According to the WTO, one of ten people fall ill due to food contamination annually. And the best solution to this very big problem is blockchain distributed ledger technology (DLT) which enables food safety through traceability.

Imagine that you go shopping at your trusted neighborhood grocery store and buy groceries for your son’s birthday party. You cook his favorite meal, a chicken dish. Only to find that soon after the party, everyone — you, your family, your friends, get violently ill with food poisoning because the chicken was past the good through date. How could this happen? As soon as you are well enough again and able, you go to your supermarket to complain. They have already notified their supplier, who has recalled its products — all of them, costing millions. The problem is, even the supplier does not immediately know exactly what happened. Why not? The supply chain is a complex thing. Especially in the food industry, interactions and processes leave many areas in which problems can arise.

So what happened? It turns out that in one branch of the production, factory workers falsified slaughter dates in order to increase the commercial shelf life of the meat. This turned out to be a big problem — the company in question supplies the UK with one third of the chicken consumed nationally. So if in such instances, faulty products are not recalled on time, the issue can become pandemic…

What Blockchain can do for Food Supply Chain

Blockchain technology can ensure trust in the supply chain and the food we eat. It is ideally suited to address the complex relationships and diversity of interests which characterize supply chain because it can solve the problem of disclosure and accountability between stakeholders with misaligned interests and update shared data in real time.

DLT enables multi-party insights into assets and liabilities and proof of ownership. Thanks to distributed ledgers, there is transparency, no data silos or can arise, and all stakeholders are accountable because they are obligated to disclose information and share a common, consistent record — “one source of the truth”.

Among the most important challenges which DLT addresses in supply chain are provenance, traceability and quality control. This will raise the bar for commodity standards and reduce risks in production and distribution — benefiting consumers, businesses, and all stakeholders involved in the process. Products that are unsafe can be followed back to their origin and later distribution points. Illness can be prevented, and product recall targeted, so that it is fast and effective, and damage and waste are minimized. These are essential points to ensure food safety.

To return to the above example of food poisoning, if blockchain technology had been used to track the chicken meat along its whole journey from its first point of origin, incidents like this can be avoided altogether — saving health, money, companies’ reputations, and legal disputes. Not least, risk is reduced for enterprises which are involved in interactions with other partners as part of their business activity, freeing them from liability in cases over which they would otherwise have no control.

How does this work? Data on the product — in this case, chicken meat — is registered in the blockchain database from the beginning and then continually on every leg of its journey. It can then be monitored and tracked in the supply chain in real time. Records are immutable and the data can be matched to each step in the supply chain, so that the accountability of all involved is guaranteed.

Customers can scan QR codes to follow a product’s path themselves

from beginning to end. Revealing a product’s movement via QR codes ensures that it is authentic and has not been tampered with.

Tracking is closely related to data sharing, another aspect of DLT which is revolutionary for optimizing supply chain. Through certification of batches, a product’s quality and freshness can be controlled in immutable, transparent records to guarantee that it reaches the consumer in the condition it should. Realtime records speed efficiency that can be life-saving.

If without DLT, it took a the grocery giant Walmart seven days to track a fruit back to its origins, with blockchain tech in place, this is now down to two seconds. Data sharing — whether by QR code or otherwise — is also key to giving both commercial buyers and consumers detailed information on a product’s contents and attributes. The values are many — to justify the quality vs price trade-off for both B2B and B2C, to prevent allergic reactions, to provide food standard ratings, etc.

DLT for supply chain has yet other benefits and adds value beyond health and process efficiency. For example — regarding environmental and compliance concerns, and ensuring that workers’ wages are fair.

DLT can be combined with other technologies like IoT in a number of ways to collect data that is relevant in supply chain to optimize information on products. For instance, it can help to ensure that fishing is done only in areas where the fish population is not over-exploited. Automatic Identification System (AIS) transmitters are attached to fishing vessels and connected to sensors with which the fish are tagged when caught. The sensors record the location of the catch. In an industry that is plagued by reputational damage due to questionable fishing practices, one major tuna producer increased sales by two-digit millions after they started using DLT to make their product traceable back to the fisherman.

As an immutable ledger, DLT can replace the cumbersome, slow, and unreliable paper trails which exist in many supply chains, especially in the shipping and logistics industry. It is established that the digitalization of documents (contracts, government certificates, invoices) — and making them available through blockchain platforms in real time — can speed their processing time by 80%.

Other key areas where DLT enables supply chain are in assuring real-time management of stock, efficient product supply, and promoting fair pricing by increasing transparency.

Because of the intransparency of classical supply chain processes, small farmers are traditionally reliant on middle men to reach the market and are forced to live with miniscule margins. However, DLT eliminates unnecessary third parties, thus allowing these small farmers to connect to retailers or consumers directly, thereby increasing their due earnings without raising the price, and strengthening agricultural production — not only in developing countries, but worldwide.

