a team from the University of Edinburgh, up to 72,000 deaths worldwide from childhood pneumonia could be attributed to the use of antibiotics with reduced efficacy; the number increases to 169,000 deaths if you include drugs that had none at all.
Blockchain as a viable solution
Blockchain, the technology underpinning cryptocurrencies such as Bitcoin, is being utilised to address these challenges. In essence, blockchain is a ledger that can securely maintain information in a decentralised manner. Information is stored in blocks and added to the end of the chain, and once added the information within the block cannot be modified.
Each block within the chain is identified through a unique ID called “hash”. The hash is uniquely generated based on the content of the block itself, and so if the content of the block changes so does its hash. Each new block also includes the hash of the previous block within its content, and so is used to generate the new block’s hash.
If the content of an existing block is manipulated, it’s new hash will not match the information stored in the following block, flagging the issue for correction. An aspiring hacker would have to update not just one, but rather all subsequent blocks till the end of the chain - a feat that would require an infeasible amount of computing power and time. Further bolstering security, blockchain leverages a decentralised model where information is duplicated across a network of potentially thousands of computers, called nodes. Any issues in a handful of nodes could be quickly remediated based on a majority consensus.
Blockchain in action
The use of blockchain to fight the counterfeit industry has already been adopted by a number of organisations. A UK based data company, FarmaTrust, offers traceability as medicine moves through the supply chain. Raja Sharif, CEO of FarmaTrust explains that the “... issue with fake medicines is that they usually enter the middle of the supply chain, not at the top at the point of manufacturing, and the useful thing about blockchain is that it creates an incorruptible record; once you’ve made a record, you can’t make it again or alter it.” The Food and Drug Administration (FDA) in the USA is running a pilot program with two dozen leading pharmaceutical manufacturers, distributors, logistic partners, and other representatives of the pharma supply chain. The goal of the program is to evaluate blockchain to trace and track medicine as it traverses the supply chain.
Companies are also leveraging blockchain to build greater consumer awareness by providing additional information about individual product items. Danish dairy company, Arla, is piloting a blockchain-based platform - aptly named ‘Milkchain’ - that provides detailed information on the origin and production of its products. Nestle has announced it will use blockchain for its Zoégas coffee brand allowing buyers to trace the origin and production of the coffee beans, simply by scanning the QR code.
Richer user engagement
Having the information available is just one part of the equation; it needs to be presented to consumers in a meaningful and engaging way. An Australian startup, Third Aurora, recently showcased a voice technology prototype that would allow a consumer to simply point their camera at an item and ask product-related questions. Companies are also trialling augmented reality to provide a richer and engaging experience via smartphones.
This type of connected packaging is helping solve consumer demands for product authenticity and brand transparency. People are becoming more discerning about who they spend their money with and are looking for companies that match their social, economic and environmental philosophies. Virtual or augmented reality is currently the most engaging way for businesses to connect with their customers on a personal level. However, in order to tell the product’s ‘life story’, companies need reliable data from technologies like blockchain to nurture consumer confidence and trust.
In closing, while mass production took away product individuality, technologies such as Blockchain and Augmented Reality may be able to bring it back.
Co-Authors:
Disclaimer: This article is based on our personal opinion and does not reflect or represent any organisation that we might be associated with.