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How Blockchain Will Transform Food Supply Chain?
Blockchain, the groundbreaking technology behind cryptocurrencies and bitcoin has been a huge buzzword in recent years. With blockchain technology steadily seeping into every industry, it is only logical for the food supply chain to follow the footsteps. The shared-ledger technology embeds trust into the system thereby improving the transparency and efficiency of the supply chain. Yielding mutually beneficial outcomes and competitive advantages, blockchain adoption holds great potential in the agrifood sector.
Existing Issues in the Food Supply Chain
As of now, the food sector is crippled with supply chain inefficiencies, frauds and scandals. And most of the issues affecting the food industry stems from the inherent lack of trust and transparency within the supply chain. Our food system today fails to meet the transparency and assurance demanded by many consumers. You might have heard about the high profile food fraud cases such as UK Horsemeat scandal of 2003 and Salmonella peanut butter outbreak of 2009. Since food safety and nutrition are inextricably linked, food frauds creates a vicious cycle of disease and malnutrition. The World Health Organization (WHO) reports that almost 1 in 10 people in the world fall ill after eating contaminated food. Furthermore, food borne diseases mainly affects the health of infants, young children, elderly and the sick. Costing the global food industry an estimated US $40 billion each year, food fraud continues to rise among consumers and the industry.
Why Blockchain?
It is clear that the current food supply chains and quality management systems are bogged down in manual processes that are unable to detect or prevent adulteration. When you place the food supply chain on blockchain, it makes the entire process transparent and traceable. As the entire ecosystem brings farmers, wholesalers, retailers, shopkeepers, warehouse and factories together, consumers can be assured on availing end-to-end traceability. Each entity that handles the food could be represented as a node in the blockchain network , which would make it easier to track and trace the source of food items from farm to fork. Manual recordings and verifications of the supply chain operations can be replaced with IoT(Internet of Things) devices. IoT refers to an extensive range of devices that serve as a conduit between physical and digital world. Environmental, biological and chemical-based sensors can be used to collect and transmit real-time information of food products as they move from one point of a supply chain to another. Not only it reduces human errors, but also increases the overall efficiency. Since the data is recorded and transacted through consensus protocol in a blockchain system, the chances of information tampering or malicious activities are eliminated.
Blockchain imparts accountability and traceability to the food supply chain, thus preventing the chances of food safety disasters. Globally renowned organizations such as Nestle and Unilever are contemplating with the idea of utilizing the distributed ledger technology to build a fully-transparent food supply chain. Walmart has been working with IBM on using blockchain to achieve enhanced food traceability and transparency. The multinational retail corporation has developed IBM Food Trust solution that connects farmers, processors, distributors and retailers through a permissioned network of data.
“Our customers deserve a more transparent supply chain. We felt the one-step-up and one-step-back model of food traceability was outdated for the 21st century. This is a smart, technology-supported move that will greatly benefit our customers and transform the food system, benefitting all stakeholders,” Frank Yiannas, vice president of food safety for Walmart said in a statement. With blockchain solution in place, Walmart was able to retrieve the tracking information of a food item within 2.2 seconds, a process that took almost seven days in the past. Having quick access to accurate tracking information of food products helps the company in preventing the gravity of a disease outbreak or contamination, reducing unnecessary waste and economic burden of recalls.
How Will Blockchain Prove Beneficial?
Blockchain has the potential to streamline certain aspects of food industry thereby helping to maintain the highest safety standards and exceptional quality. Serving as a beneficial tool for the food industry, blockchain technology can provide greater visibility into the complex steps in a supply chain. Authenticating a product’s journey across the supply chain through blockchain transactions helps in substantiating product claims and building trust among the consumer base. The core attributes of blockchain - transparency, traceability and tamper resistance, can transform the food industry by generating trust between the farmers, retailers, suppliers, and consumers. Besides transparency and fraud prevention, blockchain also helps in ensuring faster and fairer payments. This shared ledger technology could prove highly beneficial to farmers who are only paid a meagre amount by middlemen. As the blockchain technology prevents price coercion and eliminates intermediaries in the chain, food producers can reap significant economic benefits.
Food wastage reduction is another noteworthy benefit of blockchain. According to the Food and Agriculture Organization of the United Nations, “Roughly one third of the food produced in the world for human consumption every year - approximately 1.3 billion tonnes - gets lost or wasted”. The extra food that is wasted on landfills can feed hundreds of families struggling with hunger. Not only this global issue poses a challenge to food security, but also affects the economy and environmental sustainability. Blockchain adoption would help the consumers and suppliers in availing better access to the entire supply chain operations. Suppliers remain informed, inventories are accurately recorded and quality checks are completed precisely. Business intelligence and clarity generated by blockchain technology facilitates better decision making and ultimately less waste.
Limitations
It is clear that blockchain has the potential to address the current issues and make a positive impact on the food supply chain. However, there are some limitations to the adoption of blockchain in food sector. Food ecosystem involves many players and many layers which demands greater efforts for blockchain adoption. All the entities in the network need to adopt this technology in order to attain successful integration. However, customizing and implementing blockchain system in scale won’t happen overnight, as it requires huge effort and expenses. Nonetheless, most participants and organizations are hesitant about adopting a an emerging technology. Rapid developments in this decentralized, distributed ledger technology is challenging to grasp for many.
