Logistics: NFTs serve the supply chain

Driven by double-digit growth, the logistics sector must meet two challenges: guaranteeing the traceability of each product and its integrity throughout the chain.

To react to this forum and discuss directly with the Capgemini teams on the role of the blockchain in the supply chain, come and meet them on the Tech for Retail show November 28 and 29 in Paris.

Two major challenges, while volumes are racing, and its players must perfect their digital transformation to avoid any human error. The blockchain has established itself for several years as an essential innovation for securing product transfers and ensuring infallible traceability. Better, the NFTs – non fungible token – clarify the responsibility of each actor and guarantee customer satisfaction. Explanations.

It is a booming market: NFTs, these unique and non-replicable digital certificates, backed by the blockchain to establish ownership. The global market has gone from 80 million dollars in transactions in 2020 to more than 20 billion in 2021. It already exceeded 18 billion dollars in the first eight months of 2022, according to the reference site specializing in analysis of the NonFungible NFT market. Faced with this exponential growth, many brands – particularly in the luxury sector – have committed significant resources to developing their own NFTs. The uses are already numerous.

Bring experiences to consumers

While there is indeed a craze around digital works of art, in particular cryptopunks for speculative purposes, NFTs are also increasingly used to provide services and experiences to consumers, sometimes in addition to the purchase of a physical product. These are so-called affinity NFTs. Decathlon has thus embarked on the adventure with its Kipsta Barrio project, a range of sneakers intended for street football players and designed in collaboration with Séan Garnier, world champion and three-time French freestyle football champion. Each purchased pair is associated with an NFT in the form of a golden ticket. The latter gives access to personalized and exclusive experiences with the athlete. This reinforces the image of the brand. Finally, NFTs are becoming a tool for loyalty and customer knowledge, such as Starbucks, which rewards its best customers with limited-edition digital works, thus creating innovative digital experiences.

NFTs are now entering the physical world with innovative use cases, at the service of business issues, such as the logistics. This fast-growing sector – 10% of French GDP and 200 billion euros in turnover in 2021, according to a study by the blog supply chain info – boosted by purchases, has experienced rapid digitalization thanks to the possibilities offered by the Internet of Things (IoT), in particular to optimize warehousing and monitor the supply chain. However, the sector must go further in its digital transformation to guarantee better traceability and product integrity, a real Achilles heel. Management of contingencies, forecasting of orders, difficulty in locating a product… This lack of visibility puts all the players in the chain under pressure. Logistics networks are in fact increasingly fragmented, with multiple parties throughout the transfer of the same product. And if the parcel is damaged or misplaced, the thorny question immediately arises as to which link in the chain engages its responsibility.

Blockchain rhymes with supply chain

The solution may well lie in the massive use of NFT. By associating each package or pallet transported with a unique digital certificate, each change of status can appear in an ultra-secure way, without possible falsification. Because thanks to the blockchain, each link in the supply chain can enter information according to a contract that formalizes everyone’s writing rights. Enough to give full visibility over the entire process, and guarantee particularly useful traceability for products whose value depends on certain parameters: information on the production and conservation of a bottle of wine, origin of the raw materials and conditions manufacturing for the luxury industry… In other words, blockchain is the way to create a single source of truth.

Security, traceability, responsibility

But NFTs go even further. At each stage of the supply chain, the ownership of the NFT is transferred as well as the responsibility for the physical product associated with it. By backing up the digital certificate and metadata linked to a parcel (technical characteristics, certifications, names of the successive owners of the object, etc.), each player in the logistics chain becomes responsible for the product transported at the time it is in his charge. The French start-up Ownest, which has made NFTs applied to the supply chain its hobbyhorse, speaks of NFTs of responsibility. These confer real titles of ownership: when carrier A transfers his load to B, he offers him the associated certificate. Thanks to the tamper-proof information contained in the NFT, carrier B can verify the integrity of the goods. If the condition of the product is not compliant (damaged package, temperature of storage unsuitable…), he can refuse it and, de facto, completely disengage his responsibility. This innovation therefore not only improves traceability thanks to the blockchain but infallibly determines the responsibilities of each other. And the use extends to all actors in the chain: suppliers, partners, customers, carriers…

Since 2021, Ownest has been working with the Cdiscount marketplace to track high-value packages using this NFT technology. The goal? Monitor the transfer of responsibility throughout the journey of a parcel, from the warehouse to the end customer, to identify the responsibility of the actors in the slightest complaint. After a successful pilot project, a 3-year contract was signed in 2021 with the French marketplace to use the solution on 2.5 million parcels over 30 kg. This use case could well become a school in the years to come.

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Logistics: NFTs serve the supply chain

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