Blockchain
What It Is, What It Isn't, and What It Means for the Produce Industry
A Wall Street Journal reporter earlier this year jokingly suggested cutting through the blockchain hype by changing every mention on the internet of the word "blockchain" into "multiple copies of giant Excel spreadsheet." Indeed, it is a useful, if oversimplified way of thinking about blockchain ledgers.
Importantly, "blockchain is not a specific software, it is a methodology for sharing data between trading partners," says Ed Treacy, Vice President, Sustainability & Supply Chain Efficiencies for IFPA (formerly PMA), who delivered a presentation called Exploring the Power of Blockchain Technology a PMA Fresh Connections: China conference in Shenzhen.
Chart describing Centralized vs. Distributed vs. Decentralized Blockchange
Another key difference between a blockchain record and, say, multiple Excel sheets: according to Treacy, blockchain is, "a unique type of ledger where you can't change the data and you can't delete the data: once it's there, it's there, and nobody else can change it."
Though far from buying into the idea that blockchain is the be-all and end-all new tool for companies to store and share data, Treacy nevertheless thinks the blockchain-based solutions will be adopted across a wide range of industries, and will be, "transformational for the grocery industry," including growers and suppliers of fresh produce.
"In the produce world, blockchain is a protocol for sharing information in a decentralized environment that enables the information to move securely through the supply chain at the same speed as the product," says Treacy. "Depending on how it's configured, you can authorize on certain parties to unlock your data. Everybody will have the data as part of the blockchain, because we want them to pass it on to the next link in the supply chain, but they won't necessarily be able to read it."
Blockchain can be used to add and automatically distribute data at each link in the supply chain, but can be tailored to control which parties have access to what data.
Blockchain can be used to add and automatically distribute data at each link in the supply chain, but can be tailored to control which parties have access to what data.
Blockchain solutions are already being deployed commercially by companies like HarvestMark (China), whose President, Dan Sun, presented alongside Treacy at Fresh Connections: China. For example, HarvestMark's parent company, Trimble, has used blockchain solutions in North America for managing shipping load assignment and contracting. According to Sun, "one carrier reduced contract management headcounts from 12 to 3 and increased revenue by $3.5 million through better matching capacity and demand."
Trimble Blockchain Application in production RFP to Engage Bid to shipper view to carrier view
But for the traceability applications where blockchain is mostly likely to find widespread use in the fresh produce industry, much of the technology is still in the pilot phase.
Treacy related how Walmart, in a pilot project with IBM, was able to use blockchain-based supply chain tracing to cut down the time needed to produce a complete record of the journey of a pack of pre-sliced mangoes from orchard in Mexico to cash register in the US: assembling the data went from almost a week down to 2.2 seconds. "If that was a food safety outbreak, a lot of people would have gotten sick in that six days and 22 hours," it took to trace the product prior to a blockchain solution being in place.
One male Blockchain team member from Walmart speaks with one female blockchain team member from walmart.
Members of Walmart's blockchain team. Image: Walmart.
IBM, a leading proponeMembers of Walmart's blockchain team. Image: Walmart.nt of commercial blockchain solutions, subsequently announced last year that it is partnering with major US grocery retailers including Walmart, Kroger and Wegmans, along with 10 major suppliers, including Driscoll's and Dole, to "apply blockchain to the food supply chain to improve food safety and ingredient transparency."
Treacy has joined into the process to represent the interests of fresh produce suppliers in the process: "We want to make sure that what [IBM] comes up with is going to work for most produce companies," not just the biggest suppliers who can afford large investments in enterprise software solutions. Additionally, Treacy hopes to shape blockchain solutions that will not force companies to completely change their processes: "Going forward, blockchain has to be complementary to existing business practices."
Other global pilot food blockchain projects highlighted by Treacy include JD.com working with an Australian beef exporter, Australian grain producers, and work being done by Alibaba, Microsoft and a startup named Ripe.io.
