Tmall Global, Alibaba’s vast international e-commerce platform, has fully implemented its global tracing system using blockchain, the key technology behind Bitcoin. Along with drug control code technology and big data, the blockchain traces the entire origins of imported goods to ensure that fake products do not make it onto the platform, which has been a major issue in the past. This is undertaken by collecting associated data, from production, shipping, customs clearance, and inspection, to third-party examinations, and gives each item a unique identification code.
This system, called “Traceability for TMG”, is set to be implemented globally across 63 countries and regions, covering 3,700 types of goods and 14,500 international brands. Jointly participating in this system are various governments, embassies, business associations, and big international brands from countries around the world including the U.K., U.S., Japan, Korea, and Australia. By standardizing the Tmall Global QR code system and applying effective product tracing, consumers’ online shopping experiences will be vastly improved and global brands protected.
The blockchain applications were first fully utilized in the tracing system in 2017. A blockchain is a type of distributed ledger system that is designed to prevent tampering. Based on distributed consensus algorithms, smart contracts, and encrypted algorithms, a blockchain can solve the problem of performing transactions in circumstances where there is a lack of trust between parties. The traceable characteristic of blockchains effectively solves many headaches in finance, credit tracing, copyright, verification and other sectors. By applying blockchain technology to the tracing of the origins of goods, it vastly improves the overall transparency of the entire goods transport system, creating a much more effective control on the supply chain.
Brand new for Alibaba’s 2017 Double 11 Global Shopping Festival, unique identification numbers were established for imported products, including information such as the production, testing, shipping, customs clearance, and other procedural information relating to the goods. With this information made available to users, the legitimacy of the platform is strengthened.
Traceability for TMG: The Basics
There are certain requirements for establishing a goods tracing system that blockchain technology helps solve:
Standard construction: In order to create a globally standardized system for both merchants and products, merchants’ managing capability, including products and chain supplies, must be made compatible. Furthermore, a set of cross-border commodity quality standards and global quality inspection network within the EWTP framework is required.
Commodity control: The tracing of goods needs to fuse well with the supply chain network to enable effective underlying data support and commodity quality control at every level, from commodity manufacturing to warehouse delivery.
Guarantee of genuine products: The system should cultivate a positive mindset among customers and improve brand value by utilizing open and transparent blockchain technology and terminal consumer-level traceable QR codes.
There are also various types of commodity tracing that need to be accommodated by the system including: manufacturer tracking, overseas commodity tracing, international logistics tracing, import declaration tracing and terminal inquiry message tracing. Besides manufacturer tracking, all of the above have completed their initial stages of construction.
What Exactly is Blockchain Technology?
Blockchain technology, also known as distributed ledger technology, is decentralized in nature and originated from the development of Bitcoin. The main characteristics of blockchains for use in this kind of tracing system include:
Decentralization: Blockchain has revolutionized node to node direct interactions, thereby eliminating the risk of being under the control of centralized agents, making the entire transaction process more transparent.
Open, transparent and traceable: Every blockchain transaction is linked with two neighboring blocks via an encryption, so the history of each and every transaction can be traced. Every node in the system has a complete copy of the most up-to-date database, which means that modifying the data at just one node is futile.
Stable and reliable: Distributed network frames ensure that one single node cannot be attacked in such a way that will affect the functionality of the whole system.
Consensus mechanism: A strong security and consensus mechanism is realized through the technology, and does not require any third-party intervention.
Types of blockchains
Generally, there are three different types of blockchain:
Public blockchain: A blockchain which allows anyone to send a transaction and participate in the consensus process, where transactions are effectively validated without authorization. The world largest public blockchain is bitcoin.
Private blockchain: A blockchain where writing permission is restricted to a particular organization. Read access is either open to the public or arbitrarily restricted.
Consortium blockchain: A blockchain which is composed of a consortium of several financial institutions that manage and grant permission to write and read, while any user can make limited inquiries through the blockchain open API. Each node usually corresponds to an organization which is part of the consortium, and all the organizations maintain the operation of the blockchain.
It is this last type, the consortium blockchain, that was chosen for Traceability for TMG.
Blockchain Building Blocks
By using a blockchain, each stage in the whole product delivery process is strictly controlled and integrated, from generating a restocking plan in the supply chain to the end consumer who scans the code to obtain information.
