Supply chain transparency blockchain vs testing

Insider Takes

The industry is currently focusing much of its attention on supply chain transparency, possibly with the use of blockchain technology. While implementing blockchain at every point—from the retailer to the farmer in the field—is a nice story and admirable effort, the installation of such a system is an enormous project. But what is the initial reason to take it on?

If a brand is looking to prove the contents of its product here and now, opting to test it before use or release may currently be the much more viable option, providing insight into the product at the end, rather than attempting to track the entire chain’s every move up to that point. It is also much more economically efficient and achieves the same goal—ensuring that the interested party gets the promised amounts of active ingredients and nothing more.

By some observants in the industry and from a certain standpoint, the implementation of such a huge project as global tracking with blockchain is an overkill, an incomparable amount of work and investment with a similar effect as end-point analysis. Focusing on efficiency, one wonders who will bear the added costs of such a project? No party along the supply chain is ever welcoming of increased prices, so it is most likely to end up on the shoulders of consumers. One must ask if that’s something consumers really want … to have access to vast amounts of information of every step of the supply chain? They will most likely not even be presented with all this information, but a small snapshot of it. What the consumer needs is not more noise, nor access to heaps of data, but clarity: a short and single piece of information, a guarantee of safety and efficacy of the product. And this can be delivered through analyses of the finished product, presented by a trusted brand.

Transparency-conscious consumers may also want the ingredients to be produced sustainably and without exploitation of workers. In an undesirable scenario, this can end up being a single picture and name of a happy farmer at the origin that can very well have nothing to do with the integrity of the product. It is unlikely that a consumer will dig through actual blockchain data to prove to himself that the provided photo or video is in fact one of the product’s roots, so the potential for misleading here is too big. While such thinking may be considered pessimistic by some, it is the only way responsible brands, who have a reputation at stake, can and should approach quality. As a scientist would approach any statement—with doubt.

More than any blockchain mountain of information that few will dig into, or any heap of certificates that anyone can make, the safeguards for consumers and companies alike not to get fooled are trusted brands and testing.

Unfortunately, at least in this day and age, PharmaLinea does not believe that full supply chain transparency or trust exist yet. As such, we do not trust any new ingredient without testing it ourselves first. Credible, responsible players perform analyses of incoming materials, regardless of any given Certificate of Analysis (CoA). Our experience has taught us that we’re just not there yet as an industry. And when choosing suppliers, we think the same as many consumers would—going for the trusted brand. Why does one choose IBM, for example, as opposed to a different provider? Not primarily because its product is so much better, but because the strength of its brand doesn’t allow the company to slip up. The way such a brand is constructed from the ground up, the values it has, the set of rules and consequences it has in place … simply protect the company from bad practices. From a more monetary perspective: investments into the brand are too big for it to be able to risk ruining its brand image with small cuts. On the contrary, companies that base their brand on low prices, everlasting discounts, flashy communication, and aiming for a short and profitable run have nothing to lose with their brands; the backlash is too low and they are more likely to cut corners based on a simple financial decision.

A brand with correct values and investments into brand image is in some sense a better guarantee of product quality than any supply chain transparency system is currently able to offer. While efforts are underway (and perhaps blockchain will one day be accessible and financially feasible), at the moment it is brands and risk of test result-related backlash that talk. It is also worth considering if more efforts should be made into a different direction—more stringent end-point testing instead of complete supply chain transparency.

Blaž Gorjup is chairman and founder of PharmaLinea Ltd.