Traceability needs to be Decentralized and Free

Traceability of items through a business’ operations should be part of the normal operations of any warehousing or inventory system.  The system should be built in a way that there are no additional steps necessary in order to provide all the information about the origin of the product to the consumer, or the business down the supply chain that is being supplied the products.  To truly supply the consumer with detailed information about the environmental impact of their purchase, traceability needs to be widely adopted throughout the supply chain, and I believe for this to be done, traceability should be decentralized and free.

There are two general ways in which traceability (of individual products) is implemented today.  The first is to use an external service to that identifies each of the unique items and is supplied information by actors from across the supply chain.  There are companies which provide this service and often focus on an area where there is potential for illegal activities, or a desire for a detailed story by the consumer.  The second method of ensuring traceability is the use of the GS1 serialization process and each company can add an additional number to a product code which uniquely identifies the unit.  This latter technique has been widely applied in the pharmaceutical industry due to regulatory requirements. 

But I think that widespread adoption of traceability in the supply chain depends on it being part of the normal operations of the firm.  It needs to be cost effective, or in the best case, add no additional costs at all.  I believe that this is possible as the fundamental process in ensuring that traceability happens already exists!  It is the creation and sending of a packing slip.  For pretty much every shipment, a list exists of what is in that shipment.  What needs to be done is to include information on the origin of each item when it is created or received into the facility, and to have this information kept with the item during its time within the facility, and then this information can be transferred to the next party in the supply chain.  This last step is a detailed, electronic packing slip.  If information was kept with the item throughout each facility, traceability of items can be ensured.

And this would be free, as long as the company is using a Warehouse/Inventory Management System that can pass along this information.  In essence, instead of using a traditional ‘inventory’ management system, companies switch to an ‘entity’ management system and all the information about each piece is automatically kept.  There is additional processing of items, but this handling can be offset by savings from having a more efficient system.

Why it needs to be decentralized

And I argue that companies would be more willing to pass on information in this way rather than through a third party because here they are in complete control over what information is being passed along, and to whom.  Additionally, it then becomes clear what needs to be paid for, and the act if passing along the information that you have should be free to a company, the value added service is proving that that transaction took place.  This is where there exists a space for blockchain applications that can prove a transaction took place in the way that it was claimed, which can be useful for industries and products where counterfeiting or illegal practices are common.  But for the majority of products using blockchain is a little bit if overkill.  After all, blockchain transactions go to a lot of effort to prove that something intangible exists and isn’t being duplicated (money).  Physical items don’t have this issue, you are already holding the item, its uniqueness does not have to be proven, you just need to have proof that this particular item was transferred from the parties that claim to have transferred it.

Claiming that an item is from a particular supplier should be free, proving this is something that should be paid for in addition to existing costs.  And all this should be possible to be done from the normal business software that is used in a firm. 

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