Last summer, several major food manufacturers and retailers including Nestle, Unilever, Tyson, Walmart, and Kroger joined together to announce a major exploration of blockchain technology for food traceability. This announcement drew attention to blockchain as a technology that had real applicability for food safety and has helped the food industry envision the possibilities of blockchain beyond its cryptocurrency origins.
Explore this issueFebruary/March 2018
As more companies explore its possibilities, it has become clear that blockchain represents an opportunity to efficiently manage supply chain data across a complex network from farmers, to distributors, processors, retailers, regulators, and consumers. With the promise of amplifying traceability, blockchains record specific information about products as they move throughout the supply chain. Although industry analysts say blockchain is still very much in its infancy, now is the time for companies to educate themselves on its benefits and how it can lead to vast improvements in efficiency and security in the food supply chain.
Blockchain = Shared Database
Blockchain was first used in bitcoin—digital currency operating independently of a central bank. The blockchain technology that underpins bitcoin is proving to offer valuable benefits to use in cases outside of the financial world. Casting the catchy buzzword aside, blockchain at its core is a shared database. Many industry veterans already know that shared databases have benefits, but what makes blockchain special is that it is a distributed ledger. There is no single point of failure in a distributed ledger—it is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites.
This decentralized structure makes the data resilient to a technology or organizational failure. This, in theory, could significantly change the way companies access and store important documents and transactional histories. For instance, in developing countries, where paper documents can be destroyed in a natural disaster, or electronic copies can be lost in unstable economic conditions, blockchain represents a huge opportunity for consistency.
For the past few years, technology providers like IBM and Microsoft have been focusing on taking blockchain from being a public ledger to an enterprise solution designed to solve supply chain problems. Enterprise blockchains are decentralized in nature, meaning there is no one central point to hack, and support multiple levels of permissions for robust security around who can write to and read from the ledger.
Standards as a Foundation for Blockchain Traceability
Driven by consumer demand for safer food, the global food traceability market is expected to grow to $16.09 billion by 2022, according to a report from Research and Markets. For several years, food suppliers, manufacturers, distributors, retailers, and technology providers have collaborated to enhance the retail grocery and food service industries’ ability to trace products from farm to fork. Industry stakeholders participating in initiatives such as the Produce Traceability Initiative, the Foodservice GS1 US Standards Initiative, and the GS1 US Retail Grocery Initiative have made significant progress in moving traceability forward. While some have made more traceability progress than others, these more than 200 industry participants have at least committed to taking the first step toward the track and trace of products using GS1 Standards. Many have moved along to adopt other GS1 Standards for automated data capture through the use of standardized barcodes, and the ability to share data in real time through a continuously updated network of product data called the Global Data Synchronization Network. With all of these standards working together, a company can have supply chain visibility—a crucial first step that can set a company up to maximize blockchain’s power in the future.
GS1 Standards enable traceability by ensuring all trading partners communicate in a uniform manner. Standards ensure systems interoperability, and provide a singular approach to maintaining product information that supports, at the very least, “one up/one down” visibility of the product’s movement through the distribution channel. The internal data and processes a company uses to track products is integrated into a larger system of external data exchange that takes place between trading partners.
Traceability has permeated the fresh foods industry to varying degrees. For example, more than 65 percent of the produce industry has implemented traceability based on GS1 Standards, motivated to erase negative consumer perceptions of the long and dangerous food recalls of the early 2000s. The meat industry has also been leveraging standards for product traceability for more than 20 years. By contrast, the seafood industry has just begun its traceability journey, as it works through challenges with how to identify product from the source. However, there has recently been an increase in the use of barcodes by distributors and retail outlets, which may drive the adoption of GS1 Standards for traceability upstream more to fishermen and processors. Generally, about 25 large seafood companies have traceability programs underway.
Consumer packaged goods companies have also widely leveraged standards as a means to respond to consumer demand for e-commerce offerings and product information transparency. As a result, traceability enables a consumer to research ingredients and other information that may contain allergens or conflict with dietary concerns, such as clean eating and gluten free.
