A new Deloitte report ‘New tech on the block: Planning for blockchain in the Retail and Consumer Packaged Goods industries (no registration required) identifies areas with the biggest immediate opportunity for retail and CPG businesses looking to invest in blockchain technology.
In the view of the authors ‘The retail and consumer packaged goods (CPG) industry is well placed to take advantage of blockchain opportunities which could revolutionise their operations and processes’.
Deloitte categorises numerous business applications for blockchain in the retail and CPG sectors by their impact on the consumer, the supply chain and payments and contracts. They conclude that business leaders need to be strategic in choosing which parts of the businesses could benefit most from investment in blockchain.
Steve Larke, technology consulting partner at Deloitte, comments: “Retailers and consumer businesses are constantly being told that blockchain is the next big thing. However, it is crucial for decision makers to understand which areas of the value chain will benefit most from the new technology, and how easy it is to implement.
“It is technology that has the ability to track, trace, and authenticate products, record contracts and transactions and guarantee the movement of information. Significantly, the benefits can then be passed on to the consumer in the form of savings, increased trust, and safer, higher-quality products. As we enter the ‘age of blockchain’, the retail and CPG sectors are particularly well placed to capitalise on this technology and revolutionise the way many processes are conducted. Businesses that do not consider how blockchain could help are at risk of falling behind competitors.”
The retail and CPG report
Blockchain is a digital, decentralised, distributed ledger which provides a way for information to be recorded, shared and maintained by a community (whether private and public). The report identifies where blockchain could have the greatest impact within the retail and CPG industry.
The analysis examines 16 blockchain use-case groups developed from an initial analysis of over 50 use cases. These were shortlisted and combined to cover the breadth of the retail and CPG markets and potential blockchain applications. Deloitte then measured both the potential impact of the blockchain use-case group and the complexity of implementing it in a business.
The complexity criteria applied evaluated:
- the level of business change required
- unique participants and active participants (volume)
- the number of services
- whether the use-case had been tested before.
“Out of the blocks, not a stumbling block”
The ability of blockchain to track, trace, and authenticate products, record contracts, guarantee the movement of information and record transactions means enterprises could use the technology across the entire value chain. The benefits would pass to consumers in the form of:
- increased trust and transparency
- safer and higher quality products.
The report identifies various blockchain use cases and ranks these cases. A ‘know your supplier’ solution which would allow businesses to store information about their suppliers and seamlessly execute payments and contracts at the point of fulfilment, is the number one opportunity for businesses (in the view of Deloitte).
Other blockchain cases are harder to implement but could carry huge value opportunities. For example, a ‘Connected Supply Chain’, could provide a seamless end-to-end ledger from manufacturing to fulfilment. Or an ‘Authenticity & Provenance’ solution would verify a product’s genuineness, protecting businesses and consumers from counterfeiting.
Assessing opportunities and responding to blockchain
As expected, the report adds preferred ‘actions’. “It is important for businesses to understand how much blockchain can generate additional commercial value and how it aligns with the overall business strategy. Depending on the strategic objectives of the business, there are four segments of impact:
- “trial projects – opportunities that have a lower immediate value relative to others due to a narrower blockchain application
- “explore – opportunities relative to trial projects in terms of value but similar complexity (and cost), offering greater value relative to investment in the short-term
- “wait and see – Opportunities that currently offer a lower value relative to other blockchain opportunities and are more complex (and costly) to implement
- “plan – These offer the most attractive opportunities in terms of potential value.
“Using blockchain as a tool to achieve strategic goals is key to seeing a tangible value‑add from this emerging technology. Consumer focused businesses that have the resources and capabilities should be considering how they can harness the power of it.”
Enterprise Times: what does this mean
More and more data accumulates that blockchain will play a role in complex inter-enterprise processing. This Deloitte report adds to the evidence, and to the conclusion that enterprises can no longer ignore blockchain – unless they choose to become followers (and take a vassal position).
Yet, in one sense, this Deloitte Retail and CPG report seems tame, especially about supply chain integration via blockchain technology. As Enterprise Times has reported elsewhere, businesses involved in complex supply chains are moving ahead. They seem to be in advance of where Deloitte posits developments, though Deloitte is correct to say that there are huge opportunities if the supply chain/blockchain convergence happens for retail and CPG.