Over the last decade, blockchain technology has developed into one of today’s leading technologies. For the fresh produce industry, the concept of blockchain technology holds vast possibilities and benefits to improve efficiency and traceability, optimise supply chain operations, enhance quality management, increase market and business intelligence, reduce costs and foster brand protection.
Mr Ed Treacy, blockchain expert and vice-president of supply chain efficiencies for the Produce Marketing Association (PMA) says blockchain can help digitally trace and authenticate food products from an ecosystem of suppliers to store shelves and ultimately to consumers. For the retailer, it means fresher food, reduced food waste, faster targeted recalls, and supply chain visibility and traceability. On the customer side, it builds trust and confidence, encourages brand loyalty and provides necessary information and transparency. What is blockchain?
Treacy explained the sometimes complex and overwhelming concept of blockchain technology as a continuously growing list of records that are apart (blocks) and then they are linked – that’s the chain (blockchain). The data in the chain is secure. It uses very sophisticated encryption protocols – it creates a unique serial number that incorporates the data and the time etc. and it uses distributed ledger data storage, so it is impossible to modify data without people being aware of it.
“In the produce world, blockchain is a protocol for sharing information. It is not a database in the sky, nor a software or a hardware. It is a set of rules that has your name on it and is shared. It is a protocol. A blockchain is just a ledger of transactions… It is a unique type of ledger where you can’t change or delete data. It is essentially a secure database, or ledger, with copies spread across multiple computers and everybody has the same record of all transactions”. Depending on the configuration, it can be tailored to control which parties have access to what data.
It takes place in a decentralised environment and enables information to move securely. A powerful attribute of the blockchain methodology is the ability to move through the supply chain at the same speed as the product.
According to Treacy, blockchain technology is mainly in a pilot phase, but it is moving fast, and people are figuring it out and finding more efficient solutions.
In his presentation, he pointed towards various blockchain pilot projects.
In the USA a pilot project by Walmart US provided proof of the blockchain concept. In the pilot case, a packet of pre-sliced mangoes was traced through the supply chain back to the farm in six days, 18 hours and 26 minutes. During the pilot case, assembling the data went from almost a week down to 2,2 seconds.
The multinational technology company, IMB, as part of a consortium with ten major food suppliers in the USA, embarked on collaborative pilot projects with the grocery industry to apply blockchain-based technologies to the food supply chain to improve food safety and ingredient transparency for a more transparent, authentic and trustworthy global food supply chain. Treacy is also representing the PMA volunteer Blockchain Task Force on the collaborative project team.
Results from the pilot studies are very encouraging and provide proof of the value and benefits of blockchain. Blockchain pilot projects are using existing business practices and standards. “You cannot invent a whole new way of doing business to support blockchain. Blockchain must work on top of how we are doing business today. In terms of cost, the benefits to each trading partner should be greater than the cost,” Treacy said.
He highlights the fact that the process of implementing blockchain do require business process mapping, identification of inefficient processes and it forces data quality issues to be addressed.
Other blockchain pilots
Other blockchain pilot projects relating to beef and grain exports were also implemented in Australia. In December 2017, IBM and Walmart launched a blockchain-based food safety alliance for China. The Walmart pilot aims to make China’s pork market safer. Blockchain technology is also applied in tuna supply traceability and another project was piloted for tomatoes.
American multinational technology company, Microsoft, has also set its sights on retail as an industry that could benefit from blockchain technology. Earlier, the company hosted a demo at the National Retail Federation (NRF) show in New York that aims to help retailers streamline their supply chain operation by creating smart contracts based on blockchain.
Commercially, Trimble and partner company HarvestMark are leading contributors in blockchain technologies and open source communities that save customers millions of dollars per year. Trimble operates across five continents with more than two billion products traceable per year. Advanced blockchain technologies solve scalability and security issues and it handles thousands of transactions per second.
The company uses channels and multiple ledgers to manage complex transactions while protecting confidentiality. Blockchain apps are configured to handle location and freight data. The value of blockchain provides opportunities for real-time data analytics and deep domain knowledge for the perishable food value chain. Pricing, capacity, utilisation, and other data can be tracked and analysed. In terms of cost and efficiency, one carrier reduced contract management headcounts from 12 to 3 and increased revenue by 3,5 million dollars through better matching capacity and demand.
Data-driven efficiencies and benefits
Blockchain is all about improving efficiency and, above all, provides net benefits for role-players in the entire supply chain – growers, transportation companies, retailers, regulators, manufacturers, distribution centres and customers.
The blockchain methodology can help brands track sources of contamination far more quickly, reducing the impact of compromised food. As far as product recalls are concerned, blockchain can provide end-to-end traceability of data, has the ability to verify the history of the product and provide real-time location and status.
In terms of regulatory compliance, it has the ability to upload, manage, access, edit and share compliance documentation, test results and audit certificates.
Treacy highlighted the fact that the future value of blockchain technology lies in the analysis of data and how data will be used to the benefit of the entire supply chain – from growers to consumers.
Data-sharing and privacy
Treacy highlighted some of the issues to be tackled, including supply chain data transparency, what data should be shared with customers or trading partners, private versus public blockchain networks and the cost of development, performance, the ability to select privacy levels, and regulators’ right to access to blockchain data.
Although blockchain technology is mainly in a pilot phase in the fresh produce industry, Treacy advises to prepare for blockchain. This can include identifying inefficiencies in current workflow, processes, and systems and analysing if blockchain is the right answer to the issues. Systems must be prepared to post information into a blockchain ledger and to determine the best method to capture data at all points in your processes. Company data-sharing and privacy policies should be updated to make provision for blockchain.
This article comes from a presentation given by Mr Ed Treacy, blockchain expert and vice-president of supply chain efficiencies for the Produce Marketing Association (PMA) at PMA’s Fresh Connections: Southern Africa Conference and Trade Show on 15 August 2018 in Pretoria, South Africa.