Blockchain technology can be used to reliably trace entire supply chains, preventing counterfeit drugs and foods from making their way to consumers.
Supply chains are long, often spanning multiple continents, complex, and dotted with blind spots. These opaque gaps leave room for unethical agents to interfere with the supply chain. If you were running a food company, this would mean you might not really know where the raw materials you source really come from. For instance, they could be coming from environmentally polluting vendors or outright unethical businesses from regions notorious for employing child labor. The consequences can be even worse for compromised pharma supply chains, as counterfeit medications could range from substandard to potentially lethal.
Blockchain technology can help companies address these gaps in their supply chains. Imagine the blockchain as a public record of transactions or movements along a supply chain that all stakeholders can access to see what the others are doing with it. The data is recorded over decentralized servers on a network to ensure all stakeholders have access to data at all times. Moreover, records on the blockchain are cryptographically secure, preventing malicious players from accessing the data. Another key feature of blockchain technology is its immutability. Any record once logged on the blockchain cannot be altered in any way. This is what makes the blockchain particularly attractive for supply chains as it means that audit trails cannot be manipulated.
Establishing the origin of food and ingredients
With growing awareness of the human carbon footprint, studies show that more and more consumers are willing to pay more for sustainably produced food items. In response, agriculture and food companies are increasingly adopting sustainable practices that reduce waste as well emissions. However, it is often hard to validate the emissions, or reductions thereof, as food companies source ingredients from multiple vendors, often spread globally.
Danish food biotech startup Nature Preserve leverages blockchain to enhance the sustainability of agri-food businesses and identify inefficiencies in their workflow. Alex Ingrisano, COO of Nature Preserve, told me that they “track precisely where food waste happens and of what type, making it easy for companies to quantify and find a use for side streams.”
In addition to effective waste utilization, this also enables the assessment of the sustainability of the whole supply chain. “We gather qualitative data during the onboarding process, including how you process, how you transport, and what pesticides you use, then inventory movements get registered. This allows us to automatically calculate the climate impact, such as carbon emissions. A movement or a process [along the supply chain] generates a certain amount of carbon emissions that can be measured. We keep tabs on that process or movement and we can objectively measure what impact it has.”
Other consumer trends in the food industry include vegan diets, organic produce, ethically sourced ingredients, as well as traditional preferences like halal or kosher food. For a processed food manufacturer, keeping track of such a large number of different requirements across dozens of vendors, if not more, is an uphill task. Blockchain holds immense potential in helping food companies validate the integrity of claims of the food being vegan, kosher, organic, ethically sourced, etc., depending on their requirements. For example, once a batch has been certified at the source to be organic, no intermediate player can transfer the certificate to another batch of non-organic food without alerting other stakeholders.
Preventing counterfeit in drug manufacturing
Counterfeit drugs can enter the market at different points and cause hundreds of thousands of deaths annually as well as loss of reputation for genuine manufacturers. The proliferation of online stores selling drugs is further exacerbating the problem.
It is common for drugs to be manufactured at one location and packaged at another. To establish true proof of the authenticity of a drug, the blockchain needs to record data related to all steps of drug manufacturing. This is why blockchain startups are now going beyond packaging to validate process data and raw materials as well. Needless to say, such solutions extend traceability to other biotech products such as lab consumables or bioreactor components.
Irish startup Servblock is building a blockchain-based platform that digitizes and automates the process of material verification and tracing. The company tracks materials across the manufacturing and supply chain using sensors and labels to track each component.
“Biotech companies need to do computer system validation,” ServBlock founder John Ward told me. “We have to validate their computer’s components, even the processes get validated, as well as the maintenance of the data and the signature logs so that we can identify who has made these changes through an audit trail.”
Challenges and opportunities
Scalability is one important aspect preventing biotech and pharma companies from adopting blockchain for traceability. “The cost of maintaining and running blockchain nodes is expensive,” Ward explained. “Then you also have the fact that [blockchain] is public-facing, but a lot of pharma companies value their privacy and don’t want their data being stored in a manner which is not accessible to the outside world.”
This is a massive challenge as all stakeholders in a pharma supply chain, which often includes competitors, would have access to the data on a blockchain network. The fear of losing competitive advantage by open sharing of proprietary data may deter some pharma companies from participating in such networks. This is also problematic for food manufacturers that hold on to their formulations as business secrets. The development of new privacy-preserving blockchains is addressing this concern.
For both pharma and food tracing, most blockchain solutions use physical tags or sensors to track products, generally on the packaging, or paper-based documentation when tracking processes. This is not helpful if the original raw material or piece of information was tampered with, to begin with. Companies are increasingly augmenting blockchain solutions with analytical techniques. Norwegian biotech Orivo, for instance, uses fingerprinting technologies to validate the origin of food and feed ingredients — information that their partners then record on their blockchains.
In particular, Orivo applies this technology to analyzing chemical fingerprints in seafood products. “We can say which species it is and where its geographic origin is, based on our reference database. The fat composition of a fish is different based on the species and what it feeds on or what temperature it lives in,” said Erik Fuglseth, founder and CTO of Orivo.
He emphasized that, before it enters the blockchain, any piece of data is still susceptible to fraud or disingenuous claims. “Blockchains are immutable, but if the information there is already fake, then you have fake information going all the way.”
However, traceability based on blockchain alone still has its benefits too. Beyond keeping a record of the past movement of goods, blockchain can also incentivize working towards shared goals. By tracking transactions along the supply chain, blockchain solutions can encourage stakeholders to work towards goals such as reducing time spent in transit or lowering the carbon footprint.