Blockchain - Track and Trace Update

As introduced in our October 2018 Newsletter Bertelsmann and Arvato Systems worked closely together to create a track and trace blockchain solution, helping to bring more transparency into the production and supply chain of food. Now we are happy to inform you about the latest status of this proof of concept (POC).

The origin of the POC

The joint POC between a German retail corporation, Microsoft, Impinj as well as Bertelsmann and Arvato Systems enables the end user to track and gather more information about the food we buy in grocery stores by receiving insights into the entire supply chain including various touchpoints from generation to end customer. The original goal of this POC was to create maximum transparency and security for the end customer as well as advantages from a business perspective, such as reducing transaction costs or optimizing process flows.

How does it work? The POC in practice:

• The product packaging is equipped with Impinj RAIN RFID tags or QR codes during the production process.
• Impinj RAIN RFID Readers are used to read and track the verification characteristics of each product individually at every milestone along the supply chain. Hence, the data contained in each RFID tag or QR Code is trackable from the production to the end customer.
• At each touch point, the respective data is captured and communicated to the blockchain.

Taking the POC a step further

But we have not stopped there, and our blockchain team was also able to develop this POC further and bring on new partners for this joint project. Together with REWE, Lekkerland, K + S, Traxeed, Microsoft and Commerzbank, we have taken the first steps of the POC to a new level and successfully mapped a fully digital purchase-to-pay and order-to-cash process in a distributed ledger using real digital money. Now this blockchain track and trace solution does not only offer transparency to the clients, but it also helps businesses to optimize their processes and gives them detailed insights about the status as well as the whereabouts of their products.

At the example of K+S Salt

• We start with the serialization of K + S salt via CSDB and have linked the CSDB gateway directly to the blockchain. That means that as soon as a serial number is generated and placed on the product, a unique digital ID (a so-called digital twin) is automatically generated in the blockchain. That makes the product identifiable and traceable.
• If REWE orders this salt now, they receive their order confirmation which is confirmed via an Advanced Shipping Notification. This notification includes the number of items ordered as well as the actual number of items shipped. Mismatched in ordering and shipment numbers can be tracked right away.
• As soon as the goods arrive in the REWE warehouse, the automated goods receipt confirmation via RFID takes place. Based on the RFID tracking, REWE can prove how many items arrived, and in case of mismatching order and delivery numbers, the order, as well as the invoice, is going to be automatically adjusted.
• Afterward, REWE triggers the payment process to settle the open invoice (also fully automatically reproducible). Here, real money is used for payment via digital asset, which was issued by Commerzbank and is also directly linked to a bank account. It is essential to know that we are not talking about a crypto-currency like Bitcoin but real money! The solution provided by Commerzbank fulfills all regulatory requirements in the payment area. The digital asset is thus transferred via blockchain from REWE to K + S, and K + S can then write these clear assets to a bank account or settle further payments.

This whole process takes place in a so-called private transaction, which is exchanged exclusively between the sender (K + S) and the recipient (REWE). Therefore, this information is not visible to direct competitors who are also using the same blockchain and track and trace solution (such as former Lekkerland). Thus, we have managed to leverage blockchain but still restrict the transparency to a level on which companies as well as consumers benefit. Next, to the private blockchain transaction, there is also public transaction which ensures the transparency and flow of relevant information. This public transaction can be shared across the entire network or a targeted recipient circle. Here is information, such as Callbacks, cold chain certificates, or CO2 emission certificates are conceivable to create more transparency for customers. That could become the basis for a global food safety system.

The POC does not only show how customers gain more transparency into the products they want to buy but also the benefits and advantages companies can gain with the use of CSDB and blockchain. Companies gain complete and real-time transparency about delivery status in the supply chain, they can make the purchase-to-pay process autonomous without human interaction, and they are only using one interface, which reduces the complexity tremendously. Also, this new solution may help to increase the food safety standards as every product may be able to be tracked and traced even if it's manufactured further as well as to help reduce between 2%-6% of the global food loss based on more efficient planning, monitoring, and information sharing.