Final Thoughts
Adopting blockchain can be a transformative approach for food supply chains, as it would provide better visibility in an otherwise murky journey from harvest to retail. However, all the parties along the chain need to follow the steps and embrace the technological change. With global retail giants such as Walmart and Carrefour leading the way, we may see the supply chain players jump on the bandwagon in the near future.
Existing Issues in the Food Supply Chain
As of now, the food sector is crippled with supply chain inefficiencies, frauds and scandals. And most of the issues affecting the food industry stems from the inherent lack of trust and transparency within the supply chain. Our food system today fails to meet the transparency and assurance demanded by many consumers. You might have heard about the high profile food fraud cases such as UK Horsemeat scandal of 2003 and Salmonella peanut butter outbreak of 2009. Since food safety and nutrition are inextricably linked, food frauds creates a vicious cycle of disease and malnutrition. The World Health Organization (WHO) reports that almost 1 in 10 people in the world fall ill after eating contaminated food. Furthermore, food borne diseases mainly affects the health of infants, young children, elderly and the sick. Costing the global food industry an estimated US $40 billion each year, food fraud continues to rise among consumers and the industry.
Why Blockchain?
It is clear that the current food supply chains and quality management systems are bogged down in manual processes that are unable to detect or prevent adulteration. When you place the food supply chain on blockchain, it makes the entire process transparent and traceable. As the entire ecosystem brings farmers, wholesalers, retailers, shopkeepers, warehouse and factories together, consumers can be assured on availing end-to-end traceability. Each entity that handles the food could be represented as a node in the blockchain network , which would make it easier to track and trace the source of food items from farm to fork. Manual recordings and verifications of the supply chain operations can be replaced with IoT(Internet of Things) devices. IoT refers to an extensive range of devices that serve as a conduit between physical and digital world. Environmental, biological and chemical-based sensors can be used to collect and transmit real-time information of food products as they move from one point of a supply chain to another. Not only it reduces human errors, but also increases the overall efficiency. Since the data is recorded and transacted through consensus protocol in a blockchain system, the chances of information tampering or malicious activities are eliminated.
Blockchain imparts accountability and traceability to the food supply chain, thus preventing the chances of food safety disasters. Globally renowned organizations such as Nestle and Unilever are contemplating with the idea of utilizing the distributed ledger technology to build a fully-transparent food supply chain. Walmart has been working with IBM on using blockchain to achieve enhanced food traceability and transparency. The multinational retail corporation has developed IBM Food Trust solution that connects farmers, processors, distributors and retailers through a permissioned network of data.
“Our customers deserve a more transparent supply chain. We felt the one-step-up and one-step-back model of food traceability was outdated for the 21st century. This is a smart, technology-supported move that will greatly benefit our customers and transform the food system, benefitting all stakeholders,” Frank Yiannas, vice president of food safety for Walmart said in a statement. With blockchain solution in place, Walmart was able to retrieve the tracking information of a food item within 2.2 seconds, a process that took almost seven days in the past. Having quick access to accurate tracking information of food products helps the company in preventing the gravity of a disease outbreak or contamination, reducing unnecessary waste and economic burden of recalls.
How Will Blockchain Prove Beneficial?
Blockchain has the potential to streamline certain aspects of food industry thereby helping to maintain the highest safety standards and exceptional quality. Serving as a beneficial tool for the food industry, blockchain technology can provide greater visibility into the complex steps in a supply chain. Authenticating a product’s journey across the supply chain through blockchain transactions helps in substantiating product claims and building trust among the consumer base. The core attributes of blockchain - transparency, traceability and tamper resistance, can transform the food industry by generating trust between the farmers, retailers, suppliers, and consumers. Besides transparency and fraud prevention, blockchain also helps in ensuring faster and fairer payments. This shared ledger technology could prove highly beneficial to farmers who are only paid a meagre amount by middlemen. As the blockchain technology prevents price coercion and eliminates intermediaries in the chain, food producers can reap significant economic benefits.
Food wastage reduction is another noteworthy benefit of blockchain. According to the Food and Agriculture Organization of the United Nations, “Roughly one third of the food produced in the world for human consumption every year - approximately 1.3 billion tonnes - gets lost or wasted”. The extra food that is wasted on landfills can feed hundreds of families struggling with hunger. Not only this global issue poses a challenge to food security, but also affects the economy and environmental sustainability. Blockchain adoption would help the consumers and suppliers in availing better access to the entire supply chain operations. Suppliers remain informed, inventories are accurately recorded and quality checks are completed precisely. Business intelligence and clarity generated by blockchain technology facilitates better decision making and ultimately less waste.
Limitations
It is clear that blockchain has the potential to address the current issues and make a positive impact on the food supply chain. However, there are some limitations to the adoption of blockchain in food sector. Food ecosystem involves many players and many layers which demands greater efforts for blockchain adoption. All the entities in the network need to adopt this technology in order to attain successful integration. However, customizing and implementing blockchain system in scale won’t happen overnight, as it requires huge effort and expenses. Nonetheless, most participants and organizations are hesitant about adopting a an emerging technology. Rapid developments in this decentralized, distributed ledger technology is challenging to grasp for many.
Final Thoughts
Adopting blockchain can be a transformative approach for food supply chains, as it would provide better visibility in an otherwise murky journey from harvest to retail. However, all the parties along the chain need to follow the steps and embrace the technological change. With global retail giants such as Walmart and Carrefour leading the way, we may see the supply chain players jump on the bandwagon in the near future.
