The need to digitize traceability is key to enabling circularity
Considerable energy is being devoted to research and pilot projects determined to prove whether blockchain, a secure digital ledger technology that can collect data across partner ecosystems, along with other smart contracting and digital identification technologies, will be crucial for shifting to a circular, inclusive economy.
Indeed, a growing number of businesses ranging from IBM to Walmart to Unilever are talking up blockchain as the holy grail for automating supply chain processes — such as enabling reverse logistics or compensating partners for embracing sustainable business practices — that will be crucial for shifting to a circular, inclusive economy.
"When you think about blockchain, it is actually the persistence of these transactions across a distributed ledger," said Pratima Rao Gluckman, an engineering leader at VMware, during a mainstage presentation at VERGE 19. "Most importantly, when you look at blockchain, it’s about a decentralized trust platform."
By creating "smart contracts," an ecosystem of partners might use blockchain to define the rules for transactions without the need for a centralized authority, such as a centralized database. At least, that’s the theory. That might eliminate the need for brokers and other intermediaries who might have been previously necessary to help forge connections, Rao said, helping eliminate those costs.
VMware, best known for software that helps improve computer server use, jumped into the blockchain arena one year ago. One high-profile project it is nurturing involves a solution for diverting ocean-bound plastics that it developed in collaboration with its parent company, Dell Technologies.
The system is being used to reimagine the processes that Dell uses to collect plastics for use in its packaging — following it from when it’s collected by pickers, passed off to recyclers and back into Dell’s manufacturing operations. Using blockchain, Dell can see the location where something was collected, enabling the company to better verify its origin and back up its own sustainability claims more confidently.
"If you look at Dell, it’s a huge company, a massive supply chain, thousands of vendors, and everyone using these disparate systems," Rao said.
Those suppliers include pickers, recyclers, materials providers and packaging suppliers. "It’s impossible to track workflows across these multiple systems that are just not connected with each other. So they want to solve this problem, and they want a very scalable architecture to make that happen. What they need is decentralized trust, because what they found in this massive supply chain [is] that they have a lot of corruption, there’s a lot of fraud."
The list of giant consumer food and products companies dipping their toes with blockchain applications is growing longer by the day. J.M. Smucker Company several weeks ago announced a plan to use it for coffee crop traceability. Walmart believes it could be important for improving food safety. Even smaller organizations, such as scallop purveyor Raw Seafoods, are trying it as a method to improve food traceability and safety.
"We believe blockchain and other technologies have real potential for those industries that have global, complex and fragmented value chains where absolute transparency has been traditionally difficult to achieve," said Judith Batchelar, director for Britain’s Sainsbury’s Brand, commenting about her own company’s recent test of the technology over the past year. "The results from this pilot really showcase just how this technology can be applied, clearly illustrating who and how multiple stakeholders can benefit."
Sainsbury’s recently completed an experiment focused on small tea farmers in Malawi, along with Unilever and financial services firms Barclays, BNP Paribas, Rabobank, Standard Chartered, startup Provenance and others.
No participants have said what’s next, but all are evaluating the data and assessing whether this sort of system might be scaled.