How blockchain technology improves food supply chain transparency and efficiency

Editor's Note: An earlier version of this article ran on Blockchain Tech News, a Food Truck Operator sister publication.

Paul Chang notes that blockchain technology is already in use in the food supply chain.

Blockchain technology, best known as the infrastructure for virtual currencies such bitcoin, has proven its ability to improve efficiencies and transparency of supply chains, notably the food supply chain. 

Paul Chang, global blockchain lead for distribution and industrial market at IBM Corp., gave a detailed summary of how his company's blockchain technology has improved the food supply chain during the recent National Restaurant Show at Chicago's McCormick Place. IBM, a blockchain pioneer, has produced some of the best known blockchain use cases working with high profile companies such as Walmart, Albertsons Companies, Carrefour, Nestle and Dole.

During his presentation, Chang showed screenshots of reports used by different supply chain players, such as restaurants, distributors and manufacturers, which display real time metrics of product movement in the food supply chain. One of the most significant takeaways was that the technology is already being used by major food industry players.

"This is a system that's live and in production," he said.

"We're just scratching the surface of what blockchain can do for your business," Chang said. He compared blockchain's current status to the early days of the Internet, when many thought it was mainly a tool for email.

'Trust and automation'

While a blockchain ecosystem consists of a decentralized network of computer servers that can receive data from sensors in real time, Chang characterized its essence as "trust and automation."

To have a more efficient supply chain, a retailer needs to establish trust between itself and its supply chain partners, he said. And for the transactions to execute efficiently, they must be automated. The manual execution of trusted transactions, by contrast, requires extensive manpower.

Chang presented a slide showing how the traditional food supply chain provides limited visibility of activity to its participants. The interactions between the grower, manufacturer, transporter and retailer are not streamlined. On a blockchain, however, the participants are all part of one streamlined journey. 

"The data that's sitting on the blockchain can be trusted," Chang said. "Blockchain is going to help your business become more automated."

A blockchain ecosystem can be seen as a social network on which the participants can communicate with one another in real time, he said.

Walmart test leads the way

IBM beta tested its Food Trust blockchain technology with Walmart's food supply chain for 18 months, Chang said.

After making the technology available in 2018, he said Walmart's leafy green suppliers joined the blockchain in 2019. In addition, Carrefour, Albertsons and Nestle became customers. Albertsons uses the technology to trace its romaine lettuce while Carrefour, a French retailer, and Nestle enable consumers to have access to farm-to-store data for mashed potatoes.

Carrefour provides data to shoppers about the origin of private label, antibiotic-free chicken from production to distribution, via QR code scan, Chang said. One reason this is important is that consumers will pay a premium for organic food.

"You don't need EDI (electronic data interchange), you don't need to fax anything," he said.

Since deploying the technology, Carrefour has witnessed a double-digit sales lift, Chang said, although he was not sure if the sales lift was driven by the technology or a TV campaign to promote the technology.

Novel use cases

One of the world's largest coffee traders, who Chang did not name, has deployed the technology to track Fair Trade product movement from the grower to the restaurant. The technology allows consumers to tip the coffee farmer based on the information they see on their mobile app.

"I can choose to make a donation to the (farmer's) village," Chang said. "You should be able to see your dollars go down (in your mobile wallet) by $10 in real time and see their wallet go up by $10. This is the future of blockchain. There is no other platform that does this."

Golden State Foods, a foodservice distributor serving McDonald's, tracks the temperature of fresh beef captured using IoT sensors and RFID labeling through the McDonald's supply chain. By partnering with IBM, Golden State Foods created real-time visibility of the temperatures while product was in transit, capturing temperatures at every supply chain node.

Chang presented a slide showing how blockchain, IoT and analytics are used together to manage inventory of temperature sensitive food. The nine-step process enables Golden State Foods to make better production decisions, he said. 

The technology has already reached critical mass in the U.S. retail food market, as between 45% and 60% of the market has become involved with it, Chang said.

Improved metrics tracking

Another slide showed the supplier overview of the process from manufacturing to the restaurant, highlighting the number of shelf life days, identifying at risk cases per location.

He also showed a slide showing a daily report that allows a restaurant manager to view case shipments, highlighting shelf life in days, at-risk cases, out-of-code cases, by both case number and store location.

Companies of all sizes benefit

Nor is it just or the big players. "We have big clients as well as lots of small clients on the system feeding data," he said. Eighty percent of IBM's blockchain participants have annual revenues of less than $5 million.

IBM's Food Trust blockchain ecosystem tracks more than 5 million products on retail shelves and 9 million transactions representing 7,000 different products, according to Chang's presentation. It has also conducted half a million traces.

Only a quarter of consumers today trust the food ecosystem, the presentation noted, the root causes being a lack of trust and transparency.

Blockchain technology addresses these concerns and improves food safety, supply chain efficiency, food waste and food fraud.

Charts courtesy of the National Restaurant Association.