Alibaba Group pilots product trial on blockchain traceability system

Alibaba (Australia) and a group of founding partners have launched pilot orders through its new Food Trust Framework, a Tmall Global initiative that uses blockchain technology to improve supply chain traceability.

Taking place in Auckland, New Zealand, and hosted by CEO of Alibaba Group, Daniel Zhang, the pilot follows Alibaba’s announcement last year that it would engage PwC in Australia, New Zealand and China as a service provider to advise the company on the set up of a framework to protect product authenticity and provide a safe and trusted marketplace for consumers. Alibaba also signed a Memorandum of Understanding last year partnering with Blackmores, Australia Post, Fonterra and New Zealand Post in the Framework.

Blackmores and Fonterra are the first companies to trial the Food Trust Framework, shipping products from Australia and New Zealand to China. Blackmores is shipping Odorless Fish Oil while Fonterra is shipping Anchor dairy products to consumers who purchase them on Alibaba’s Tmall Global platform. Once the pilot is complete and if successful, the Framework could form the basis of a global supply chain model applied across all of Alibaba Group’s e-commerce markets.

The Framework aims to achieve end-to-end supply chain traceability and transparency to enhance consumer confidence and build a trusted environment for cross-border trade across Alibaba’s Tmall Global platform by incorporating a range of standards and controls to manage the supply chain process, including blockchain technology and product tagging with unique QR codes. These technologies are designed to authenticate, verify, record and provide ongoing reporting of the transfer of ownership and provision of products and goods.

Recognisng the significance and importance of an independent view as to the operation and application of the Framework, PwC plans to provide services to the participants. An independent assessment of the Framework aims to provide the visibility and transparency of the level of adherence to the Framework by participants in the supply chain, including consideration of existing reporting and practices.

The Framework represents the next step in Alibaba’s vision to build the future infrastructure of commerce and will help give confidence to producers, merchants, logistics providers and consumers alike.

Speaking at the launch in Auckland, Alibaba Group’s Alvin Liu, General Manager of Tmall Import & Export said: “Food fraud is a significant global challenge, particularly with the growing complexity of supply chains. In response, we have created a coordinated, world-leading and robust framework that involves stakeholders from across the supply chain to improve visibility and enhance the confidence of both end consumers and merchants.”

Food fraud costs the global food industry an estimated US$40bn each year, according to research from the Michigan State University. PwC has also estimated that 40 per cent of food companies find food fraud difficult to detect with current methods, and 39 per cent think their products are easy to counterfeit.

“Blackmores goes to extraordinary lengths to have visibility over our supply chain and each of our products passes 30 tests and checks before it is released for sale.  So we’re exploring ways to leverage the technology and data that can provide our consumers with assurance that their trust in our products is well-placed,” said Richard Henfrey, Blackmores Chief Executive Officer.  “Our commitment to quality doesn’t end in our distribution centre and we need to give consumers confidence in the products they purchase on e-commerce platforms.”

Fonterra President Greater China, Christina Zhu, said: “Fonterra delivers global best practice supply chain traceability through our existing technology. Given the potential of emerging tech, including blockchain, we want to be at the forefront of developing food quality and safety standards across the supply chain. In China and many other markets, we know consumers want to be able to trace the products they purchase online, so we welcome being a part of creating a globally respected framework that protects the reputation of food companies and gives greater value and consumer confidence.”