Product Recalls: A Future Opportunity for Blockchain
Product recalls are additionally significantly faster with standards in place to help break down any barriers caused by proprietary numbering systems and manual communication methods. During a recall, companies that maintain a standards-based framework can pinpoint affected product down to the UPC, which batch it came from in the manufacturing process, and during which dates it may have become contaminated. Once all this information is identified, it is often shared with retailers’ loyalty program members via a simple text or email.
Food traceability is improving now even without blockchain capabilities, but a strong case is being made for how blockchain represents an opportunity for traceability to move faster. Speeding up the recall process was precisely the impetus for Walmart’s well-publicized blockchain traceability pilot involving mangoes. Blockchain was used in tandem with Walmart’s established system of traceability based on GS1 Standards. Pallets of mangoes originating from a farm in Mexico were tagged with numeric identifiers. Every time the product made stops throughout the supply chain, their status was updated on the blockchain ledger.
After the pilot was completed, Walmart was able to pull up all relevant traceability information in seconds, compared to what historically would take a week to procure. All the mangoes’ identifying details are on the blockchain: the mangoes’ weight, the exact date they were harvested, and the orchard it originated from in Oaxaca, Mexico. It even included specific details of a hot-water treatment to rid the product of any insects, the exact date the importer received the shipment, when it passed through customs, and all other transport and storage through its arrival at a Walmart store.
Walmart is not the only company jumping on the blockchain train early. Last Thanksgiving, Cargill, the nation’s largest food manufacturer, also debuted a blockchain pilot program that allowed consumers to track where their turkey originated. Described in a press release as “the first and only major turkey brand to pilot a blockchain-based solution for traceable turkey,” Cargill’s Honeysuckle White brand demonstrated the company’s commitment to providing transparency for consumers. Consumers in select markets were able to enter an on-package code at HoneysuckleWhite.com to access the farm’s location by state and county, view the family farm story, see photos from the farm, and read a message from the farmer.
This example illustrates how blockchain can work to keep secure records of a product’s complete provenance. Coupled with GS1 Standards, a blockchain can record granular information about a product’s transformation and journey to the consumer—ensuring systems interoperability from supplier to manufacturer to distributor to retailer.
Since not all companies are going to select the same technology partner to implement blockchain, standards are the invaluable common language that can streamline the transmission of detailed product data on a blockchain. A standard called EPCIS (Electronic Product Code Information Services) is already being leveraged in the healthcare industry to record complete product chain of custody. In such a heavily regulated business environment, the track and trace of pharmaceutical products throughout the supply chain has become a requirement by law—specifically the Drug Supply Chain Security Act or DSCSA. Under this law signed by President Barack Obama in 2013, pharma companies must identify individual transactions so that all parties involved know what happened to the product, where it happened, and when. The safety of our drugs and medicines depends on the recording of this detailed information.
The food industry can learn from the implementation of EPCIS in healthcare. With the use of the same type of globally unique product identifiers, EPCIS can enable true product information transparency by providing everything about that product’s chain of custody on a blockchain. As conscientious consumers scrutinize products based on their origin, sustainability, socioeconomic impact, how they were made, and other concerns, EPCIS and blockchain tell the story of the products’ journey with a high degree of certainty and validity. Also, in more aspirational use cases, EPCIS and blockchain can support the Internet of Things by more efficiently transmitting data used in personalized marketing, in-home replenishment, or upselling or cross-selling beyond the sale of products.
Deciding to Collaborate Now
Even though we may not see blockchain being used in a mainstream capacity for years to come, discussion of its benefits has created a frenzy of renewed excitement around the topic of traceability. It’s important to look at the supply chain ecosystem holistically before jumping to adopt any new technology. Now is the time to lay a solid foundation for blockchain.
Nuce is the senior vice president, corporate development, at GS1 US, with more than 20 years of experience in retail technology. Reach her at firstname.lastname@example.org.