"Blockchain is not figured out yet," says Treacy. "In the world of produce, we're still figuring out the best way to use it where the value is, so it's a very exciting time to part of the process of forming and shaping" how blockchain will be applied to the fresh produce industry.
Exploring the Implications of Blockchain Technology in Fresh Produce
Assorted colorful fruits.
While blockchain technology first broke into the public consciousness with the financial success of Bitcoin, Ethereum and other cryptocurrencies, new applications for this emergent platform are now being developed and implemented in industries like food and beverage. The implications are particularly significant for the fresh produce sector, where time is of the essence and food safety is a primary concern.
Adoption is increasing rapidly, with more than 20% of the top global companies having committed to deploying blockchain solutions by 2025 and leaders such as Kraft Heinz, Tyson and Nestlé already on board. The technology can unlock improvement across operational functions and represents a significant step forward in supply chain management capabilities.
Here, we’ll examine two key characteristics of blockchain technology and their impacts on critical concerns for fresh produce businesses.
A Single Secure Ledger Improves Traceability, Efficiency and Inventory Management
As a fully digital platform for information exchange that updates in real time, blockchain technology’s unified and completely secure ledger facilitates the creation of an uncompromisingly accurate and resilient supply chain. Considering how many aspects of food and beverage operations rest on the integrity and accessibility of data, there are several areas in which this can have a positive impact.
First, there’s traceability, which is improved by blockchain through the use of automatic information collection and end-to-end visibility. When the process of record-keeping is entrusted to devices built for that purpose and all partners along the supply chain share the same record, the accuracy and accessibility of your facts and figures can be assured.
Industry leaders are eager to unlock these advantages, as evidenced by 22% of respondents indicating that traceability via blockchain will be a priority in the coming year according to IDC’s Global Food and Beverage Trends and Strategic Insights 2021 commissioned by Farmsoft.
Inventory management efforts can also benefit from the implementation of blockchain management. Because material and product details are logged every step of the way and automatically imported upon receipt via the scanning of a smart label, your fresh produce business will always know exactly what’s in stock, what’s in transit and what needs to be ordered or shipped.
One final facet of fresh produce businesses that stands to gain from the deployment of blockchain solutions is efficiency. With your staff relieved of the responsibility of manual reporting processes, they can spend less time on paperwork and more on important production-related tasks that affect output and revenue.
Smart Contracts Ensure Optimal Food Quality and Customer Satisfaction
Blockchain technology can also help ensure excellent product quality and consumer experience by utilizing smart contracts. These are digital implementations of agreements between businesses with regards to the storage conditions and critical characteristics of fresh produce.
RFID sensors synced with the unified blockchain ledger allow for automatic readings of temperature, humidity and other factors important to preserving fruit and vegetable freshness. That way, your organization will know if your predetermined requirements aren’t met by suppliers or transport providers, helping you weed out items that aren’t fit for store shelves and foodservice deliveries and thereby protecting brand reputation.
You’ll be able to rest easy with that level of transparency, knowing that your products are handled with due care. Such a setup also encourages accountability between supply chain partners, which can lead to reduced waste from spoiled goods and botched shipments. As a result, your operations are both more profitable and more sustainable.
Integrating with Your Fresh Produce Enterprise Resource Planning Solution
While the utility of blockchain in fresh produce is undeniable, implementing it with your existing enterprise resource planning (ERP) solution may simply not be a possibility. It is still a relatively new technology, and not all systems are designed to facilitate its use as of yet.
Farmsoft’s solutions are different, though. We have the advantage of our partnership with Microsoft and their Dynamics 365 platform, which can integrate use of blockchain for data management. We also have in-depth knowledge of the fresh produce sector, with many leading providers among our clients, and can help implement our best-in-class Farmsoft Fresh Produce ERP at your organization.
We pride ourselves on reliability, with 99.5% uptime and, in the case of increasingly popular cloud deployments, redundant offsite servers and automatically applied updates. Our support teams are always ready to troubleshoot any issues you might encounter.
Want to hear more about what Farmsoft’s advanced systems can do for your fresh produce company? Take a moment to reach out to us today.