How Blockchain Empowers Transparency in CPG Manufacturing & Retail
These days, it’s almost impossible to talk about disruptive technologies without mentioning blockchain. With distributed ledger technology (blockchain) expected to exceed $3.1 trillion in “business value-add” by 2030, CPG manufacturers and retailers are looking to capitalize on blockchain’s benefits to seize some of this value for themselves. From a technical perspective, blockchain’s benefits include:
Blockchain has the potential to impact every stage of the manufacturing and retail value chain, including the supply chain. With so many ‘chains,’ it’s difficult to figure out where to start. This blog offers insight into a few of the areas for CPG/Retail where blockchain that could make the biggest difference in this industry.
Why Consider Blockchain for CPG/Retail?
For one thing, CPG/retail organizations taking an early lead in adopting blockchain will likely enjoy a first mover advantage versus competitors in the market, as can be seen in the technology vertical with companies like Uber and Airbnb.
Moreover, comparatively speaking, the CPG/retail vertical has a lower bar to pass with regulatory and compliance agencies, which may mean adoption in this market could be more accelerated and substantial, further increasing the first mover advantage.
In the Supply Chain
Generally speaking, the supply chain consists of five stages: plan, source, manufacture, deliver and, sometimes, return. For the customers of manufacturers and retailers, whether they’re B2B, B2C or D2C, the supply chain is often where transparency is most important. Blockchain offers significant benefits in this regard.
Currently, tracking the movement of goods in the supply chain is opaque and inefficient, and there are times where parties don’t know where their shipments are located. This results in lost and stolen goods, costing businesses billions in revenues and profits each year. Once shipments are delivered, recipients have no surefire way to tell if what they’ve received a match in the quality and authenticity of what they paid for and ordered.
Using blockchain-based platforms to capture, track and share supply chain data, businesses can enable real-time traceability for their products, so they know where their goods and materials are at all times. Parties can share information without fear of it being lost or stolen.
Another popular blockchain use case is counterfeiting prevention. Today, anti-counterfeiting measures are expensive and often ineffective, creating a situation that offers a safe haven for counterfeiters to input their fraudulent goods into the supply chain. As a result, retailers and consumers alike must constantly remain vigilant and on the lookout for fake and sometimes dangerous products.
In the future, a blockchain-based traceability solution will be used to stop counterfeiting dead in its tracks. In this scenario, products are tracked and traced with unique identifiers (e.g. QR codes), making it so that merchants and consumers can scan the code to make sure their products are authentic and view all sorts of data.
In Digital Marketing
In today’s digital marketing environment, brands spend money without a clear picture of which marketing investments are the most successful. Furthermore, while customers value personalization in their shopping experience, they also value data privacy and transparency, and many are cautious of retailers mishandling their personal information, especially with the recent rash of hacked or compromised customer records across the retail industry.
In the future, digital marketing platforms will be built on the blockchain, thus creating a single source of truth for data from marketing campaigns. When this happens, brands will be able to communicate directly with consumers on a blockchain-based platform. This approach eliminates the need to market through various channels and incentivizes engagement to collect data and increase exposure. Best of all, personal data is stored securely and permissioned according to user preferences. The consumer is in control of their data and can monetize it as they see fit.
Another pain point for CPG manufacturers and the retailers who sell their products is POS-based fraud and, more specifically, coupon fraud, which costs businesses billions each year.
Similar to how QR codes are used to identify products in the supply chain, coupons can be outfitted with these same unique identifiers, and their corresponding data can be stored on a secure, tamperproof distributed ledger, enabling instant verification for retailers upon consumer use and eliminating the need for third-party clearing agents.
Finally, while blockchain and bitcoin are very different from one another, there’s no doubt that offering an option for users to pay with blockchain-based payment methods like bitcoin and other cryptocurrencies increases flexibility and could potentially attract additional customers. EPAM offers BitPay integrations for SAP Commerce Cloud and Salesforce Commerce Cloud to accelerate this process.
For more on the use cases described above, visit our blockchain in CPG manufacturing and retail landing page to explore for yourself!