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Jul 03, 2019 @ 09:07 by Lisa Babenko

The potentials of Blockchain – enabled supply chain for consumer trust and marketing

Today’s consumers react skeptical to conventional marketing claims. Blockchain has the potential to bring a new level of transparency into consumer goods supply chains and serve as a differentiator in the marketplace/ competitive battle. In this article, you will discover how companies can capitalize on this trend and how you can approach blockchain for your business.

The Trend: Consumer trust and transparency became a differentiator in the marketing game

Todays’ consumers demand more. More transparency in products’ supply chains and more extensive information on provenance. At the same time, they are more aware than ever. Surrounded by “Greenwashing” and multiple food scandals, do we even wonder that they lost trust in conventional marketing? Likewise, it is not surprising that brands such as True Fruits or Fritz Cola become increasingly popular. Simple as it is, todays’ consumers more likely put their confidence into small “lovebrands”, rather than in legacy corporate brands and retailers.

When analyzing this situation, you will find a major underlying issue - today’s supply chains are disconnected and fragmented. Their parties work with manual processes highly prone to errors. Particularly in terms of information which is often not reliable, missing or can be easily tampered.  

The Blockchain-enabled supply chain concept. Source: Accenture
The Blockchain-enabled supply chain concept. Source: Accenture

The Vision – a connected Supply Chain

In a nutshell, Blockchain is one of the enablers for the connected supply chain concept. Its role is to provide a reliable record of information establishing traceability and transparency, especially in complex multi-tiered supply chains. This information can in turn be used to win the trust of todays’ demanding and informed consumer. 

In a Blockchain, supply chain parties like manufacturers, brands, logistics providers and retailers work in one shared ledger, distributed between them with each party having a same local copy of the ledger. Once a transaction takes place in one of the network nodes, for example when a batch of produced goods leaves the plant to be transported into a distribution center, all parties in the network are updated at once – they look at a “single source of truth”. The critical condition is of course that the transaction is recorded correctly – Blockchain does not solve the “Garbage in – garbage out” problem. Since transactions can be recorded both manually by people and automatically by “IoT”, automation should be applied where possible to ensure the most reliable input. This includes for example the use of sensors during production as well as NFC chips in product labels or packaging containers. Due to various cryptographic mechanisms, Blockchain can record the complete transaction history in an encrypted and immutable fashion. This ability implies that Blockchain can serve for the protection of ownership as well as support standards compliance. Different consensus mechanisms define how the exchange in a Blockchain is governed and controlled in the network. Therefore, trust can be established without the need for a third party.

Example of a Blockchain service design for the end consumer. Source: dgroup
Example of a Blockchain service design for the end consumer. Source: dgroup

How to design Blockchain for consumer trust

While Blockchain can provide benefits in a plethora of supply chain use cases, including internal compliance, business process efficiency or double-spend of certificates, it’s potential for customer retention and marketing should not be underrated.

As studies show, consumers are willing to pay more for sustainably produced products. GfK also found out that 56% of the consumers would spend more on “green” products, and this tendency might be higher if consumers weren’t so skeptical towards conventional marketing messaging.

Therefore, brands or retailers can capitalize on blockchain to break through this skepticism winning over consumers’ trust and inhancing the brand loyalty. This measure can be especially effective if implemented in combination with other strategic actions like transformation towards sustainable or ethical production practices, introduction of new consumer-centric product lines and a multi-channel marketing strategy with a combination of digital and physical channels. With regard to the Blockchain-enabled supply chain, the action plan could include the possibility to scan product QR codes on the point of sale in combination with a marketing campaign and a consumer-friendly mobile app to discover product information and storytelling content. 

