When we think of potentially hazardous foods, chicken, pork or perhaps eggs might come to mind- but not lettuce. Yet just last month in America, this supposedly harmless vegetable left 5 people dead and just under 200 seriously ill. The culprit? Contamination with the deadly E-coli bacteria at some point in the lettuce’s supply chain that, two months on, authorities have still been unable to identify.
In today’s complex and increasingly globalised supply chains, cases like this are becoming unwelcome regulars in our newsfeeds; so too are instances of mislabelling or even malicious tampering. Outdated systems, never-ending paper trails and lack of visibility all contribute to the chaos. Every year, 30% of food produced worldwide is lost to supply chain errors, costing businesses a staggering US $1 trillion. Over 420,000 people die annually from contaminated food, a quarter of these being children. Our supply chains are long overdue a renovation, and the food industry thinks it has an answer: blockchain.
Over the past six months, major retailers across the globe, including Walmart and Carrefour, have announced pilot projects to experiment with blockchain-based supply chains. Proponents say that these new systems will revolutionize our current supply chains, reducing waste and creating safer, more efficient and more transparent processes for consumers and businesses alike. But is this simply another example of the hype endemic to blockchain, or will it prove genuinely transformative?
What is blockchain?
At its heart, blockchain is simply a ledger. Like a normal ledger, it can be used to document digital records of transactions. However, unlike centralised ledgers, which are stored on one single device, a blockchain is stored across multiple devices, and can be updated by multiple participants simultaneously. This makes it extremely transparent, and a highly effective tool for transacting across complex networks with numerous, geographically dispersed participants. Blockchain also offers a high degree of security and is effectively tamper proof, thanks to specialist cryptographic infrastructure- meaning it is virtually impossible to alter or delete information once it has been committed to the network.
On the surface, these characteristics of distribution and immutability make blockchain a highly attractive proposition for businesses with complex supply chains. It cuts out the need for the disparate, independent databases and paper trails that plague today’s systems, giving businesses an automatic, reliable and digitalised bird’s eye view over the journey of any product.
This increased transparency and traceability could offer significant advantages to food retailers. First, it incentivizes suppliers and producers to label products accurately and honestly- if an item has been tampered with, it is easy to identify the culprit. Currently, retracing a product’s journey through a supply chain takes weeks or months- something that was exemplified by the powerlessness of American authorities in the face of the E-coli crisis. A blockchain-backed system, by comparison, could reduce the time it takes to trace products from months to a matter of seconds. This increased control over their networks could allow retailers to mitigate or even prevent contamination or quality incidents.
Giving customers increased visibility over the provenance of their food could also give businesses a competitive edge. Currently, consumers around the globe have little insight into the origins and quality of the food they are eating. In Chinese markets, where counterfeiting and quality has long been an issue, we are beginning to see this change. Retailer Alibaba, who is running its own blockchain pilot, is currently experimenting with adding QR codes to the back of imported butter. These are designed to allow consumers an overview of the butter’s lifecycle, giving them in depth information about the origins and quality of the product and acting as a reassurance that what they are buying is not a counterfeit. Retailers operating in the UK should pay attention. As we leave the European Union and its stringent food laws behind, consumer complacency around sourcing will likely decrease. Just earlier this year, there was wide scale public uproar against a potential import deal with America which threatened to bring in low welfare, chemical laden meat into the UK. If consumer mentality changes, businesses that prioritise transparency will stay one step ahead.
An imperfect system
While these potential benefits are significant, blockchain is no one-size-fits-all solution for supply chain management. Despite its transparency, this system- like any other database- is only as good as the participants operating on it, and will still be subject to human error (intentional or otherwise). The transparency of blockchain platforms does incentivize honesty, but businesses will still need to take measures to counter mistakes or fraudulent behaviour if they want a truly reliable overview of their supply networks. Such measures might include data verification technology like satellites, drones or sensors, but these will inevitably add to the cost of implementing these platforms.
Digital inclusion- or the lack of it- will also be a challenge for businesses who operate supply chains in developing nations. While the western world takes for granted digital technologies and our ability to operate these technologies, access to the same luxuries (or, in some cases, even the internet) cannot be assumed outside of this bubble. This has been a significant challenge for Moyee coffee, an Irish company trading on a blockhain powered supply chain, who have resorted to stationing employees in Ethiopia to operate the platform on behalf of producers. While this may work well on a small scale, linear supply chain, for larger organisations with more complex, disparate supply chains, it may not prove so easy. It is also only a temporary solution; to make these platforms truly sustainable, businesses will need to take a longer-term approach to the underlying issues.
These challenges mean that blockchain, in spite of the noise currently being made in popular media, remains firmly in the proof-of-concept stage as a solution for supply chain management; it is not likely that it will be viable for widespread use for several years to come. However, despite these hurdles, blockchain’s impact on this industry should not be minimised. It has challenged the tired, outdated systems that are no longer fit for a globalised world; even if food retailers choose not to turn to blockchain for innovation, they should be striving towards the same goals it promotes- a more efficient, transparent supply chain for the benefit of businesses and consumers alike. Blockchain is no magic cure for the many woes that plague the food industry today- but it is certainly a good start.