Advances in blockchain technology could enable the food and beverage industry (F&B) to enhance traceability. In the US alone, food recalls and foodborne illnesses cost $77 billion per annum, including discarded products, loss of revenue, damage to corporate reputations and healthcare costs. Better traceability can significantly reduce these costs.
“Blockchain comes into its own when the data needs to be highly secure or if smart contracts are to be managed,” says Marc Ramsay, Vice President Industry Business Unit at Schneider Electric South Africa.
“If an F&B manufacturer is handing off a finished product to a logistics company, which then delivers it to a third-party company that stores it within a cold storage facility, the F&B stakeholders want to make sure that the logistics company does not damage the product and that it gets to its destination on time.”
“F&B organisations would be given the ability to be much more precise in how they can track their goods and could simplify the execution (invoice/payment) of supply contract. When an issue occurs, they can be more accurate on what needs to be removed and what can be kept in the food distribution pipeline.
“Verifications could all be dealt with within blockchain through the smart contracts. At the IoT level, sensors could be placed on transportation devices, such as pallets and packages, so that variables such as temperature and vibration level can be monitored and the environmental data stored in the blockchain.
“Blockchain stakeholders would have real-time visibility into the stipulations of that contract and whether or not any of the agreed-to rules had been breached. This powerful tool provides traceability, security, transparency and real-time access to contracts that affect the upstream and downstream supply chain.”
Blockchain process unpacked
In a blockchain process, networks of computers use consensus mechanism and cryptography to allow each participant on the network (or along the supply chain) to update a distributed ledger in a highly secure manner, without a central authority. For a hacker to breach one of the blocks in the chain would be difficult but to breach all the links in the chain at the same time would be nearly impossible.
In a private blockchain, this can be complemented by access rights rules, defined by each participant of the blockchain based solution, so that it is difficult to access the data of the ledger without the proper access rights. Moreover, some blockchain technologies have ‘smart contracts’ capability so that defined rules can be executed on the data of the ledger, in a similar secured way.
As a result, the level of trust built into such a system is high. When working within a trusted system, the time and cost associated with lengthy back and forth business processes is reduced. The ability to track movements across the various stages of a product lifecycle become much more acute, thereby improving the efficiency of the entire supply chain (i.e., defective products can be quickly tracked and traced so that loss of revenues and damage to reputation is limited).
More work to be done
“Although blockchain is still clearly in the experimental and pilot stages, Schneider Electric is prototyping how to leverage its expertise in plant automation and process control to build and develop solutions that improve traceability across product life cycles.
“By partnering with blockchain technology specialists, such as Microsoft and IBM, Schneider Electric is assessing its contribution to the development of blockchain solutions that will support a multitude of key manufacturing and process industry requirements,” concludes Ramsay.