Benefits Of Smart Sensors & Blockchain In The Food Supply Chain (Part 2: ROI & Sustainability)

28 March 2019   |   Readtime: 6 Min.

A few days ago, we explored the benefits of implementing a blockchain-based platform in combination with IoT-enabled smart sensors from a product integrity and food safety perspective. Today, I want to take it to the next level and discuss the financial and environmental benefits as well as the social impact this could have.

Here, at Chainvu, we firmly believe that blockchain will revolutionize the food industry within the next three to five years. Being able to trace a tuna fish from Indonesia or grass-fed beef from Argentina to the consumer's dinner table is not only crucial but will become a competitive necessity based on the sustainability-obsessed millennial customer demand. But slapping on a sticker isn't enough.

  • We need to combine it with a smart sensor that is location aware, can monitor temperature, moisture, and shock, and instantly send alerts if it detects something out of the ordinary.
  • We need the ability to process and act upon this data instantly, whether this means executing a smart contract upon arrival or taking immediate steps to remediate a situation that could cause spoilage or damage.
  • We need visibility, transparency, and collaboration across the entire food supply chain (from the farm to the table) to ensure product integrity, food safety, and financial profits.

Having said that, let's take a closer look at the financial and sustainability benefits that come with a solution like this:

  1. Reduces labor across the entire food supply chain
  2. Allows you to execute smart contracts automatically
  3. Enables you to trace food safety incidents fast and efficiently
  4. Reduces food waste
  5. Enhances your brand's sustainability
  6. Satisfies your customers' demands for traceability
  7. Improves your brand integrity and reliability
  8. Rapidly generates a positive Return-on-Investment

So let's dive right in.

1) Reduces Labor Across The Supply Chain

Let's be honest — we all can agree that traceability and transparency in the food supply chain should be non-negotiable. But for most companies, they are "maybe-in-the-future" or "nice-to-have" wish list items. That's not because they don't understand the necessity of it, but is because of the excessive amount of effort, manpower, and money it took until now to record the required data correctly and get it into a format that can be stored and shared between parties.

All of this can now be done with tiny Internet-of-Things-enabled smart sensors that are built into your pallets, shipping boxes, or other transportation units and are coupled with a blockchain-based platform.

To illustrate this, let's say we are using the Chainvu platform to monitor the packaging, distribution, shipping, and sales of romaine lettuce. At the farm, the produce is packed onto Chainvu-enabled pallets while a Chainvu wall mounted site manager builds a live inventory that is managed and stored using blockchain. During shipping, as the lettuce reaches the distribution center, Chainvu keeps track of your produce at all times — monitoring the temperature, shock, location, and much more.

Instead of passively recording data, Chainvu's sensors provide live updates and, consequently, all supply chain partners connected to this blockchain have instant visibility. This significantly reduces the amount of data recording and entry your employees have to do — or in other words: no more paper checklists on clipboards!

2) Execute Smart Contracts Upon Arrival

Based on the previously created inventory, Chainvu has monitored the shipment for events that could cause damage or spoilage. For eggs, this could mean shock impact and extreme temperatures. For the lettuce, too cold could mean frost damage while too warm could result in bacteria multiplying and result in potential food safety issues.

Traditionally, the retailer did not have this kind of insight at the receiving docks and was accepting the pallets without knowing the exact conditions of the produce. If something was wrong, long-drawn-out negotiations about the chain of custody and the legal and financial responsibility of the damage ensued.

With Chainvu's blockchain solution and sensors, once the romaine lettuce arrives at the retailer's delivery bays, the retailer's dock associate has instant insights about the history, integrity, and safety of the product. If all parameters were within the predefined guardrails, a smart contract can be executed automatically — cutting down the labor and time significantly.

3) Fast & Efficiently Trace Food Safety Incidents

During one of the worst E. coli outbreaks in 2018, 210 people got sick in 36 states (and five people died) from eating contaminated romaine lettuce harvested in April 2018. The FDA finally announced that the outbreak was over in the end of June but only was confident that it had found the origin of the contamination (a near-by irrigation canal from a large Concentrated Animal Feeding Operation) after almost six months of investigations!

