Blockchain In The Food Supply Chain — Explained

11 April 2019   |   Readtime: 4 Min.

Growing food safety concerns. Increasing customer demands for traceability. The need for improved speed and efficiency during recalls of contaminated food. Better visibility across the entire supply chain. These are only some reasons why innovative food supply chain members — may they be producers, processors, transportation companies, distribution centers, or retailers — are evaluating or piloting blockchain solutions right now.

You probably know that Walmart now requires all of their leafy green suppliers to be part of their blockchain, but that is only one of the 12 biggest food companies that are already building a blockchain to reshape how the industry tracks food worldwide.

And while it is hailed as something that will potentially revolutionize the entire food industry, when most of us think of blockchain, we think of bitcoin and cryptocurrency, the best known examples of blockchain, which makes many of us a little skeptical of this new technology.

However, blockchain in the food supply chain is quite different. Let's have a look at what blockchain is in general before taking a closer look at it in the food context.

Blockchain Explained

Essentially, blockchain is a new technology that allows different parties to store and manage data in multiple decentralized locations. A blockchain is made up of a sequence of consensually verified blocks of transactions that are grouped together in form of a chain.

Every member of this chain is an equal owner of the same transaction data copy — yet there is no central master or intermediary (like a bank) as there has been with centralized (think Excel Sheets) or distributed computing (e.g., cloud computing).

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The point is to provide the same shared record to all parties at the same time. If there is a change, the record gets updated — making it immutable (or unchangeable) and therefore more resilient to fraud or tampering and increasing trust among all parties.

In other words, participants can access, inspect, or add new data, but they cannot alter or delete existing records — creating a permanent, public, and never-ending trail of information.

Blockchain In The Food Supply Chain

In 2017, Frank Yiannas, the then head of food safety at Walmart, walked into a staff meeting, placed a package of sliced mangoes on the table and said: "Your trace-back exercise starts now!"

 

It took his team 7 days to trace the fruit from the store back to the farm. In a real food safety incident, taking this long could mean people die or all mangoes (safe and unsafe) have to be pulled and disposed of — resulting in enormous food waste, financial damage, and loss of consumer trust.

The reason for this is simple: depending on the type of product, today's complex food supply chains can include anywhere from 10-30 hand-off points from the grower to the retailer. That is potentially 30 different paper trails or systems that don't talk to each other.

Essentially, the one participant hands over a paper receipt or checklist to the next supply chain member when delivering the product. In the best case scenario, this receipt gets entered into a system or filed away, but more often than not, it lands in the trash bin. This means the chain of information only reaches from one point to the next and there is no chance of ever achieving full transparency across the entire supply chain.

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With blockchain, all members of the supply chain have the same access to information. As soon as a pallet is created, it is possible to add a data record of the inventory to the blockchain, informing all participants of the event.

Because everything happens automatically and there is no need to fill out tedious paper checklists or manually enter data, this saves resources and time. In addition, regulatory bodies can be looped into the blockchain, making panicked scrambling to get ready for audits a thing of the past.

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The Use Cases Of Blockchain Go Far Beyond Traceability

Right now, the industry is focused on tracing what farm and what field did possibly contaminated food come from. However, in the past, traceability solutions were never truly scalable as they relied on a central database. Knowing how decentralized blockchain is, it is easy to see how traceability of food is an extremely valuable use case of the blockchain.

But the use cases go far beyond that. In fact, there are several layers of applications blockchain can be used for in the food supply chain:

1) Faster traceability of the items. Identifying specific food items fast and efficiently, for example, in a food safety incident, is crucial. Blockchain can reduce the time required to trace an item from farm to table (or the other way around) from weeks to mere seconds.

2) Integrity of products. While most blockchain solutions only focus on where a product came from, the integrity of the product is just as important. For example, you need to know if there were any exceptions on the journey (e.g., temperature variations outside an acceptable range or shock that could have caused breakage), how quickly the produce was moved into the cool storage, or if the product was moved outside a predefined zone. All these factors let you draw conclusions about the integrity of the product you are about to receive.

3) Contract level for delivery. Right now, billions of dollars are tied up in potentially disputed contracts. By implementing blockchain, you know if and when the truck arrived, its bill of lading, and much more. This way, trucks won't be held up at the receiving bays with lengthy inspections, which results in faster contract execution and speedier delivery.

4) Smart Contracts & Automatic Payments. Now that the products can be traced, their integrity verified, and the delivery is more efficient, blockchain can be used to execute contracts and initiate a blockchain transaction automatically.

Conclusion

While blockchain solutions in the food supply chain are certainly still in their infancy, the largest corporations are all evaluating and piloting different solutions. Some, like Walmart, have even gone as far as adding traceability as a contractual payment requirement (nobody gets paid until everything is traceable). Over time, the above-mentioned layers of use cases will merge until they seamlessly interact. It will be interesting to see how and when this merge happens.

But for now, I encourage you to think about different use cases in your supply chain. It is always a good idea to look for existing collaboration points with other members of your supply chain (e.g., food safety) as well as areas for dispute (e.g., receiving of goods) as they make natural jumping off points for blockchain. But always keep in mind: Blockchain is a team sport and to be successful, we need to leave our egos at the door and come together as partners willing to create a better customer experience.

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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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