We were thoroughly looking into it with our business and service design teams for an agri-food use case focusing on one question: How can we rethink the conventional service design and UX to convey the blockchain benefits to consumers? What is different than on a conventional marketing landing page? How to communicate its unique qualities like immutability and single source of truth? As a result, we design an app prototype which conveyed the benefits of the blockchain ledger through visual design rather than text explanations which was critical to unlock value through blockchain in the above mentioned use case.

dgroup /Accenture Blockchain Approach: Close collaboration of business, service design and technology
dgroup /Accenture Blockchain Approach: Close collaboration of business, service design and technology

The approach: start with finding a reasonable value proposition

Considering the hype around Blockchain, proponents are searching for use cases beyond financial transactions. Supply Chain is one of the most popular areas for exploration with multiple Proof of Concepts being launched by brands and retailers across industries globally. However, some of those lead to a disillusionment and the learning that a conventional database would be a more efficient, scalable and stable solution. This is not a reason to abandon Blockchain – in fact, disillusionment is a natural phase within the Gartner Hypecycle for Emerging Technologies. The most important thing is to do a proper evaluation of your use case and whether there is a sufficient value proposition if you apply the Blockchain technology.

The following five questions are a simplified extract of our Blockchain use case assessment and can serve as an initial aid to identify a Blockchain use case:

1. Does the use case involve an ecosystem of multiple parties who do not know and trust each other? 
2. Which information exchange is essential for value generation in this ecosystem?
3. Is there a high risk of fraud or information manipulation in the current state?
4. Which ecosystem participants suffer the most from the current pain points and can they be brought together to collaboratively work on the solution?
5. Who among the participants is willing to pay for it?

Once you narrowed the areas of Blockchain application down to certain areas and business ecosystems, you can proceed into the first stage of the Blockchain Innovation journey: The identification and prioritization of use cases.

1. Start with a use case workshop 
Taking the first step towards blockchain we recommend initiating a use case workshop with your key stakeholders. During the workshop you identify high-potential use cases and their related benefits. The result should be a shortlist of prioritized use cases with the highest impact on your top and/or bottom line. In doing so, we usually differentiate between two types of use cases: 

- Optimize existing pain points. 
- New business models. 

This case provides you with new opportunities for marketing and services such as consumer engagement, direct feedback and automatic replenishment.

Following this differentiation is in so far important as each case type requires the usage of different KPIs to estimate its full potential.

2. Identify your minimum viable ecosystem and revenue model 

In the next step, you will identify your minimum viable ecosystem and revenue model. This means on the one hand, to build a limited consortium with a member from each layer of your supply chain (“Minimum Viable Ecosystem”). On the other hand, to calculate the entire ecosystem value and put it against costs associated with the solution.  Afterwards it is important to design a strategy for consortium and governance thoroughly. The strategy is particularly important since consortiums are usually dominated by conflicting interests and therefore the main reason for blockchain to fail.  

3. Agile Deployment from Proof of Concept (PoC) to Pilot and Scale
Within the proof of concept, previously defined parameters are implemented. After successfully implementing the PoC, technology can be transferred from the test environment to a real environment – the so-called pilot phase begins. In case the technology proves itself under real condition, it can be scaled within the next step. At this point, you drive for further expansion while managing the technology.

Start with a usecase shop
Start with a usecase shop

Summary - Blockchain-Enabled Supply Chain unlocks potential for business efficiency and revenue growth.

Given the changing consumer expectations towards information transparency and a purpose-driven attitude as well as the increasing frequency of food safety events, the value of an integrative approach to food supply chain management will continue to grow. This refers particularly to aspects such as operations, marketing and traceability. 

The connected supply chain concept combines blockchain technology, IoT and biometrics. Together, they drive significant efficiency gains by fostering data reliability, process digitization and a faster settlement. The concept responds to consumer expectations and therefore enables retailers and brands to win trust and increase loyalty. On top of that, the blockchain solution unlocks opportunities for more authentic and engaging marketing as well as value added services. 

Take the first step towards this approach and conduct a use case workshop with experts and relevant stakeholders. Dgroup & Accenture will help to identify the use case, shape the business model and build the blockchain based solution end-to-end.

About the author

Lisa Babenko is a consultant at dgroup / Accenture. Her area of expertise is new business building in retail and consumer goods industries. Over 3 years, Lisa is working with clients on defining and implementing blockchain-enabled business model innovation. Lisa is also conducting blockchain seminars at universities and acts as a keynote speaker on blockchain and innovation related topics.

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