As a response to that, Walmart is now requiring all their leafy green suppliers to use blockchain to track their products. In an initial trial, the retail giant was able to reduce the amount of time it took to trace a product to its origin from over 2 weeks to 2.2 seconds.

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4) Significantly Reduces Food Waste

If food waste was a country, it would be the third largest emitter of greenhouse gas in the world, right after China and the United States, according to the FAO Global Initiative on Food Loss and Waste Reduction Study 2015.

By constantly monitoring perishables, such as meat, fresh produce, and eggs, you significantly reduce the amount of food waste created as you can take remediative measures immediately should an exception occur on its way from the farm to the shelf.

In addition, by being able to identify and dispose of potentially contaminated products effectively and confidently, you avoid throwing away days or even weeks' worth of unspoiled food. This would drastically minimize the financial impact of a currently $7 billion problem.

5) Enhances Your Brand's Sustainability

Did you know that in just a few years (by 2025), millennials will make up about 75% of the workforce? Although this generation entered the workforce during hard economic times, it comes with an enormous spending power of over $600 billion.

This is coupled with a progressive world of globalization, economic disruption through innovation and smarts rather than big money, and a different (more socially and environmentally responsible) worldview — resulting in specific buying patterns. Consequently, 73% of millennials are willing to spend more on sustainable goods, in comparison to just 66% of general consumers, according to a Nielsen study. The same report also states that 87% of millennials feel more loyal to businesses and products that help them contribute to social and environmental issues (e.g., meals donated for every product bought, avoid waste by buying Zero Waste products, etc.).

By adding traceability, transparency, and visibility across your entire supply chain, you are able to put irrefutable proof behind your sustainability claims.

6) Satisfy Customer Demand For Traceability

In addition to enhancing your brand's sustainability claims, you could give your customers the option to trace their products from farm to fork. A lot of stories have recently made the news where customers were able to track their tuna fish from a fisher boat in Indonesia, a steak from Argentina, or Italian olive oil across the entire food supply chain to their dinner plate.

While these stories are awe-inspiring, the next question is always this: what is a consumer going to do with this kind of information? Does it really matter in which row in which grove the orange was picked that made it into your orange juice? While such detailed level of data is crucial for food safety and to guarantee the provenance of specific high-value items, consumers can be easily overwhelmed by the sheer amount of data — making it useless.

But how much more useful would data be that says there was no exception on your food's way from the farm until you bought it? This kind of information is not only useful but also could impact how people view sell-by- and use-by-dates — reducing the amount of food wasted every year.

7) Improves Your Brand Integrity & Reliability

I touched on this briefly above, but it is worth pointing out again. By being able to trace a product to its origin, you are able to guarantee that what your consumers are about to buy or consume is genuine. It has not been tampered with, it was grown or raised where the label says it comes from, and much more. This level of transparency greatly increases the trust your customers place in your products and your brand.

Should a food safety incident occur, this trust can quickly be reinforced or restored by being able to fast and efficiently identify and dispose of the contaminated product.

8) Rapidly Generates A Positive Return-on-Investment

Considering the benefits above, in addition to the fact that a solution like Chainvu only requires a minimal investment, it is easy to imagine how blockchain can generate a positive return-on-investment rapidly. Of course, the exact ROI numbers greatly depend on your exact situations (including which products you produce, process, ship, or sell), how many sensors you are using, how many supply chain partners are actively involved, and many other things.

To experience the full benefits of our platform and sensors and get a better understanding of what a return-on-investment could look like for you, sign up for a pilot. If you aren't ready for a full-blown pilot, sign up for a 1-month trial.

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ABOUT THE AUTHOR

Bob Burrows

CEO & Founder of Chainvu

As the CEO and founder of Chainvu, Bob is passionate about the safety and sustainability impact in the food and pharmaceutical supply chains. Did you know that 35% of food in North America doesn’t make it to the table? Chainvu gives the entire supply chain actionable product visibility and 100% traceability of products live at every step. Our solution is embedded and proactive, providing immediate notifications to prevent damage, reduce labour & waste, and improve product quality. Prior to Chainvu, Bob has over two decades of experience as a serial intrapreneur and entrepreneur achieving global leadership in digital networking products, and large-scale communications services. Bob holds a B.S. in Electrical Engineering from the University of Waterloo and an M. Sc. in Business from the Sloan School at MIT.

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