Expert Comment: Building Blockchain Technology into the Global Food Supply Chain

By Dr Virginia Spiegler, Lecturer in Operations and Supply Chain Management, Kent Business School

As our current global population of around seven billion is expected to approach over nine billion by 2050, the food industry will face huge pressure to meet the necessary 70% increase in food production over the next few decades. At the same time, global supply chains also face the prospect of increased instability and unpredictability as environmental pressures, food wastage and climate change render our current consumption patterns unsustainable.

Over recent years, the food industry has also succumbed to huge scrutiny over the lack of transparency found in its global supply chains. High profile cases such as the Horse Meat Scandal of 2013 and the more recent Dutch Contaminated Eggs Scandal, demonstrate the need for businesses to eradicate ‘blind spots’ in their food supply chains. Workers’ rights, product safety, legal compliance and environmental responsibility are just several expectations companies must meet to ensure risks to consumers and economic actors are minimised.

Farm to fork

As new business models such as Amazon Food emerge to offer direct deliveries of food to consumers, the journey of food from ‘farm to fork’ becomes ever more complex. The number of steps between raw ingredients and the consumer is increasing. The result, as the Food Standards Agency summarises, is that global supply chains are characterised by, “Increasingly complex, fragmented food production and retail processes,” created to deal with these current consumer demands.

The importance of traceability to retailers and consumers is consistently growing with shoppers wanting to know where their food is coming from and some retailers responding by naming supplier information and region on their packaging. However, the ideal of ‘shopping local’ with fresh, seasonal and local ingredients is not an option for everyone amid increases in food prices and personal time restrictions.

Digitalisation and Internet of Everything (IoE)

There is a clear need for global food supply chains to significantly optimise and increase their efficiency to deal with these multifarious challenges. Digital transformation is already stepping up to track and trace products, assess resources and automate machinery in the supply chain.  These capabilities are also offering more transparency and operational efficiency in our global supply chains than ever before, with very little financial investment.

Obviously, the success of this digital transformation will depend on the ability to integrate the different individual systems. As the evolution of new technology emerges, with the IoT (internet of things) and the more recently coined term IoE (Internet of Everything), food supply chains can benefit from increased connectivity between people, things, data and processes. For example, IoE applications can change operations in farms as sensors, cameras and drones can be used to assess soil and crop conditions to determine best time for seed sowing, irrigation and harvesting. This data can be combined with autonomous tractors and weeding systems to enhance productivity and minimise the application of herbicides.

During transportation, vehicles can be set to provide in-transit visibility, such as locations, time of transit and environmental conditions of food compartments. Advanced automated warehousing allows foodstuff to be stored in discrete specific zones to minimise wastage through poor handling and pest infestation and to effectively manage inventory of highly perishable items. On the processing line, the health of employees can be monitored in real time to prevent workers from reporting for work when contagious. Hyperspectral scanning can also identify the presence of virus and bacteria and the occurrence of food adulteration. Moreover, combining demand and warehousing data can assist in the planning of optimum production scheduling and sequencing.

All this information, from the ground to the grocer, can be made available to customers through mobile apps and QR codes, sending traceability information to companies and consumers. For example, consumers of Barilla brand pastas and sauces can use their smartphones to scan a QR code on the back of products to retrieve information of that specific batch. From the durum wheat field, consumers can learn where and how it was sown, cultivated and harvested, to the processing of the raw materials, packaging and labelling of the finished product.

However, the integrity of the information provided by identifier technologies such as QR codes is questionable. So far, consumers have had to accept the trust certifications on products and their origin at face value. This is because food supply chains have been closed and are notoriously difficult for stakeholders to audit. Until recently, the only imaginable way to secure data and transaction transparency along supply chains was through a centralised system that is governed by a third party. The nature of such a centralised data system would be subject to security breaches, data corruption and bias.

Blockchain technology

The food industry is now warming up to new technology to create sustainable and transparent supply chains that get around these problems. Blockchain is a digital ledger that uses a global peer-to-peer network to provide an open platform in which transactions are recorded chronologically and publically. This technology is ground-breaking as the data on the public ledger exists on a decentralised system and cannot be changed – this means its legitimacy is undisputable and it can be audited by all stakeholders. As Harvard Business Review summarises:

“With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision. In this world every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared. Intermediaries like lawyers, brokers, and bankers might no longer be necessary. Individuals, organisations, machines, and algorithms would freely transact and interact with one another with little friction. This is the immense potential of blockchain.” [1]

The capability of this technology cannot be understated. Applied to the food industry where fragmented supply chains feature multiple parties that may have little confidence in one another, this technology can build sustainable and transparent structures. Every step in the supply chain can be logged in a blockchain for later verification and detection of irregularities or fraud. For instance, Skuchain provides a platform that uses cryptographic QR codes and registers every processing step of a product and therefore enhancing transparency, security and efficiency in the supply chain. Also, Walmart is already working with IBM and Tsinghua University, in Beijing, to follow the movement of pork in China with a blockchain.

The future of food

Upon implementation, these technologies will enable companies to protect their brands by reducing the various risks around food safety while ensuring legal compliance and product traceability. Businesses can also enjoy increased profits made by increased consumer confidence in supply chain transparency, the automation of tasks during production and the reduction of food waste that currently stands at 1.3bn tonnes of food a year. Not only this, but on a global scale, companies will also play a major part in establishing food security and environmental sustainability for the planet as the population soars and natural resources are becoming evermore scarce.

Ultimately, supply chain experts face three main challenges in the coming years: process optimisation, demand management and visibility – the latter becoming increasingly important in the food supply chain sector.  Amid recent scandals and the erosion of trust within these chains, pressures for improved traceability and transparency are mounting. Although mandatory traceability is already enforced in Europe by the General Food Law Regulation (EC) 178/2002, the predominance of manual systems in food supply chains makes responses to crisis slow and uncertain, which affects market confidence. IoE-enabled blockchain technology provides a system of trusted records that can address these issues. A Quocirca research report shows that the main obstacles for IoE deployment are not related to the cost of its implementation but to the organisations’ perception around data security and privacy. Hence, IT and technology specialists need to tackle data breach and to better communicate the benefits of such technologies.

What are your thoughts on increasing transparency in food supply chains using digital technologies such as blockchain? If you would like to explore this topic further you can contact Dr Virginia L. M. Spiegler directly at  V.L.Spiegler@kent.ac.uk or find out more about the MSc in Logistics and Supply Chain Management.

Academic Blogger:Virginia Spiegler Lecturer in Logistics and Operational Management

Dr Virginia Spiegler

Dr Virginia Spiegler is a Lecturer in Operations and Supply Chain Management at Kent Business School, University of Kent.

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[1] https://hbr.org/2017/01/the-truth-about-blockchain

 

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