While supply chain traceability has been touted as one of the more beneficial use cases of blockchain technology, one expert from big-four consultancy firm PwC argues that fraudsters may still be able to falsify the origin of products.
Craig Heraghty, leader of agribusiness at PwC, recently told Australian news outlet ABC that there was a “worrying trend” emerging in the industry where consumers were only being given “the illusion of traceability” through blockchain technology.
In theory, blockchain-based supply chain tracking can trace the movement of goods from the farmer or producers all the way through transport to the supermarket, and eventually to the end consumer.
However, some fraudsters stand to benefit from passing low-quality produce off as better products – for example, organic or sustainably certified – to command a higher price for their goods. In turn, this devalues produce from genuine farmers.
To do this, fraudsters simply need to copy a QR code or barcode used to verify product authenticity on the blockchain. Expanding on this, Heraghty commented:
“The weakest link in the chain is not blockchain or any technology, the weakest link is the piece of sticky tape that puts the label on the package.”
Heraghty urged blockchain supply chain companies to think like fraudsters, who will always find the simplest ways to get around supply chain tracking despite complex and advanced technology solutions.
To combat this, blockchain companies and grocers will need to work together to come up with solutions that prevent the physical tampering of goods before they reach supermarket shelves.
Tamper-evident packaging solutions
The good news is that many companies are now exploring tamper-proof physical packaging and labelling to complement immutable blockchain technology.
American manufacturing company 3M has explored tamper-evident prototype labels for pharmaceutical products that are traced on the blockchain. With the help of Microsoft Azure’s blockchain infrastructure, 3M can print and track labels which visibly change if they’ve been altered.
If similar labels could be produced for food packaging, it could revolutionise the effectiveness of blockchain-based supply chain tracking.
Grocery sector leads blockchain supply chain adoption
Despite these difficulties, Coin Rivet reported in August that the grocery sector is still responsible for almost half of all blockchain supply chain projects, according to research by University College London.
Solving the challenge of food tracking would have a profound effect on the cost of global food fraud, which costs an estimated $30-$40 billion worldwide each year.
Ultimately, PwC and Heraghty praised grocery and agricultural companies who were deploying measures to trace their supply chain and increase transparency through blockchain technology.
However, his warnings prompt broader questions about whose responsibility it is to solve these instances of fraud.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.