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The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Op-Ed | Blockchain Can Bring Transparency to Supply Chains

The open source, decentralised database blockchain allows consumers to check the authenticity and ethical standards of their products, says Dr. Jutta Steiner.
A chain | Source: Shutterstock
By
  • Dr Jutta Steiner

LONDON, United Kingdom — Every physical object we buy comes with a story: a journey of people, places and materials. But these stories often remain hidden in sprawling, complex supply chains and the information presented to consumers is rarely more than marketing that can mask sad truths.

Now, more and more consumers are demanding genuine transparency on where and how their products are made. Recent regulation in the EU requires companies to publish more information about their supply chains, with measures to ensure adequate punishment for those who do not. But even with increased consumer awareness and new regulation, ensuring the authenticity and transparency of a product’s chain of custody has proven difficult.

A new technology, called blockchain, has great potential to fix this. A blockchain is a shared database that is secure, open, auditable and runs without a single centralised operator. Specifically, blockchains enable users to transfer digital property to each other across expansive networks in a way that is safe, verifiable and prevents any party from altering or challenging the legitimacy of the information being exchanged, making it a promising tool for bringing greater transparency to complex global supply chains.

The key to transparency is the decentralisation of data, meaning no single party can control what is seen. Indeed, we have long tried to entrust a range of third parties with the running of systems tracking and overseeing supply chains — without success. The truth is, no single third party can make supply chains more transparent. Having one party (or a small collection of cooperating parties) overseeing this creates an inherent bias and weakness in the system. If that party is the brand itself, or the most powerful actor in the supply chain, there is a major conflict of interest. This could lead to selective disclosure since the party monitoring the information is also responsible for its bottom line. If supply chain data were gathered by a third party, this party would have to be totally disinterested, yet incentivised enough to maintain the system, making them and their operations a vulnerable target for bribery, social engineering or targeted hacking.

On the other hand, using blockchains will bring transparency to supply chains, allow consumers to make informed purchases and empower governments to quickly and easily request reliable information related to even the most distant supplier. Indeed, blockchains will entirely change the game for certifying, tracking and tracing the origin of our goods. Such a system can provide confidence around key attributes of purchased goods — such as ethical standards, origin and authenticity — all easily verified through a smartphone-readable QR-code or RFID tag embedded in the label of a t-shirt or engraved into the underside of a piece of jewellery.

Huge benefits for customers will emerge from the secure guarantee of a true chain of custody, along even the most complex supply chains, at a very low cost. And, as we look to the future, if we are to avoid the mistakes of the past that have led to the on-going environmental and societal atrocities caused by opaque supply chains, ‘Made in’, ‘Made with’ and ‘Made by’ must all become the values by which products are judged. This paradigm shift is already coming, but it will be blockchain technology that truly sparks the revolution.

Dr. Jutta Steiner is the chief operating officer of Provenance.

The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.

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