Transparency and Traceability in Cold Supply Chain with Blockchain and IoT

The magnitude of the problem

The cold chain or perishable supply chain is that part of the global supply chain that is responsible for transporting goods that are perishable in nature, have a limited shelf-life or tend to lose their potency if the prescribed conditions of transportation are not met.

Many vaccines can lose potency if exposed for prolonged periods to temperatures beyond the recommended range of 2 to 8 degrees Celsius. Food items having a limited shelf life and with restrictive amounts of preservatives, farm products such as dairy and meat, also packaged eatables of a fragile nature; These all can become unfit for consumption, or degrade down in the inherent quality if the recommended conditions for transportation are not met. And what’s worse? The consumers have no way of identifying which from which, till they’ve purchased and are on the verge of consumption. Take for instance the most simple of packaged foods in the market, chocolate! This beautiful bar of sweetness, if not transported under 8 degree Celsius loses its prime taste, its sublime texture, and sweetness. It becomes powdery, crumbling with each touch, much like bread! And this is a very common sight in chocolates manufactured and transported under conditions of 40 degree Celsius on the outside and not so much different on the inside of packaged shipment.

In a study conducted by UNICEF for monitoring the temperature of vaccines supplied to various regions, 33.3% of storage units in developed countries and over 37% in developing countries contained vaccines that had been exposed to temperatures below recommended ranges. In the literature review of 45 studies, another interesting find was the proportion of vaccine shipments below recommended temperatures – It 38% in developed countries, as compared to 19.3% in their developing counterparts. All of this means a health-hazard waiting to happen as the patient populations haven’t been adequately inoculated. Apart from resulting in wastage of precious resources.

While lapses in the perishable supply chain is a big concern, an even bigger concern is the number of freezing incidents that go undetected. Examples of such lapses that resulted in disease outbreak as the vaccines had reduced potency –

  • Measles outbreak in Micronesia (2014), a country with a history of cold chain breaches during transportation,
  • A spike in cases reported for Hepatitis B during winter months in Mongolia. and the
  • In the United States, a sharp rise in pertussis rates in health regions with higher percentages of refrigerators with frozen temperatures.

Time and distance are the twin challenges when managing cold chain logistics for the transportation of fresh food perishables

Traditionally, most of the systems managing cold-supply chains in today’s globalized economic systems are centralized in nature, i.e. power emanating from the centre, or from a single source or a single company capable of dominating the proceedings. The new technology of linking digital blocks in an unbroken chain of virtual addresses is being pitted as the panacea for present-day administrative problems as well as for interventions to automated systems by humans. The relatively popular tech has immense potential for data and informational transparency.

Academic and Industrial Responses

The past few years have witnessed rapid advancement in the application for the Internet of Things (IoT). Many of the leading industry experts and researchers are considering the application of IoT along-with auxiliary technologies for realizing a traceable and transparent perishable supply chain. The efficiency of a traceability system (Folinas et al., 2006 (9)) depends on its ability to track and trace each of the logistics units and individual product. Such an ecosystem enables continuous monitoring, right from primary production, to the transportation and its eventual consumption. Similarly, Shanahan et al. (2009) [10] suggested an IoT-powered (RFID) framework for beef traceability, right from the farm to slaughterhouses and up-further in retail.

Another set of researchers assessed the potential benefit of blockchain technology in the manufacturing supply chain. Abeyratne & Monfared (2016) [13] pointed out that the inherent characteristics of blockchain technology (distributed ledger, immutability, and absolute authenticity) foster utmost trust through the transparent and traceable transactions of all data, goods, and financial resources.

Conceptualizing a blockchain-based, distributed-database and IoT-powered cold-chain system

Presented below is a model cold-chain system that’s decentralized and distributive in nature, and uses the Internet of things (for eg – GPS, RFID, WSN) for collecting and transferring information on the blockchain technology. For storing and managing all relevant data of products in the perishable supply chain, the immutable blockchain technology and the application of smart contracts for automated processing of predefined terms and conditions with utmost authenticity. All of the stakeholding parties from producers to manufacturers, suppliers to distributors, and even retailers, consumers and certifiers perform critical functions of members in the proposed blockchain-based supply chain ecosystem. Each of these members is capable of adding, updating and checking the product information, depending on the privileges and pre-defined rules for information stored within blocks. RFID tags (Internet of things) attached to each of the cold-chain product are unique digital cryptographic identifiers, which connect these physical items with a virtual identity stored on the distributed ledger. Every products’ information profile is represented in the form of a virtual identity on the blockchain.

The Unbreakable Vows: Sanctioned by Smart Contracts
Every ounce of data is stored on the blockchain and is visible for any of the members to access and read. Such a traceability system is governed by a set of rules, basically coded information which itself is stored on the blockchain. The pre-defined rules dictate the functioning and the interactions that the users can have with the system. How data is going to be shared among the users is again outlined by these rules. And that’s not all! Apart from deliberating the system and auto-fulfilment of contracts, these ‘unbreakable vows’ that have been once stored on the blockchain cannot be altered without receiving prior approval from every node (block of information) via mass-broadcasting to all of them.

