Blockchain Technology: Case for the Trace
Blockchain is moving past its initial hype into a period of broader adoption in the U.S. food retailing industry. A growing number of successful case studies involving both retailers and manufacturers suggest that the distributed-ledger technology has staying power, especially when it comes to the areas of traceability and food safety.
- This year and beyond, expect more companies to take part in blockchain projects as an effort to better evaluate the technology’s impact begins.
- In addition to perishable products like seafood, shelf-stable products are showing promise in blockchain pilots.
- Besides providing traceability in the supply chain, blockchain reduces long delays in shipment and can also be used to track trade promotions, facilitate the payment of invoices and verify that goods were transported as specified, among other applications.
In 2020 and in the next several years, look for more companies to sign on to blockchain projects, while an effort to better evaluate the technology’s impact gets underway.
Walmart’s Early Case for Traceability
In the food safety arena, blockchain first came onto the scene in 2017, when it became known that Armonk, N.Y.-based IBM was developing and testing its IBM Food Trust solution with Bentonville, Ark.-based Walmart to try and achieve faster, more efficient product traceability. (Walmart’s initial pilot with an imported mango was so successful that by last fall, it had mandated all of its leafy green suppliers to join IBM Food Trust.)
Since that time, an impressive list of suppliers and other retailers have signed on to the IBM network – most recently Boise, Idaho-based Albertsons Cos., which began testing the solution last spring by tracing bulk romaine lettuce from one of its distribution centers.
Further, in recent months, blockchain has gained more attention at the federal level: The U.S. Food and Drug Administration has mentioned the technology as just one of the end-to-end digital traceability solutions that it’s studying for its New Era of Food Safety initiative.
While the FDA has said that adopting such technology will be voluntary, blockchain will no doubt be a key tool to help the industry usher in a quicker, more effective recall process that could save companies millions of dollars.
“I think blockchain for recalls is really going to cross the chasm,” confirms Ralph Rio, VP of enterprise software for ARC Advisory Group, based in Dedham, Mass. “It has enough traction behind it to become a more routinely used application that has wide adoption.”
The Beginning of KPMG Origins
KPMG, a global accounting and professional services firm based in Amstelveen, Netherlands, has been piloting a blockchain solution for the past six months, and executives at the company say that they’re starting to see quantifiable results.
“The most suitable use cases in our observations are the ones that we can demonstrate measurable results for,” says Laszlo Peter, head of blockchain services Asia Pacific at KPMG Australia. He shares a few examples without giving actual figures or participants’ names: “Reduce waste by x percent by optimizing the value chain. Extend shelf life by x days with traceable temperature and humidity measurements for a high-margin SKU. Trace a product recall to a specific location and avoid having to dump the whole stock.”
KPMG Origins is the company’s fully managed blockchain platform that includes governance and integration infrastructure for third-party solutions like enterprise resource planning or Internet of Things solutions.
“Specific for supermarkets, we have completed a prototype using a rock melon recalled for a listeria outbreak,” says Peter. “We are also working on a cold-chain automation for product shelf-life extension and waste reduction, and we have a fully integrated ‘smart crate’ solution for fresh food that can track and trace fresh food assets from farm to packing sheds/ripening facilities and distribution centers, all the way to retail shelves.”
Peter notes that some specific challenges have surfaced during the pilots. For one, there are “always information gaps with multiparty participation,” he explains, so KPMG had to design alternatives in some cases. In addition, the company had to spend a lot of time setting up a governance structure and designing rules of engagement for multiparty collaboration.
Topco’s Seafood Tracker
New Kid on the Blockchain
Ewing, N.J.-based GS1 US, the information standards organization, recently named a VP of blockchain to continue its efforts in educating retailers and other industries about the importance of data quality when setting up and collaborating on blockchain networks.
Kraig Adams comes to the organization after spending more than 25 years at Atlanta-based Coca-Cola North America, where he was most recently the beverage company’s VP of national foodservice distribution. In 2018 and 2019, he was on the executive leadership committee for the Foodservice GS1 Standards Initiative.
In his new role at GS1 US, Adams says that he’ll start by focusing on “three Es” with the group’s members. “We’re going to continue to Educate [the first E] so that our members can better understand how distributed-ledger technology might be a possible solution to help solve a problem they’re running up against with data visibility, whether it’s within their own organization or across trading partners,” he explains.
“To better educate, we want to Explore [the second E] what some of our members are already doing with blockchain technology,” Adams continues. “Is it to support the new era of food safety at FDA? Is it to achieve full traceability around food safety? Is it within the pharma community to make sure prescription drugs or medical devices can be traced? Or it may just be understanding the provenance, or the 'where,' of a product and how it has taken a journey throughout its lifecycle from farm to table.”
The last part of GS1’s work, or the third “E,” is Evaluation, notes Adams. “I think there have been some good examples of how members have explored the use of blockchain, but I don’t think we as an industry have been able to truly evaluate the business value,” he says. “We want to ask, did blockchain give the community a better value than what they’re using today? To take it to the next level, we want to really understand the value that comes when different blockchain solution providers begin exchanging data, to really be able to do full traceability across trading partners.”
