Blockchain in FMCG supply chains

Blockchain is a technology that can publicly validate, record, and distribute transactions in encrypted ledgers that cannot be altered or changed. In this blog, we look at how Blockchain can be applied to FMCG supply chains to improve efficiency & traceability, and increase compliance

Here is a great illustration of how a transaction is created by McKinsey:

Not only is this technology great for applications where increased security is a must, but it also has the potential to increase transparency and end to end visibility of the supply chain.

What are the applications of Blockchain in FMCG supply chains?

There are 2 key aspects to supply chain transparency:

  • Visibility: Accurately identifying, collecting and classifying data from all parties/links in the supply chain
  • Disclosure: Ensuring only relevant information is disclosed to the viewer, depending on their approval access internally and to external stakeholders

Implementing blockchain technology for supply chain contexts solves for both aspects providing:

Improved communication and collaboration

Due to its nature, blockchain technology improves communication and facilitates collaboration among all parties in the supply chain. Greater traceability and transparency eliminate waste, duplicate orders, invoice fraud, payment issues and unapproved spend/orders too.

Transparency in sourcing

The nature of this technology makes it easier to verify where materials and goods come from and how they pass through the supply chain. This also reduces counterfeiting of products including premium/super premium alcohol, prescription drugs and luxury goods.

Sustainability & efficiency

Using Blockchain in FMCG supply chains also results in efficient gains. Using blockchain in conjunction with other technologies results in more efficient stock holdings, reducing waste. Also, blockchain enables companies to go paperless as it relates to their supply chain and the immutable nature of the technology enables data to be stored efficiently for future teams to refer to.

Effective product recalls

Blockchain technology enables a more transparent and traceable supply chain, enabling manufacturers to locate affected products quickly and efficiently, thereby, increasing the effectiveness and efficiency of recalls. Contamination & quality issues can be traced to specific lots of batches and also the relevant suppliers identified by using this technology.

Compliance

Increased transparency in supply chain due to blockchain adoption also results in a more sustainable and compliant supply chain, by enabling sustainability & ESG tracking. Not only this, combining this with QR codes has the potential to increase visibility of sustainability credentials for consumers, directly impacting sales.

Many companies are already exploring the benefits of leveraging blockchain technology in supply chains, such as smart contracts, purchase order payments and supply chain tracking.

To learn more about the applications of Blockchain in supply chains and listen to how a start-up in this space is changing FMCG supply chains, tune in to the Salesbeat podcast next week on Tuesday, 20 December 2022.

You can also listen to salesbeat podcast to learn more. Stream now!

Innovation & timing – Tesco’s virtual stores

South Koreans are known to have the longest working hours in the world, with executives often too busy to go shopping for grocery at a traditional store.

Tesco, the UK giant, introduced “virtual stores” in response to this. These ‘stores’ are essentially a display of products on the walls of metro stations and bus stops. Commuters, especially those who are tech-savvy and time poor could scan the QR codes of products on display with their smartphones, and place orders while waiting for their trains or buses.

This initiative was so successful, they decided to launch this in the UK too.

Shopper in Korea buying groceries at Tesco’s virtual store

The UK launch

They decided to trial the first store at Gatwick. 

On 6 Aug, they launched UK first virtual store for passengers who were leaving on holidays holidays. This gave holiday makers leaving from Gatwick North terminal the opportunity to order milk, groceries and other essentials that they needed when they got back from holiday. No one likes coming back home to an empty fridge!

Shopper buying groceries at Gatwick North Terminal, departures

Passengers/shoppers were able to browse basic necessities ranging from milk and bread to toilet paper displayed on vending machine sized screens. Through the app, they could scan bar codes/QR codes underneath those products, buy the products and arrange for these to be delivered on their day of return. 

According to The Drum, Tesco’s internet retailing director Ken Towle, said that the virtual store “blends clicks and bricks” as it brings together the “love of browsing with the convenience of shopping online.”

Right product, Wrong time

While this was a great initiative that should have succeeded, Tesco were ahead of times with this launch. Especially for the UK market. While shoppers in Korea were all tech savvy and used to e-commerce, shoppers in the UK were more inclined to want to go to stores and shop in person. 

So the roll out of any further virtual stores were shelved, unfortunately! 

2020 lockdowns accelerated the adoption of e-commerce and technology (scan & go) in retail in the UK. Had Tesco launched their virtual stores now, they may have seen very different results.