When DLT is used in Supply Chain to optimize processes, information flow, and forecast customer needs, it promises to transform the supply chain into a demand chain, save billions across the industry and bring more efficient resource use.

In overview, DLT can add much value to supply chains. It can:

Increase food safety and quality control,

Prevent theft and fraud,

Ensure provenance and product authenticity,

Guarantee authentic fair trade status through tracing product origins,

Be used to monitor production conditions and labor to ensure quality in manufacturing,

Trace shipments in real time,

Monitor stocks, demand, costs, CO2 emissions and waste throughout the supply chain,

Promote inclusion and market access to small farmers and producers,

Reduce paperwork, bureaucracy and delays,

Lower costs and lead times.

Case Studies: How Major Companies use DLT in Supply Chain

The supply chain, and the agrofood industry in particular, stand to benefit from the potential which DLT offers. This is concurrent with numerous scandals about food safety and quality, increasing public concern on these topics, coupled with a trend to digitalization and a rising demand for data integrity. Prominent examples of the technology’s use include:

Walmart China is making a particular effort to ensure food safety with DLT tracking, directed at following the movement of pork meat.

China is making a particular effort to ensure food safety with DLT tracking, directed at following the movement of pork meat. The major league tuna supplier John West uses DLT and can-tracker codes to trace the origins of their products back to the fisherman.

uses DLT and can-tracker codes to trace the origins of their products back to the fisherman. The Chinese online trade giant JD.com is working with an Australian exporter and manufacturer to track Black Angus beef from its place of origin through processing and final transport.

is working with an Australian exporter and manufacturer to track Black Angus beef from its place of origin through processing and final transport. The Belgian trading house Louis Dreyfus Co . has pioneered use of DLT in agrotrade and document digitalization to sell US soybeans to China, thereby cutting overall transaction time in half by providing documentation in real time.

. has pioneered use of DLT in agrotrade and document digitalization to sell US soybeans to China, thereby cutting overall transaction time in half by providing documentation in real time. The Chinese company Walimai uses IoT sensors, DLT, and QR codes to track baby formula and confirm that it is tamper-free. This is key in a market that has experienced a scandal with fraudulent formula food which, in 2008, resulted in the death and damaged health of many children.

uses IoT sensors, DLT, and QR codes to track baby formula and confirm that it is tamper-free. This is key in a market that has experienced a scandal with fraudulent formula food which, in 2008, resulted in the death and damaged health of many children. Starbucks is launching a pilot blockchain program to pursue sustainable sourcing practices in its supply chain.

is launching a pilot blockchain program to pursue sustainable sourcing practices in its supply chain. Online trade mammoth Alibaba is developing DLT in its supply chain to track product authenticity and exclude counterfeits.

is developing DLT in its supply chain to track product authenticity and exclude counterfeits. Unilever is exploring DLT to support supply chain forecasting, optimization of meeting demand, and minimizing waste.

Carrefour is rolling out DLT and QR codes to track food products in its supply chain from A to Z and provide full transparency to customers on food origins, production dates, producers, and farming methods.

Why Insolar is Optimally Poised to Revolutionize Supply Chain

Insolar is just what supply chain needs in terms of DLT. The reason lies in the platform’s unique features.

Insolar ensures scalability that enables operating networks of different scales and with differing rules. Insolar offers public/ private/ hybrid networks that are amenable with individual domain rules. Supply chain requires interoperability across private and public networks, because by its nature, it traverses multiple governance and regulatory zones. This is especially true in shipping / logistics, where multiple international routes and jurisdictions involve differing commercial codes, maritime law, and rights of ownership.

The complexity can be reduced and compliance for multiple regulatory schemes secured in a DLT run supply chain where processes are automated by smart contracts and decentralized, if — like on Insolar — the network is hybrid and domain governed.

The implications are staggering, because this has potential to not only optimize supply chain generally, but also remove the intercommercial frictions that often curb international trade and lead to protectionist and isolationist szenarios. In an ever-more globalized economy characterized by interdependence, that is ground-breaking and can empower and transform the way global trade is done.

Insolar’s dynamic consensus feature is also ideally suited for supply chain. It changes the number of validators based on the value of the transaction. Thus transaction costs are reduced if the transaction value is low. If it is high, the participating nodes carry liability. Businesses can plan their transactions cost-efficiently and securely.

Finally, in a sector characterized by a particularly large number of partners across different verticals, Insolar’s ease of use and its interoperability features are essential. Since Insolar is compatible with legacy IT systems, any number of enterprises can easily join its network, and clients do not have to rebuild, just add-on Insolar applications. Insolar is BaaS — Blockchain as a Service, built with enterprise in mind. It is an IT add on, which makes it affordable for enterprises. As such, it abstracts complexity — just as you can drive a car without understanding the technology under the hood, enterprises can use the Insolar platform and its applications easily without delving deeper into understanding how they work or adding additional IT skills or hardware. It reduces unnecessary computational and storage overhead.

_______

Check our Github and leave feedback on the code.

Follow Insolar on social media: