The blockchain, which debuted as part of the Bitcoin paper in 2008, was quickly hailed as a revolution in the waiting for more transparent economies. It embodied the promise that every transactional operation could now be tracked across global ledgers open for audits and scrutiny. The different actors of the market would uniformly adopt this new way to do business, heralding an era where trade chains could be reasoned through software, and where an item’s QR code would directly access its whole story.
Unfortunately, this incredible opportunity has yet to materialise in the form of a Cambrian explosion of credible solutions.
It’s a sad but real fact that neat solutions on paper can often quickly meet the punishing friction of the real world.
In this article, we will explore why at Bendi, we considered and then passed up on using the blockchain to solve the problem of supply chain transparency.
Competition causes fragmentation
Mapping a whole market to its digital form implies massive efforts in conceptualising changing requirements and enacting the vision for a tech company. Multiplying this by the number of providers on the markets, we soon end up with a great many solutions, goals and approaches that lack the level of compatibility and interoperability necessary to create this new global approach.
A solution could possibly come from the consolidation of large providers over time in the private sector. But in reality, any effort likely to succeed would probably come at governments’ hands through international treaties and extensive collaboration with the industry. The SWIFT payment system is a valid example of a successful solution designed and planned by different administrations taking this approach.
The nature of the product
When it comes to fashion, part of the problem is related to the materiality of the garment itself. Before it is called a garment, its component parts do not just move across borders; they undergo many transformations and treatments. For example, the fabric can be made of mixed cotton of various origins, the assembly of different elements can be done in entirely different factories, and the “Made in XX” on the label only reflects the last point of departure of the finished product. Therefore, the ease with which something like an art marketplace could track an item in all its integrity is not easily transferable or applicable here.
IT training is a necessity
Writing to the blockchain implies some specialist software as it is necessary for thorough information across a whole supply chain down to the local cotton exchange and the farm. In this setting, the mileage in computer literacy at every node of the chain may vary.
Even for the computer-literate, the adoption curve makes us deal with reluctant adopters and late majorities that will decide not to engage with the idea for as long as possible.
There are incentives that refrain actors from taking part
Transparency is a game changer for the consumer and the brands; we have everything to gain from it. But unfortunately, not everybody will see that transformation as a net benefit to themselves, and the incentives to not engage with it are great.
Any official trade market can create a black market; in this case, the well-established current way to do business would immediately be treated as such. Nevertheless, getting everybody to participate willingly is an influence game that brands need to exercise more than is currently happening. Given that step’s (questionable) success, the self-reported aspect of identifying items on the supply chain could still pose a problem.
In conclusion
We believe transparency is the first necessary step to kill the shadow economies and weed out bad actors. But our approaches differ in the constant realisation that our world is complex, dynamic, full of invisible forces and with the awareness of the need for reconciling sometimes conflicting interests. Nevertheless, blockchain is still incredibly promising to solve many problems, and we will pay constant attention to future moves.