As consumers, our communication patterns, searches and online habits create a digital trail that means algorithms are getting to know many of us better than we know ourselves. Yet the trust and transparency challenges that confront the globalised food system – such as substitution, tampering, misrepresentation, illegal production and contamination – are still compounded by a lack of supply chain traceability.
The problem is, every company has its own way of working: inaccuracies are caused by traditional paper tracking and manual inspection systems; transactions are handled in siloed databases, resulting in opaque supply chains. When it comes to a recall, this can make the difference between identifying a few contaminated bags of spinach, and pulling the entire stock of spinach from hundreds of stores.
As one of 2017’s most talked-about technologies, Blockchain is being positioned as the way to “provide trust in an untrusted world” by transforming systems of record, with use cases ranging from carbon credits to diamonds. But what is it, how does it work, and how can it be applied to solve food supply chain management challenges?
What is Blockchain and how does it work
Blockchain was developed in the aftermath of the financial crisis of 2007/8 to deliver transparency, security and efficiency in managing transactions between multiple parties without involving banks. This gave rise to crypto-currencies such as Bitcoin, which can be transmitted worldwide without friction: no intermediaries, regulation or the need to know or trust the parties involved – the so-called “trustless” system.
In the simplest terms, Blockchain is a way to structure data. It uses distributed ledger technology: a database that, rather than being stored in one place, is continuously synchronised and shared among all members of a peer-to-peer network for real-time data transparency.
When a digital transaction is carried out, it is grouped together in a cryptographically-protected block with other transactions that have occurred in the last ten minutes and sent out to the entire network.
Once validated by consensus, the block of transactions is timestamped and permanently added to a chain in chronological order. New blocks are linked to older blocks and contain a reference to the previous block (called a “hash, which is somewhat like a digital fingerprint).
A distributed database cannot be hacked, manipulated or disrupted in the same way as a traditional, centralised database with a user-controlled access system. The data is immutable: once it has been written to a Blockchain, nobody – not even a system administrator – can modify or tamper with it. The technology can work for almost any type of transaction involving value, such as money, goods, land ownership, work, medical information or even votes.
How can Blockchain be applied to the food industry?
Today’s supply chains have an inherent weakness: individual parties are using disparate digital systems, different technologies, and paper-based processes to bridge the gaps. This makes it inefficient to share the critical data that drives supply chain interactions, or to guarantee a high degree of rigour and accuracy.
Blockchain-infused traceability systems could deliver the transparency and trust that has eluded the food industry until now. With immutable data, it has the potential to give growers, suppliers, processors, distributors, retailers, regulators and consumers access to reliable information on the origin and state of food.
Blockchain for agriculture – It will become feasible for farms to create digital records for individual animals to track the lifecycle from farm to fork, using technology such as RFID tags. This enables consumers to read the “digital history” of meat down to the individual animal, including who raised it, how it was raised, what it was fed and who processed it, simply by scanning a QR code on the packaging. As the lynchpin of our food supply, farmers typically have little visibility to the end consumer, and could stand to gain a new voice and new distribution opportunities through participation on Blockchain. There are also exciting possibilities for creating business value with new, previously unattainable data that could be made available through Blockchain, such as how much fertiliser or water was used, as evidence of sustainability assertions.
Blockchain for distributors – Distributors could provide more transparency to processors and buyers in terms of product type, farming practices, harvest data and Fair Trade or similar certifications. With the addition of appropriate sensor technology, valuable information could be provided to actors up the chain, such as the duration of the journey while a product is in transit, or the temperature and humidity of the truck it travels in, to demonstrate that the product is fir for use or sale on arrival.
Blockchain for food processors and producers – As food processors often struggle to validate the origin of their ingredients, Blockchain would enable the validation of information about input products without violating trust be-tween individual entities. For food producers, the nature of Blockchain would mean that any attempt to tamper with a product as it moves through the sup-ply chain could be immediately identified and prevented before it ever reaches a retailer.
Blockchain for retailers – As bricks and mortar stones are faced with in-creasing competition from online food providers such as Amazon, supermarkets often want to provide local produce as a differentiator. With Blockchain providing a web of trust, the information value provided by local farms could be bound to the claims made by grocers. This could effectively create a new model for providing local produce through a national chain, with the evidence of quality, transport and freshness that consumers insist on. Not only can this rich seam of information be used to create a point of sale educational opportunity, but it also bolsters the capacity for a digital recall in the event of a safety issue, such as food-borne illness. In the event that a potentially contaminated product somehow made it onto the shelves, stores could rapidly identify, isolate and remove only the affected items without the need for a costly whole-batch recall.
Blockchain for foodservice – Restaurants have a direct relationship with the ultimate consumer and a growing number are keen to emphasise the quality and sustainability of their food. It could prove a considerable competitive ad-vantage be able to authenticate their menus and justify a premium for local, organic or free range produce.
Blockchain offers many practical solutions to today’s impractical system, and should promote better communication between all parts of the food chain and, just as importantly, between producers and consumers.
Blockchain offers many practical solutions to today’s impractical system and should promote better communication between all parts of the food chain and just importantly, between producers and consumers.
The future is already here
The promise of Blockchain isn’t far-off utopian vision. US agricultural conglomerate, Cargill, has made an early foray into Blockchain, with a pilot through its Honeysuckle White brand. The initiative, launched ahead of 2017’s Thanksgiving celebrations, allowed consumers to trace their individual Thanksgiving turkey from the store where they bought it to the farm that raised it.
Walmart is currently piloting Blockchain technology to trace mangos, in their US stores, and has cut the time it took to provide gate-to-plate traceability to two seconds – a process which used to take weeks. Walmart is also among several companies embracing a new initiative in China focused on food safety and traceability with Blockchain as its technical foundation, following numerous high-profile fake food scandals in the world’s most populous country.
A consortium including Dole, Nestlé and Unilever is working to identify opportunities for the use of Blockchain to improve data integrity and trust between parties in “Big Food”. Meanwhile, technology vendors including IBM and Microsoft are collaborating with GS1, the global business communications standards organisation, to determine how the structure data stored or referenced by Blockchains for shared communications and interoperability through the use of standards.
So while Blockchain may seem like the buzzword of 2017 and will no doubt be the subject of much discussion, it has real potential to be a game-changer for food supply chains, helping the industry to achieve the holy trinity of trust, transparency and traceability.
To understand how Signum Solutions can help in your Blockchain journey, contact [email protected]