Making the food chain blockchain-ready

“If you think that the internet has changed your life, think again. The Internet of Things is about to change it all over again!”

By MINAL PATEL

Stakeholders throughout the food industry, including research groups and standard organizations, are evaluating the way to best incorporate distributed ledger technologies into the food supply chain. This interest in blockchain stems from a broader effort to achieve greater transaction efficiency and interoperability between supply chain nodes, while also decreasing the risk of data corruption as goods change hands. The potential of blockchain-based food exchange to reinforce inter-organization communication and provide chain transparency continues to drive development of pilot programs. New research is being conducted to shed light on the advantages and maturity of these programs.

According to research, through 2022, 80% of supply chain blockchain initiatives will remain at a proof-of-concept (POC) or pilot stage. One of the main reasons for this development is that early blockchain pilots for supply chain pursued technology-oriented models that have been successful in other sectors, such as banking and insurance. But, successful blockchain use cases for supply chain will require a special approach.

Modern supply chains are very complex and need digital connectivity and agility across participants. Many organizations believed that blockchain could help navigate this complexity and pushed to make robust use cases for the availability chain. However, most of those use cases were inspired by pilots from the banking and insurance sector and didn’t work well during a supply chain environment.

“Without data, you are just another person with opinion.”

Supply chain leaders treat Blockchain as a part of a longer-term technology road map and risk management planning. We see that many leaders are adopting a broader end-to-end view across their supply chains and map all requirements – from sourcing across manufacturing to the ultimate distribution. Blockchain as a part of a technology portfolio has created opportunities for internal collaboration across different areas that have a possible interest in Blockchain, like logistics and IT.

Many supply chain leaders that have conducted blockchain initiatives found that they now have a more complete overview of the present health of their supply chain. By browsing the method of deploying a blockchain pilot, they found what must change in their organization before blockchain technology are often leveraged effectively.

I believe that industry leaders got to understand the way to digitize supply chain events if they’re to realize blockchain-readiness, and advance data sharing capabilities within their supply chain ecosystem.

A blockchain-ready food chain is a food chain where machine generated data on food products and processes can be fed into and empowered by the blockchain technology. A blockchain empowered food chain will have high level of trust, traceability, transparency and lower level of fraud. It ensures the integrity of information regarding food quality and provenance.

Blockchain technology supports a robust information system that removes the risk of ‘single point of failure’ due to its distributed nature and ensures the integrity of information. The following features characterize the blockchain technology:

Distributed ledger: an encrypted list of transactions that is stored in multiple participating nodes (computers or servers) rather than on a central ledger.
Records in a blockchain are kept in sync by peer-to-peer mechanisms and pre-agreed rules about what new records can be added. The records and history of records are tamper-proof. This shows the authenticity and integrity of data.
Removing intermediaries in exchanges and transactions that can then reduce the chance of fraud and related transaction costs.
Visibility of all transactions while maintaining privacy of the participants.
Automated transactions known as ‘smart contracts’ that can contribute to the transparency and fairness in transactions.

Blockchain technology is now on the radar of all leading players in the food chain. Many are interested in applying blockchain technology in different sector. Several cases have been developed on the provenance and traceability of food products across the supply chain. Challenges we may face in the development of blockchain-ready food chain are-

How to digitalize physical goods and assets and represent them in blockchain based information systems?
How much information or data can be stored in a blockchain and how feasible it is to store the information in distributed databases?
Any new information system will change exiting business processes and result in different advantages or disadvantages for existing and new players in the ecosystem.

Application of Blockchain Technology in food chain is not much about the technology itself. Of course, it needs to work and it is only in the starting phase, but rather about the organization of information flows among different stakeholders, it is about different ways of organizing trust and trust-relations within the chain.

Blockchain technology is a powerful enabler of transparent and fair food systems. The challenges and potential threats the technology may carry for which joint learning and experimentation by stakeholders in the ecosystem are necessary.

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