Enterprise Blockchain is Building Trust in Food Safety and Logistics
Can we add a blockchain to that? It’s hard to be in innovation today across any industry without hearing some mention of blockchain and it’s potential to change so many different aspects of our life.
Walmart, Dole, Unilever, Kroger, Nestle, and Tyson Foods are among a number of food industry giants exploring how blockchain technologies can protect consumers from foodborne illnesses, minimizing the risk and creating transparency in supply chain logistics through a distributed ledger.
Today, if an outbreak occurs, it can take a worldwide retailer/distributor like Walmart weeks to pinpoint exactly what product needs to be pulled off which shelves to contain the spread of a foodborne illness. Once you’ve identified which product needs to be pulled, to trace that single package of mangos back to the exact farm of origin can still take days leaving customers susceptible to risk.
The new blockchain platform being implemented by a new Food Safety Consortium of enterprise brands has the potential to accomplish this same task in just seconds.
Increasing trust and efficiency in tracking the complex supply chain needed to bring food from farmers to grocery store shelves will help strengthen consumer confidence in the origins of their food.
How can blockchain keep food safe?
Decentralized infrastructure powered by blockchain will enable seamless tracking across the entire supply chain so that companies can instantly identify where food comes, where it was processed, who transported it to your grocery store shelves, where it’s been stored, and every step in-between.
IBM’s consortium with major food industry players announced at the end of August that they had an enterprise-grade platform running to start making large strides forward in food transparency.
This product in partnership with IBM will expand upon Walmart’s own internal blockchain proof of concept projects and share the technology with other partners in the consortium so they can decrease the time spent identifying the spread of foodborne illnesses from weeks to just seconds.
Walmart and IBM tested the concept with two blockchain trials of Chinese pork and Mexican mangoes. These efforts tracked shipment information, temperature, goods quality, expiration dates, and more along the entire life of the products.
What is the impact and how can we justify the cost of blockchain platforms?
According to the World Health Organization, on average, 420,000 people die each year from food poisoning across the world. Applying blockchain to your food supply, by tracking goods as they move through the supply chain, has the potential to save thousands of lives each year.
The goal of creating decentralized systems on the blockchain will be to mitigate this risk and improve efficiency in tracking goods so that moments after identifying what foodborne illness is the cause we can see where it came from, where are all the other foods from that same farm or the same truck whose refrigeration unit failed came from, and start the process of pulling specific unsafe products from store shelves. Instead of products sitting on shelves for days or making sweeping pulls of product ultimately wasting not contaminated food in the process, companies will be able to pinpoint specific origins of the problem and track exactly what items and where they are that need to be removed.
In an article on CoinDesk, IBM’s vice-president of blockchain business development, Brigid McDermott, broke down global financial costs of current supply-chain tracking inefficiencies.
The first and most impactful is the loss of human health and life. According to a Centers for Disease Control and Prevention (CDC) report, a salmonella outbreak that was linked to papaya fruit was the cause for infecting 173 people which lead to 58 hospitalizations and one death.
The second is the cost of supply-chain inefficiencies logistically recalling a tainted good where that cost is typically footed largely by the offending producer. When identifying infected items can take weeks, prices can drop and people will frequently stop buying the product altogether, resulting in a financial cost to the proprietors of even the safest products.
The final cost also related to these inefficiencies is the cost to stores of unnecessarily pulling product from shelves that isn’t affected because they were not able to pinpoint a specific cause and end up removing more product than necessary to be on the safe side of a recall and protecting customers.
These financial losses are so massive that recent estimates quoted on the on the total economic impact of foodborne illnesses on the U.S. economy alone have been between $4.4 billion per year to as high as $93.2 billion.
McDermott’s final quote on the matter was that:
“A blockchain food safety program is tremendously good because it provides transparency into the food system, which means that in the event that there is a problem like a recall, you’re able to quickly, effectively, surgically deal with that problem.”
Improving efficiency in transport and cargo operations
The potential for blockchain to solve some of these logistical issues is also seen in moving large container goods across the world. On average, it takes 200 interactions between roughly 30 companies to get a container of goods from one location to another. A few of these interactions happen in-person with the container itself, while the majority happen over email, phone, and fax. Creating, keeping, and updating paperwork takes many hours and equals up to 50% of the cost of moving a container.
The Port of Antwerp in Belgium, the second largest port in Europe, is looking to blockchain to reduce the amount of paperwork, overhead, and audit costs that keep cargo moving smoothly and mitigate fraud.
In its first layer, the Port’s blockchain will create existing records of containers with relevant information, permissions, and parties involved. Everyone will be able to see the container and its destinations plus know who is responsible for the container during each leg of its trip.
To help fight fraud, the blockchain record for each container will also contain partner information and clearance for a specific action on the Port. So, your truck driver will be added to the blockchain and given specific authorization to pick up only certain containers. The permission contained in the blockchain can be checked and verified during the pickup so that there is a reduced risk of someone intercepting the cargo at any point during its transit or handoff between partners.
Today, the Port of Antwerp is running a trial of its blockchain project from the T-Mining startup, and its coalition also includes PSA, MSC, a transport company, and a forwarder. It is expected to provide details on successes for speeding up container transit, reducing paperwork volume and time, and ultimately its ability to cut costs by the end of the year.
The future is even more connected
We are just seeing the start of what blockchain can do for the supply chain.
The interesting work of Walmart and the T-Mining/Port of Antwerp groups highlight two significant areas of improvement that still have plenty of potential. There are also significant opportunities to address larger groups of goods and providers.
IBM is expected to play a significant role in this growth due to its current plethora of trials and blockchain tests. The company is working with AOS to develop a system akin to its platform with Walmart but wants to apply the detail and ability to track sensor data (like temperature) to the entire trucking industry. That would help it reach up to 70.6% of all goods shipped in the U.S., or about 10.4 billion tons of freight.
The nature of blockchain technology is that it becomes more secure and trustworthy as the number of participants grows. While these major systems built on blockchain will take time to completely revamp the way we track and store goods, implementations are underway, and blockchain trials will take on specific portions of the process as we test and scale the technology.
— Jay Chang, Partner & Head of Product Innovation at Sidebench
Jay is a Partner & Head of Product Innovation at Sidebench, an LA based Corporate Innovation Lab, and an advisor to the USC Blackstone Launchpad Incubator. He’s also an avid foodie, chef, & Instagrammer publishing as @BehindTheKnife on Instagram. At Sidebench, he’s worked with with enterprise companies like Red Bull, Pabst Blue Ribbon, Sony, NBC, Cedars Sinai, Oakley, Facebook, and Andreessen Horowitz. Jay graduated from the University of Southern California with a BS in Business Entrepreneurship focused on technical entrepreneurship and marketing. Throughout his multidisciplinary product focused professional career, he’s developed a deep understanding of user first experiences and business case driven approach to technology consulting.
