Blockchain is a hot topic these days. From expediting and tracking the transfer of funds to keeping more secure and accurate medical records, blockchain is being considered as a solution to challenges across a number of industries. But when it comes to the benefits that blockchain can bring to food and beverage, there are a lot of skeptics out there.
While blockchain isn’t the magic bullet solution for every problem that the food industry faces, blockchain’s introduction into the perishables supply chain has a ton of transformational potential.
Let’s start with the basics.
What is Blockchain?
Put simply, blockchain is a secure, shared, uneditable listing of events describing the journey of a product from its point of origin to its ultimate destination. Specific activities and transactions occurring along the product’s path are chronologically recorded in “blocks” of information that are linked together as part of an unchangeable ledger for any permitted participant in the blockchain to access. The ledger serves as the immutable history of a product, and you can see whatever parts of that history you are granted access to view.
So what makes it uniquely suited to solve the food industry’s problems?
The food industry has been slow to adopt new technology, and with such a complex supply chain, it has left the industry with little visibility into their own operations. This opens the door for food safety issues to arise and creates distrust among consumers.
So, what is the true value of this potentially visionary technology for food supply chain participants of all sizes, and how can it be harnessed to address concrete industry use cases that increase revenue and boost profitability? Here are just a few of the potential benefits:
Ensuring Food Safety
Every year 48 million Americans get sick from food-borne pathogens. That’s 128,000 hospitalizations and 3,000 deaths each year (CDC). And every year we see the same headlines: “CDC unable to pinpoint the exact location of the outbreak” or “Source still unknown”.
When the exact source is undetermined but the commodity is identified, consumers stop purchasing that commodity altogether. This means that not only are grocery stores losing out on produce sales, but suppliers that grow the commodity in question take a huge hit, even when their produce wasn’t affected. The impact is significant – an average recall is estimated to cost the industry $10M.
Being able to track every load, every pallet, every individual consumer item, from its point of origin to its ultimate destination is critical to improve trust and to protect consumers and the industry as a whole.
Fighting Food Fraud
From horse meat to counterfeit olive oil, food fraud is estimated to cost the industry $30-40 billion a year. Whether it’s fraudulently selling a cheap fish as an expensive fish or adulterating meat, the lack of transparency and accountability is not only deceptive, but it can be a threat to consumer health. Blockchain’s immutable ledger can track all of the transactions from start to finish, so when a fraudulent item is discovered, it can quickly be identified and removed from the shelves. Ultimately, the history of transactions and provenance can allow stakeholders to hold the perpetrators accountable and discourage fraudulent labeling altogether.
Gaining Supply Chain Insights
Only 6% of companies have visibility into their supply chains. Many trading partners still use pen, paper, and email to conduct their business. Many suppliers don’t know what happens to their product once it leaves their hands, and buyers aren’t able to access the history of the products they receive. With blockchain, all purchase order data, traceability data, quality data, and more can be stored in one digital ledger. This level of visibility can have a huge impact on optimizing operations – from vendor scorecarding to transactional savings, the possibilities are endless.
Winning Consumer Trust
Only 33% of companies trust the safety of their food. Consumers want to purchase from companies who take safety and transparency seriously. Whether or not the consumer has access to blockchain data, knowing that a company is using blockchain will help consumers regain trust in the food they consume. Being the supplier or the buyer that can provide full transparency through blockchain will allow those companies to market themselves as the most trusted supply chain participants and help spark industry-wide change.
Meeting Consumer Demand
Consumers want to know everything about the food they consume – where it comes from, how it was grown, who grew it, if it was sustainably grown. They also want to engage with the brands that they purchase from. Companies that adopt blockchain to share this information and interact with consumers at the store shelf will not only retain customers but will grow their businesses by attracting new ones.
While blockchain isn’t the be-all end-all solution to all of the food industry’s challenges, it’s potential for fighting food fraud, ensuring food safety, and gaining supply chain transparency cannot be underestimated. Only as companies like iTradeNetwork begin to move from blockchain pilots into practical implementation will the full extent of the benefits be truly realized.
Curious to learn more about blockchain in the food industry? Check out iTrade’s blockchain solution here or contact us here.