The owner of a well-renowned luxury brand Louis Vuitton, LVMH, is looking into using blockchain to track its luxury items and shoes so that the authenticity of high-priced goods is maintained.

LVMH is a French luxury brand conglomerate headquartered in Paris with big names like Christian Dior SE, Fendi, Luis Vuitton etc. under its belt. But why is tracking luxury goods so important that the company is opting to choose a blockchain-based solution for it?

Manufacturing of a product is an end-to-end process. From collecting pure raw materials and transforming them into a product or wearable requires a lot of transparency in the framework. Fake or damaged raw materials can be disastrous for brands like Louis Vuitton. Consumers, who pay premium in acquiring these items, can also question the authenticity and credibility of the products that they are buying. This is exactly where blockchain steps in.

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The supply-chain workflows of international brands are extremely complex and require high level of transparency. Raw materials are usually imported from multiple countries. Their transfer from one country to another, total invoices and payments made along the way, from shipping to factory delivery, require a transparent record. Blockchain solves this issue by providing a global decentralized digital ledger. Blockchain tracking from beginning to the end product can help build the authenticity of a product for brands like Louis Vuitton. In order to make this happen, LVMH is reportedly using a permissioned-version of the ethereum blockchain Quorum. It was developed by JPMorgan and mainly focuses on data privacy.

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The biggest features that blockchain provides are trust and transparency. In a blockchain-based network, every process taking place on the network is visible to everybody else participating in the network. There is no single party controlling the network. Instead, it is the decentralized nodes that run a blockchain. Due to this decentralization, the issue of forgery of records is taken out of the picture. Although bitcoin and other cryptos record their transactions on a blockchain, if blockchain is used to track items in a transparent matter from one point to another, the entire supply-chain industry changes. As in the blockchain-based game CryptoKitties users could track the movement of their cats, brands such as LVMH can come up with solutions to track their products throughout the supply-chain process.

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By keeping track of a product on blockchain-based record, each step of manufacturing can be tracked. For example, if a sandal is tracked from the very first step of its origin, a leather factory in a foreign country to the outlet where it is being sold, the authenticity of that sandal can be maintained while keeping track of its entire lifecycle and financial transactions associated with it. We are already seeing big brands like Walmart and BMW explore blockchain to improve their supply-chain management.

BMW has been working with the blockchain startup VeChain for over a year now on supply-chain. For BMW, blockchain is important because it can help provide tracking of various components and parts.

As stated by the blockchain technology lead at BMW Group, Andre Luckow:

…blockchains enable us to improve cross-organisational and crossindustry collaboration by increasing efficiency and transparency.

Walmart is also implementing IBM’s blockchain in order to track its food items from farms to stores in real-time using a distributed-ledger system.

All in all, a conglomerate as big as LVMH adopting blockchain is a clear signal why this technology is going to prevail in the future in areas where transparency is of utmost importance. The decentralized and global nature of blockchain is what makes it attractive to most industries. Supply-chain is one of the core parts of every industry. With big brands adopting blockchain and the fourth industrial revolution coming up, it is most likely that blockchain will be at the core of supply-chain management for most of the industries in the future.

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