Let’s say a factory wants to procure milk directly from farmers. The factory / farmer can set up a fully automated milking machine connected to a large tank where milk will be collected before being transported to a collection point. A Blockchain is set-up with all the required details like farmer’s unique ID number, milk quantity (volume) and the number of batch accompanied by a time-stamp. The data will be entered in the Blockchain and cross checked to ensure their correctness, truthfulness and integrity. The milk then passes to the next phase within the supply chain.
At the collection point quality checks are made as per the records entered into the Blockchain by the factory manager. Every batch is graded and assigned to the respective farmer. The results are transparent and visualized in order to give the factory manager information if everything is correct.
After passing all the tests, a smart contract executes the pre-agreed payment from buyer to supplier. Different levels of quality achieved lead to different outcomes of the contract execution. If the quality falls within the agreed range of quality indicators, the operation is successful, milk is accepted and the payment is released to the farmer.
If difference is significant, the batch is rejected and money is automatically reimbursed to the buyer, or another order is triggered to supply the milk elsewhere.
Farmers can get push notifications on their phone informing them whether their batch has been accepted or not. In case of rejection, the farmer may get audited for quality compliance.