At some point in the last few years, a food and beverage company has asked a version of the same question—“Can blockchain help us solve our problem?” The answer is almost always yes it can, but is it the right way to solve the problem?
So far, there hasn’t been an urgent need with a large business problem that blockchain is needed to fix. It’s similar to RFID when it first came into view; it was a cool technology, but was always a solution looking for a problem, until now.
A transparent supply chain where every ingredient is tracked from farm-to-fork is good for the consumer, but they’ve not shown a willingness to pay more to know which farm or what part of the ocean their food comes from. For companies, there isn’t a clear ROI for the investment either.
The budget to reimagine traceability across the entire supply chain and invest in blockchain would never materialize, until the new requirements around Section 204 of the Food Safety Modernization Act pans out.
In the wake of the pandemic and with the FDA starting to enforce the traceability sections of the Food Safety Modernization Act (FSMA), it could be time to further digitize supply chains on an industry-wide blockchain. However, there are two urgent business problems that the food and beverage industry needs to work together to solve.
Repairing the supply chain’s fabric of trust
A big part of the fabric of trust in the supply chain is knowing that the supply chain will deliver the products and ingredients we expect. All of the actions that transpire, both transporting an ingredient between facilities or transforming an ingredient into a new product, to make a product ready to pass along are inherently based on trust and personal relationships.
This works when the same people work the same shift and have the ability to tap into a network of suppliers that they can trust and interact safely with. But this piece of the fabric of trust has been torn since the Coronavirus disease (COVID-19) began creeping across the world, with whole countries shutting down and entire chunks of supply chain networks freezing for weeks. For some, operations continued, but under the daily threat of a COVID-19 outbreak forcing a shutdown.
Now more than ever, consumers are increasingly conscious of where their food is coming from. They are asking themselves questions like, “was this porkchop processed in a factory where there is a major outbreak?” or “am I supporting my local community by purchasing this product? Does this help a farmer in my state or region?”
These questions, while previously important to a segment of consumers, are top of mind with many of us who spent the spring of 2020 painfully aware that the supply chain can get knocked off course by a global event. Blockchain can begin to reinsure the mutual trust within the supply chain network in a new normal where sources may be changing daily.
Complying with updated FSMA regulations
Recently the FDA lost a lawsuit with public interest groups compelling them to establish and enforce additional farm-to-fork traceability rules. The current wording expects suppliers and companies to provide full farm-to-fork traceability in 24 hours.
That type of traceability might only be addressed securely, efficiently and quickly with a blockchain.
Establishing standards and the backbone for the blockchain
Today’s consumers and regulators are asking companies for more and will be forced to deliver. Implementing one blockchain per company will never work. Some companies don’t want to develop their own, but rather, they want to buy into a blockchain that’s already developed.
Until there is a widely accepted structure in place, this probably isn’t the right approach either. This magnitude of change will require baby steps and collaboration.
For example, if every dairy processor implements a different system requiring different data to be inputted—something as simple as the supplier’s address being in one data entry field or separated by address, city, state and zip code—then the supplier is stuck inputting data multiple times in multiple apps/solutions. The adoption curve would be insurmountable across every supplier and every step of getting a product to the shelf.
There needs to be a simple set of standards to start with. Companies from across the industry are going to need to come together to decide what the first building blocks will be. Perhaps it’s simply recording the time, date, location, unique identifier, personnel and description involved for each action in industry standard format on a blockchain that is accessible via barcode.
This is not the sexy Internet of Things (IoT)-connected GPS and thermometers feeding data to a NASA-style control center at some high-tech headquarters; or a customer using VR to tour the farm that the potato in their hand came from that others are touting. Here at the beginning, the focus should be on the most basic data needed to trace the transformation and transportation of a product until it is sold in the store. This is potentially a manageable subset of information to start with.
This won't realize the full potential of blockchain, but it would establish a backbone to build upon. It would help organizations address their immediate need, which is complying with rules and regulations.
Once the backbone is established, the sexy features from the early blockchain hype could be built. A consumer could go to their local grocery store and scan an ink stamp on a package to see the farm where every ingredient came from and the journey each ingredient took to end up in the product. Consumers say this is the future they want. Retailers could market that 50%-plus of all of the goods in a store came right from their state or region.
That’s the future. To use an analogy, today we’re just plotting the map for a highway system or railroad. It comes down to the details that are really tough to sort out.
For now, we need to tackle the hard work of establishing standards that enable blockchain for the food and beverage industry.