How Blockchain Can Prevent Supply Chain Fraud 🚢
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How Blockchain Can Prevent Supply Chain Fraud 🚢

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How Blockchain Can Prevent Supply Chain Fraud 🚢

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After you finish this article, you'll know exactly how Blockchain and Verifiable Credentials can provide full transparency across the entire supply chain in a secure way and prevent fraud from producer to consumer ⬇️

Create a Verifiable Credential with the Dock Blockchain - for free!

The Problem of Supply Chain Fraud

The Association of Certified Fraud Examiners reported that more than $7 billion in the supply chain sector is lost globally due to fraud.

The supply chain is becoming increasingly complex, and the industry is plagued with problems such as:

  • Lies about the origin of goods and product standards
  • Financial fraud, such as manipulating record systems resulting in deceptive billing
  • Counterfeit goods
  • Outdated technology and the use of paperwork that is difficult to track
Shipping information often travels through many companies and contractors, and quickly verifying the authenticity of the data exchanged between these parties is challenging.
How can a consumer trust that the product was made to the quality and standards it claims to have? How do we know one party didn’t modify data in the documents to suit their interests?

How Blockchain Brings Transparency to Supply Chain

As you know, the blockchain is an immutable public database; anything written there will be there forever.
Blockchain enabled the rise of a data format called Verifiable Credentials. A Verifiable Credential (VC) is a digital file, like a Supply Chain document, that is fraud-proof and instantly verifiable for authenticity.
One of the most exciting things about VCs is that their data is not written on the blockchain. So they can leverage the benefits of blockchain without placing private and confidential information on a public blockchain.

How does it do this? We'll explain:

  1. An organic Food Producer issues a Verifiable Credential attesting that a specific batch of apples is organic.
  2. That Verifiable Credential contains an encrypted digital fingerprint of all the data in the document at the issuance time.
  3. The Food Producer places a key on a blockchain to decrypt the fingerprint. This process is entirely automated using a platform like Dock's.

Now a Retailer receives the batch of apples and wants to confirm its organic status.

Using Dock's platform, the Retailer automatically checks the blockchain to find the Food Producer's key and unlock the fingerprint in the Verifiable Credential.
Instant Document Verification: If the unique fingerprint created at the moment of issuance matches the document the Retailer just received, it means that the document wasn't modified and it's authentic ✅

Create a Verifiable Credential with the Dock Blockchain - for free!

Benefits of integrating Blockchain and Verifiable Credentials in the Supply Chain

Blockchain and VCs greatly reduce the costs of document verification and prevent fraud.
Knowing where products were made, the conditions they were made in, and other details about their origin is essential for companies to meet regulatory requirements.

Also, modern customers increasingly demand to know the origin of products and ensure they buy products ethically produced by people working in good conditions or with less environmental damage.

  • Buyers, manufacturers, distributors, and sellers can replace paper documentation with digital fraud-proof certificates that are instantly verifiable.
  • Third-party logistics have trustworthy information about the origin and destination of the product.
  • Retailers can quickly get full transparency on the product, including its origin and standards.
  • Customers can instantly get information on the origin of a product and other details.

Replacing Outdated and Manual Supply Chain Processes

At Dock, we've spoken with organizations moving away from having Supply Chain certifications on paper.

The world is no longer suited to having multiple copies of essential documents physically carried inside envelopes and delivered to each party on the supply chain, from the producer to the retailer.

Along the way, the papers can get lost, ripped, or become at risk of being forged.

Blockchain and Verifiable Credentials allow organizations to efficiently and securely issue, store and manage fraud-proof documentation and verify the authenticity of data at a significantly lower cost.

Integrating blockchain into the supply chain creates an auditable trail of product certificates within and between parties.

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