The challenge for the businesses of the future: blockchain for Made in Italy

Intro.

Let’s start this brief journey with a bit of history: the creation of Bitcoin in 2009 also saw the official birth of blockchain technology, which in recent months has been increasingly under the spotlight of technology newspapers, and not only, all over the world.

The birth of distributed ledgers (DLT) can be linked to the development of the technology invented by Satoshi Nakamoto.

The more recent use of blockchain technology is for validating logistics traceability data and the origin traceability of a food supply chain.

Blockchain applied to Made in Italy.

Headlines on headlines overlap in tabloids and various blogs: “Blockchain at the service of Made in Italy”.

But the question that many analysts ask is this: will blockchain be the technology that will allow us to safeguard the agri-food supply chain at the expense of the numerous counterfeits against quality Italian products?

For companies, the main challenge in adopting blockchain technology seems to be strategic.

This type of technique, in fact, is a process that must provide for medium/long-term planning: in an initial phase, the gap between efforts and benefits can also be high, however, with the increase of network nodes, the increase of suppliers who want to become participating actors in the supply chain, not only the desired result is achieved but also future scenarios that were previously unimaginable are opened up.

Blockchain use case applied to Tuscan olive oil.

In this context, personal experience regarding the world of tracing the supply chain of high-quality Tuscan extra virgin olive oil can be helpful.

In 2018, the application of blockchain technology to the traceability of extra virgin olive oil made it possible to enjoy some of the greatest advantages that blockchain offers when applied to a context of this type:

• Unifying the exchange of information among the actors of the supply chain;
• Reducing the work time of users, resulting in a lower possibility of human errors;
• Simplifying the management of data from internal operational processes;
• Externalizing the on-premises hardware system to the distributed Cloud;
• Creating a best-practice that involves the main actors of the extra virgin olive oil supply chain.

Through the various channels of the analyzed blockchain, it is possible to execute queries and obtain in response all the information regarding the technical sheet and tasting sheet of the product, the code and quantity of the produced batch, the lot code of the blend of extra virgin olive oil of the packaged product, and the entire archive of the farms, mills, and steps that the raw material has gone through.

As a blockchain, it is also possible to view the transaction register for the product, starting from the initial order phase by the customer, with evidence of all the logistical steps of the shipment of the goods.

Inside the engine are the various “gears,” or Smart Contracts, which autonomously manage the exchange and validation of information among the actors of the supply chain.

For all the accredited participants in the supply chain on the blockchain, a computer discipline has been established to which they must adhere.

Let’s make a practical example: if a supplier sells counterfeit products, through the internal traceability system of the blockchain, it is possible to identify the problem and, of course, stop the business with the supplier. These pieces of information that were previously endogenous, therefore written only in the internal company ERP, have now been made exogenous thanks to the application of blockchain to this context.

The supplier will write the information directly in a shared, public, and immutable environment, and therefore, the data will be visible to all the actors in the supply chain.

The opposite case is also true. If a supplier sells a guaranteed and certified product, the traceability system of the blockchain can confirm such information, and using the blockchain, there is double data validation. The supplier writes the information, and the various participants subsequently validate the data in an unalterable manner.

Another important aspect deriving from the concepts and tools inherent in the blockchain allows delegating the decision-making process to the Smart Contracts present in the platform, making the entire company’s IT system even more efficient, reducing human work time and operational costs.

These evolutions are taking place step by step within the chain. In the future, using a smart contract, it will be possible to entrust the blockchain with the management of the entire production plan (from the need for supplies to the precise management of packaging relationships).

Evolution.

Analysts predict that within a few years, the traceability data to safeguard “Made in Italy” will be written on the nodes of blockchain technology, so it is not only plausible that this technique can help in multiple areas, but it will be the main challenge for companies that have their eyes set on the future.

From my point of view, as a blockchain technology scholar, I have developed a completely personal idea in this field: my personal experience leads me to believe that this type of technology is not simply a method or an algorithm, but an entire management process that starts from an idea and evolves into a dense network of nodes and actors who share strict rules for data validation.