Retail Proof-of-Concept Proves Viability of Blockchain for Serialized Data Exchange
As a consumer, you are probably familiar with the “track my package” function that most major couriers offer. Whether your package is being delivered by FedEx, UPS, or the postal service, you can punch in your tracking number and see exactly where that package is, where it’s been, and when you should expect it to arrive at your door. However, the products inside of those packages aren’t exactly an open book. The majority of goods that we consume travel hundreds, if not thousands, of miles to our doorstep or to the store down the street, but oftentimes companies can’t tell us exactly where their goods came from or where they’ve been since. Aside from those last few miles, consumers and companies are blind to the entire lifecycle of most products.
This is a common narrative at the intersection of blockchain and supply chain, and there are two main reasons why most companies can’t tell you a step-by-step story for each of their products. The first reason has to do with identity. FedEx can give you the history of your package’s final mile because each package is assigned a unique identification number. However, that ID only relates to the package, not the product inside, and outside of the FedEx ecosystem, that identity doesn’t do you a whole lot of good. Contrary to what most people think, barcodes don’t assign unique identities to each product either. Rather, they specify the type of item, like a women’s small cardigan or a 12 oz can of diet soda. Consequently, there could be millions of items that have the exact same barcode information, which makes it impossible to tell identical products apart.
Many companies have already started addressing this item-level identity issue by embedding RFID tags in product labels or printing QR codes onto product packaging. These two methods, along with other serialization solutions like NFC tags and 2D data matrices, allow companies to assign unique digital IDs, also known as Serialized Global Trade Identification Numbers (SGTINs), to every single product that they produce. As you can imagine, this degree of serialization creates massive volumes of incredibly rich data that can be used to enhance consumer experience, streamline supply chain operations, and enable more granular visibility throughout the value chain.
This brings us to our second problem, which is tied to data exchange. Data sharing between businesses today is largely limited to high-level business documentation exchanged via EDI. Furthermore, most EDI networks are not equipped to handle the billions of additional data points generated by serialized products, and even if they were capable of processing all of this data, cost would be a major concern if current pricing mechanisms were kept in place. So, for the companies who have already invested in identification technology, the only options for sharing serialized data with trade partners are managed server solutions or proprietary data pipelines, neither of which scale across an entire industry.
Surprisingly enough, retail has one of the highest serialization rates of any industry, with billions of products already having unique digital IDs. Lululemon products contain RFID tags, Nike shoes have QR codes, and Hot Wheels cars have embedded NFC tags. Apparel and footwear alone are responsible for over 14 billion RFID-tagged products across the globe today, and that number is rising rapidly year over year. Consequently, retail participants are intimately aware of the sad state of serialized data sharing, so, in early 2018, twenty-three suppliers, retailers, logistics providers, and technology partners came together at the Auburn University RFID Lab to determine whether or not blockchain could be the solution to their data exchange problems.
This initiative was named CHIP (an acronym for CHain Integration Project), and it was centered around one question: “can blockchain serve as an effective means for serialized data exchange?” Corporate partners were divided into three subgroups focused on business objectives, data standards, or privacy & security, and, after several months of discussions, the collective group was able to determine the business and technical requirements for the proof-of-concept solution. Five brands and retailers chose to participate in the proof-of-concept: Nike, PVH Corp., Herman Kay, Macy’s, and Kohl’s. Each company committed to sharing serialized data streams from various points along the supply chain ranging from source to store, and these data streams had to be transformed into a common standard before being written to the blockchain. For the proof-of-concept, the group decided to build a Hyperledger Fabric-based solution and implement EPCIS as the core data standard for the network.
Each partner that participated followed a series of sequential steps. First, they had to select the serialized data systems that they wanted to plug in to the proof-of-concept and identify the solution providers that supported those systems. Secondly, they had to standardize their data, which they accomplished independently or with the help of the team at RFID Lab. Lastly, they had to integrate their standardized data streams into the blockchain solution constructed by the team at the RFID Lab, which they accomplished through a series of manual uploads or through API integration.
Within the network itself, each partner pair was organized into a channel and each supply chain node was represented by a peer. Whenever a brand shipped product to its retail partner, outbound RFID systems would trigger a series of item-level transactions that would be written to the appropriate side chain. Whenever a retailer received product from the brand, inbound RFID systems would capture item-level information from the shipment and any items that matched what the brand saw outbound would be written to the blockchain. In Nike’s case, data was provided from a manufacturing point and from a downstream distribution center, with a focus on shipments between those two facilities.
Throughout the course of the project, over 639,000 items were captured by RFID systems in partner supply chains, and 223,036 of those items were written to blockchains. The difference between these two numbers is due to the fact that retailers reported RFID data for all their inbound shipments, not just the shipments related to the brands they were partnered with. Because both retailers were receiving shipments from hundreds of brands, only a small subset of the data was actually written to the blockchains they shared with specific partners.
Additional analysis focused on finding the first product written to the blockchain for each partner pair so that the items could be purchased and put on display at the Auburn RFID Lab. After analyzing the serialized data embedded in the blockchain, the team was able to identify the first products to pass through multiple touch points in the supply chain and also track down those products for purchase. The first product to pass all the way through the Nike channel was a pair of Kid’s Air Force Ones and the first product to pass through the Macy’s/Herman-Kay channel was a Michael Kors Camo Parka Jacket. The PVH/Kohl’s channel produced a Warner’s Full Coverage T-shirt Bra.
While 639,000 out of 14,000,000,000 RFID-tagged products might seem insignificant, it is a crucial step towards the next generation of the retail supply chain. Data capture systems are being deployed constantly and products are being serialized at unprecedented levels, but in order to unite the supply chain and leverage this rich data, there must be a common mechanism for data sharing. Now that the first question of the initiative has been answered affirmatively, it’s time to determine whether or not the solution can scale and help solve actual business problems.
If you’re interested in learning more about the project or the next steps for the initiative, check out the official CHIP Proof-of-Concept whitepaper here.