Recent years have seen the meteoric rise of the “conscientious consumer”. Instead of simply buying the cheapest or most popular product, this new class of consumer wants to know the story behind how products are made.
This consumer’s decisions at the cash register are affected by news reports on the treatment of factory workers, or a company’s track record of environmental impact. Conversely, this consumer responds positively to brands that project social and environmental responsibility. Some 52 percent of global respondents to Nielsen’s survey say their purchase decisions are partly dependent on the packaging; they check the labeling first before buying to ensure the brand is committed to positive social and environmental change. Per the survey, sustainable purchase considerations are most influenced by the packaging in Asia-Pacific (63 percent), Latin America (62 percent), and Middle East/Africa (62 percent), and to a lesser extent in Europe (36 percent) and North America (32 percent).
There is ample reason for companies to provide the types of guarantees and assurances that consumers increasingly demand. This is why enterprises are looking to unlock value of goods by capturing and sharing reliable provenance with customers. Additionally, they are seeking to reduce cost of compliance through timely sharing of auditable provenance with regulators. Currently, however, there is no enterprise-grade solution for multi-participant asset tracking that consumers can fully trust.
The problem with supply chain solutions that could address this need is that they are centrally managed. A centralized system requires each person or entity involved in the supply chain to record their information or updates in a database in full view of the businesses or entities that have a stake in the transaction, which may bias how they report their data. For this reason, in order to provide consumers with attestations about a product that are actually trustworthy, a decentralized and transparent solution is necessary to ensure accurate reporting at each step of a multi-participant supply chain.
Blockchain technology offers the ideal platform for such a solution. On a blockchain such as Ethereum, data is stored across a decentralized network of nodes, instead of being warehoused in a central database that is vulnerable to various types of hacking, manipulation, accidents, and human error. Each node holds a continuously updating and immutable record of every transaction that is logged, so even in the unlikely scenario that some nodes are disabled, the system remains intact.
In a blockchain-based system, each user or entity has a cryptographic key, a string of numbers that is uniquely theirs and serves as their identity. Certain keys can be authorized to participate in specific business processes, verifying certain kinds of data or transactions. This makes it far easier to track where a mistake was made, perform an audit, or in the use case of supply chain management, provide all participants with transparent visibility into the status of assets at all times.
Blockchain technology enables each party in a complex, multi-participant supply chain to provide their own attestation (for instance, to verify that fair labor standards are met) that is stored in an independent database where it is transparent to all parties involved and not subject to interference by stakeholders in the transaction. The result is to provide businesses with the platform to offer the consumer highly credible guarantees and insight into how products are made.
As conscientious buyers seek more granular information to form their own provenance opinions beyond a mere label of assurance from a company or central certifying body; as regulators endeavor to reliably and continuously track, audit, and report on provenance of key resources; and as sellers look to unlock value, increase trust, and command a premium for their special product lineage, a blockchain-based multi-participant supply chain solution is more urgently needed than ever before. Whether it is consumer goods, natural resources, pharmaceuticals, or real estate, supply chains are becoming increasingly complex. Sellers are spending significant time and money to reliably track assets and provide guarantees to demanding buyers.
That is why the enterprise asset management market is estimated to grow from $3.15 billion in 2016 to $5.24 billion by 2021.
With the accelerating pace of adoption of blockchain technology, businesses today have a unique opportunity to harness the power of decentralization to increase efficiency and better serve their markets.
Kishore Atreya is head of consulting and leads the digital banking and supply chain initiatives at ConsenSys, a venture production studio and custom software development consultancy building decentralized applications (DApps), enterprise solutions, and developer tools for blockchain ecosystems, focused primarily on Ethereum.