Chinese e-commerce giant Alibaba is piloting a blockchain-based solution to track supply chain of their food division, to combat food fraud. The pilot is being done by the company’s Australia and New Zealand branches.
Food fraud is a common criminal activity that costs the global food industry US $ 40 billion every year. Estimates reveal that 40% of the companies in the food industry struggle to detect food fraud with their existing processes, methods and tools. Another alarming estimate is that 39% of global food companies think that their food products are easy to counterfeit.
Supply chain for most industries have seen enormous increase in complexity, and the food industry isn’t an exception. The current technology solutions don’t provide an end-to-end supply chain traceability, and the transparency suffers as a result of that. Consumer confidence on the global food industry’s ability to combat food fraud is adversely impacted due to lack of transparency.
Alibaba‘s solution to this problem is built on the blockchain technology. Blockchain ensures decentralization by design, because computers on the network, called ‘nodes’ maintain a shared version of truth. Every node has completed information on the blockchain, and there’s no central server.
Blockchain also ensures immutable record by design. No existing block records, i.e. blocks, can be deleted or modified. Updating a blockchain requires adding a new block, and the consensus mechanism ensures that only the nodes that provide evidence of very significant number-crunching can add a new block, and majority of the participating nodes need to approve it. Hacking a blockchain isn’t economically viable.
Alibaba is piloting their solution in Auckland, New Zealand. The blockchain-based Food Trust Framework is being used, and it’s being included in Alibaba‘s T-Mall platform. The partners participating in this pilot are the following:
- Australian healthcare supply firm Blackmores;
- AusPost, i.e. Australian Postal service;
- New Zealand-based dairy product maker Fonterra;
- Multinational professional services giant PricewaterhouseCoopers (PwC);
- Chinese logistics firm Cainiao.
Alibaba, headquartered in Hangzhou, Zhejiang, China isn’t the only big business looking at blockchain for supply chain assurance. There are others, for e.g.:
- Norway-based Risk management company giant DNV GL has partnered with VeChain to power their risk assurance business with blockchain;
- German automaker BMW is using blockchain to ensure that they source cleanly procured cobalt for the batteries in their electric vehicles;
- American retail giant Walmart has decided to use blockchain for the supply chain tracking of their live food business.
