- The University of Auburn partnered with global brands to test coordinating supply chain data using blockchain technology.
- Participating retailers and suppliers recorded the movement of hundreds of thousands of individual products in a combined, permissioned Hyperledger blockchain.
- Adopting such a system could lead to billions in savings for the global retail industry.
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Retailers and their suppliers lose a combined $181 billion to chargebacks, unaccounted inventory, and counterfeit goods each year, which can be attributed to a lack of supply chain visibility.
In a white paper released April 3, 2020, the University of Auburn RFID Lab detailed findings from a proof of concept showing the viability of using RFID tags and blockchain technology to help combat such scourges.
In partnership with major brands like Nike, Macy’s, Kohl’s, Herman Kay (owner of the Michael Kors brand), and several others, the Auburn RFID Lab used IBM’s Hyperledger Fabric to develop a permissioned blockchain that allows retailers and their suppliers to effectively trace individual items from creation to final sale as they pass through distribution centers, stores, and other weigh stations.
The proof-of-concept phase of their Chain Integration Project Initiative (CHIP) employed three tools: a web app used by participants to submit and retrieve supply chain data, a blockchain client used to verify permissioned input and output from different supplier-retailer pairs, and a blockchain layer to actually store the data. Data was standardized on the web app to ensure tagged items could be correctly matched on the blockchain.
Over 223,000 items were written to the blockchain among all partners between January and December 2019, including over 147,000 from Nike, which has had persistent issues with counterfeit goods. Some of the items tracked included hooded parkas, bras, and children’s shoes. The data was generated through automatically scanned RFID (radio frequency identification) tags across various manufacturing plants, distribution centers, and retail outlets.
While identifying the proof of concept as a success, the white paper identified a number of areas for improvement. This included optimizing transaction speeds to accommodate the large volume of data being sent by participants and the need to standardize how item data is codified before it’s submitted (to eliminate conversions after the fact).
Auburn also emphasized the need for participants to move away from using centralized services like those provided by the university to maintain the blockchain and standardize data, stating, “Regardless of the solution selected for the next phase of the initiative, every participant (i.e., end users and solution providers) will be expected to take on a more significant, self-sufficient role within the blockchain ecosystem.”
Most participating suppliers and retailers only currently have the capacity to monitor a small section of their overall supply chain using RFID tags demonstrated in the proof-of-concept. Considering the potential savings generated from increased supply chain visibility and coordination, however, it seems like only a matter of time before such programs move out of the testing phase and into comprehensive service among the world’s top retail brands.