Ensuring Traceability and Transparency

  1. Registering and Updating – Stakeholding parties register themselves as a system user through a ‘registrar’, which then provides these members with credentials and unique identity. Post the registration process, public and private cryptographic key pair are generated for each of the member-user. The public key is for identifying the identity of the user, while the private key is for authenticating the user whilst interacting with the system. Under such a scenario, products are digitally addressed by users as and when they are updated, added, or exchanged with the next user, but only in the downstream position of the supply chain.
  2. Storing – In the proposed perishable supply chains, only authenticated users who have access to a particular link and have received the product are capable of adding new data in the product profile using their private key. Transfers of products from one user to another necessitate the authentication with the means of a binding digital contract. The details of the transaction would be updated on the blockchain. Subsequently, the system processes this data and updates the information in the product profile on an automated basis. This allows users in the system to be able to share the status of the products at any time.

Data that cannot be changed
Every IoT-powered sensor in the ecosystem would have a unique identity. So whenever any information is transferred to the blockchain, it gets stored and can never be altered from the ledger for sake of evidence and certainty. Having said that, the proposed perishable supply chain has scope for verification and inspection of information by the delegated authorities and other third parties. The makings of a decentralized, chain-of-custody system. In addition to this, member-users also have the privilege of checking and inspecting product information, as and when they receive or are about to transfer it to further participating member-users. In the event of any discrepancies between the product’s digital profile and its real-life attributes, members flag an alarm and the automatically pinpoints the lapses in the supply chain while adjudging the responsible parties at the same time.

And the Authorities are still relevant
Even, in theory, an idyllic decentralized and immutable supply chain system requires certifications, audits, and third-party authorities. The only difference with traditionally tech-based supply chains is that the authorities also have to get registered with a digital profile on the blockchain. The participating authorities would then be able to verify any user’s identity and behaviour. The results would be publicly recorded on the blockchain for all members to see.
Presenting a working example – Certifiers and third-party authorities would make production facility visits, and inspect for whether relevant rules and regulations are being adequately met. Post-verification, the member-users and product profiles would be digitally updated with the signatures from the authorized organizations. And that part which ensures maximum transparency is the publication of all data for everyone to view. The premise being – the more the eyes, the lesser are the chances for lapses in the safety of food items.

The proposed blockchain-based and IoT-powered perishable supply-chain significantly improve efficiency and transparency, in theory at least. The decentralized and publicly-staked system can deliver real-time information to all of the participants on the safety status of food products at all times. And blockchain’s immutability disallows any fraudulent modifications to the data. Consequently, such a powerfully distributed information system would bring-in more secure, distributed, transparent, and collaborative perishable supply chain for today’s globalized economy.

IoT and Blockchain in Perishable Supply Chain

One of the promises of ‘immutable’ blockchain is the removal of human-error from governance, the agency which was single-handedly responsible for the biggest of historical blunders in the past century or so. In theory, blockchain is a digital entry of records in ‘blocks’, with each of the next-block attached to the previous one to form an unending series of chain. Storing the data on a blockchain not only provides a single view of the truth but also prevents data from ever-being falsified. This, in particular, is of great interest to cold chain experts and stakeholders.

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Modern-day supply chains have resulted in the creation of a globalized world of inter-connected commerce, far beyond anything that the previous generations could have imagined. Indeed the very marvels of global supply chain and logistics industry are providing impetus to growth through trade and commerce, which in itself is fuelled further by consumption and knack for market production. But with all this comes unprecedented complexity, featuring cooperation between multiple parties for transportation of goods around the globe. Supply Chain and Logistics industry faces numerous challenges of maintaining authenticity, visibility into the origin, and asset handling as they cross organizational boundaries.

Traversing multiple geographical (international) locations and spanning over hundreds of stages, contemporary supply chains extending over months depending upon product often include a multitude of invoices and payments with several individuals and entities involved. Blockchains technology with all of its use cases has the potential to transform today’s complex supply chain and logistics industry.
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The blockchain is a fairly new technology and that too of a disruptive nature. Companies around the world are curiously probing the conceptual implementation of blockchain technology’s use cases for enhancing business capacity. The technology is theoretically capable at least of extending any company’s digital transformation beyond its four walls, and into the processes, it shares with suppliers, customers and partners.

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Collateral Management Solution Using Blockchain

In the last few years, we have witnessed a few biggest frauds in the banking and financial sector worldwide. Either with $639 billion in assets and $619 billion in debt, Lehman’s bankruptcy filing or the $1.8 billion Indian bank loan fraud in recent years was the big eye-opener. Federal Services Royal Commission (Australia) found that the Home Loans were being given based on fraudulent documents and recently, CNBC has reported* Mortgage fraud risk jumped more than 12 per cent year over year which measures six fraud indicators: identity, income, occupancy, property, transaction and undisclosed real estate debt.

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