Information quality is key
The main aim of Traceability for TMG is the successful application of blockchain technology in supply chain traceability, making the entire workflow open, transparent, and trustworthy.
The most important aspect of the overall tracing workflow is genuine and reliable information. Therefore, an international commodity must include the following information:
· Basic commodity information, such as barcode, trading country, manufacturer factory photos, factory certification, and ingredient lists.
· Customs information, such as the country of origin.
· Quality inspection agency information, such as container loading supervision, factory verification, circulation, and ingredient list inspection.
· QR Code associated information.
Ant Financial’s blockchain data storage capability was applied during the Double 11 shopping event, and successfully located the tracing information on the chain, utilizing the blockchain to link Tmall Global with the consumers.
Thus, it was decided to apply a consortium blockchain, which supports access from external agencies, as well as traders and various manufacturers, and can achieve the exchange of information.
Layer by Layer
Tmall Global has constructed a fully traceable system to link the supply chain to complete the whole tracing procedure.
Bottom layer as a data model
Base model: This systematic data design includes the products model, manufacturers model, sellers model, statistic and so on, to provide data support using data from commodity centers and ODPS ladder statistics, which is partly input by the sellers.
Tracing model: This includes the strategic decision model, tracing results, quality inspection model and so on. The possibility of expansion of the tracing model needs to be ensured at this level.
Basic configuration: The basic configuration includes a product whitelist, rules on placing product tracing entries, and strategy-specific configurations. For example, sample size can be adjusted at any time to adapt to differing demands.
Middle layer as a business layer
Business plan: This is the most important capability construction, and includes several parts. Category access rules determine which goods require tracing and which do not. The whitelist is used on certain goods or upon certain special conditions from the sellers to skip the tracing settings. The strategic decision engine is responsible for determining which categories of sampling the goods have to go through from the four categories. For instance, from the aspect of the goods, factory evaluation regulation requires that an evaluation is needed if no evaluation reports are found or the reports have expired.
Blockchain: This is responsible for the movement of data and the data verification.
Basic access layer: This is mainly responsible for exchanging information with external systems, sign-in verification, data uplink, etc. The Tmall Global platform is more like a coordinator, where after the business decision is completed, it sends specific tracing tasks to the external quality inspection agencies. External quality inspection agencies will then reflect the results back to Tmall. According to their own rules, Tmall concludes the results and returns them to the supply chain to inform it that the tracing service has been completed and the ASN can be sent out.
Top layer as an interactive layer
WEB Service: This includes platforms on which basic tracing information can be entered, and a product tracing platform configured by Tmall’s vendor management system. Sellers can obtain product information including barcode, place of origin, factory photos, product material lists and factory certification. This is useful both for product inspection purposes, and for providing reliable product traceability to consumers.
Tmall’s product tracing platform is used to configure parameters, such as source factory sample size, product inspection sample size, and the ratio of customer refund requests above which a product batch needs to be re-inspected.
HSF Service: This is an externalized information tracing method that provides decision-making outcomes to the supply chain in determining whether there is a need to trace sources or to paste labels. HSF also exchanges data with other systems.
Scanning the QR Code
As Double 11 officially goes online, consumers can receive products labelled with the Tmall Global Anti-Counterfeit QR Code.
In order to ensure data security, the QR code also contains an encryption code for the user to “scratch” to obtain a security pin. By scanning the QR code, users can check a product’s basic information and detailed tracing information, such as factory inspection outcomes and product quality sampling tests.
Thanks to the effort and support from numerous countries and organizations, Traceability for TMG is fundamentally changing the way that users are interacting with international sellers and goods.
Blockchain technology is currently still in its relative infancy in terms of application, and so further exploration is required. As consumerism is gradually edging towards greater segregation, it is clear that the demand for better quality products by consumers is becoming more prevalent.
With the experience gained in this project, it is clear that by assigning a blockchain that is resistant to falsification and traceable, then platform improvement is guaranteed by a move towards genuine product assurances. This would enhance users’ experience by rendering the entire supply chain system more open and transparent.
Moreover, it is hoped that a consumer cognitive system on cross-border goods tracing could be built, providing regulatory authorities with more comprehensive and accurate global sellers and goods tracing information. Obtaining such quality information will be possible with collaboration measures such as service support, system building and information sharing.
(Original article by Huang Jin黄金)
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