To achieve blockchain-to-blockchain interoperability, the common language that GS1 provides becomes particularly important, maintains Adams: “When we talk about interoperability, it really is that common language, that identification of the 'what' — or the Global Trade Item Number — as well as the 'where,' or Global Location Number.”
At the end of January 2020, GS1 US was planning at presstime to release a “getting started” guide about blockchain for its members, as part of its educational initiatives. “This will discuss the use of GS1 standards across blockchain, as well as things that companies might want to be aware of and consider before they really start outlining blockchain to support a particular business process,” explains Adams.
Elk Grove Village, Ill.-based food cooperative Topco Associates began testing a new blockchain solution from Purchase, N.Y.-based Mastercard last fall, following its decision a year earlier to join IBM Food Trust. Food City, one of Topco’s members, is initially using Mastercard’s blockchain-based Provenance Solution in tandem with Envisible’s Wholechain traceability system to provide better visibility into the ethical sourcing and environmental compliance of the seafood selection at its stores, including salmon, cod and shrimp to start.
Dan Glei, EVP of merchandising and marketing at Food City, which is owned and operated by Abingdon, Va.-based K-VA-T, noted in a press release that the solution will help the grocer “pinpoint issues in the food chain during any unfortunate events such as recalls.”
But the technology has an added bonus, as some of the same farm-to-fork information being captured for business needs can be shared on the consumer end. Deborah Barta, Mastercard’s SVP of innovation and startup engagement, says that her company collaborated with Envisible, a Bloomfield Hills, Mich.-based company that enables supply chain visibility in food systems, to address consumer demand for more transparency. “More and more, consumers are demanding an understanding of the origins of the food they eat to make more informed purchasing decisions,” she explains.
According to Barta, the solution is now live in Food City’s supply chain for seafood, and is on track to roll out to grocery stores during the first quarter of 2020. Consumers will be able to scan the QR code of the product at the counter with a mobile phone’s camera, which will then prompt a browser link that allows them to explore the journey of the items they’re purchasing, all the way back to the fisherman.
From Crop to Cup
While seafood seems like an obvious choice for blockchain, due to concerns over country of origin and counterfeit products, nonperishable products are also showing promise in pilots. Farmer Connect SA, based in Vernier, Switzerland, recently launched a mobile app powered by IBM Blockchain specifically with the coffee market in mind.
“There are fascinating, human stories behind how coffee is being produced, and this information is getting lost,” explains D.J. Bodden, COO of Farmer Connect. “We’d like it to become normal that when you walk in a store and buy a bag of coffee or tea or chocolate, that you be able to have a connection with the producer and the reality behind the supply chain.”
Farmer Connect developed the app with an impressive number of coffee players, including Beyers Koffie, the Colombian Coffee Growers Federation, J.M. Smucker Co. and RGC Coffee, just to name a few.
Bodden notes that today’s tech-savvy consumers, often with smartphones in hand, are more curious than ever about where their coffee comes from. Providing such information to customers can help create differentiation between brands and even between different roasting batches, he notes.
Additionally, the Thank My Farmer app lets consumers make a donation to support sustainability projects in the regions where their coffee was produced. “It doesn’t have to be a lot of money,” notes Bodden. “In some of these countries, $1 is considered quite a bit. And then, once the consumer has helped a specific community, it’s now something they’re tied to, as opposed to being just a generic product on a shelf.”
The app is expected to launch to the general market this spring, he says. At that time, users in the United States and Canada will be able to scan QR codes on 1850 brand premium single-origin coffee.
Other Potential Uses
Produce has been tracked by blockchain from the very beginning, and Newton Square, Pa.-based SAP Industries continues to make progress with one of its initial partners, Chilean berry producer Naturipe Farms, using the SAP Cloud Platform Blockchain solution. Naturipe now regularly employs the solution from the time of harvest, when harvesters stick QR codes on the crates of berries being picked, all the way through the supply chain to retail stores.
“Once at the store, customers can scan these QR codes on their smartphones to see exactly where the berries were grown and learn about sustainability practices from the farm,” explains Lori Mitchell-Keller, co-president of SAP Industries. She notes another advantage for companies using the traceability tool: “Because of border patrol and other supply chain bottlenecks, reporting from blockchain frees up lengthy delays in shipment.”
As blockchain becomes more widely adopted in the industry, companies will likely continue to discover even more uses for the technology. FMI - The Food Industry Association noted in a recent blog that blockchain could also be used to track trade promotions, facilitate the payment of invoices and verify that goods were transported as specified.
Tegan Keele, U.S. blockchain program lead at KPMG U.S., says that her company is seeing interest from supermarkets that want to explore the idea of creating new loyalty programs, or update existing ones, that leverage blockchain-based tokenization to bring additional value to their customers, particularly younger Millennials and Gen Zers.
And Walmart Canada will reportedly soon begin using blockchain technology to track deliveries, verify transactions, and automate payments and reconciliation between the company and its third-party trucking companies.
Meanwhile, the tech industry will continue to hash out the challenges of blockchain interoperability, with the hope that different systems working together could one day have a dramatic impact on food safety.