Large retailers putting groceries on the blockchain to optimize their supply chain
When going to the supermarket, do you ever wonder where those products you put in your trolley come from? I live in a first world country where one usually assumes all products come from honest farmers and factories.
Lately, however, more and more stories surface of animals in slaughterhouses that are being treated horribly, before they are brutally killed and their meat is shipped off to meat factories for further processing. Do we actually know what type of pesticides farmers use? Are those harmful to us, human beings?
Over the years, various food scandals made headlines, ranging from 700,000 contaminated eggs that flooded the supermarket shelves to a deadly milk contamination scandal in China, which resulted in the death of at least six infants.
Shouldn’t we ask more questions about the fresh products we consume on a daily basis? Unless buying at a local farmer’s shop, there is no way of knowing the origin of fresh meat and dairy projects. Or is there?
Depending on the type of product, the traditional supply chain in a food system can be an extensive process, which can be considered slow, difficult to make adjustments to and susceptible to fraud.
This lack of transparency, efficiency and speed, among other things can be solved by implementing blockchain technology.
By adopting blockchain, companies can gain real-time information about their products in terms of transactions and movements by participants in their supply chain network. Fresh products can use real-time temperature monitoring through the blockchain. A decentralized blockchain provides a tamper-resistant, immutable ledger, which means less room for fraud. A fully digital supply chain system is cost-efficient in the long term.
The record keeping that is done on the blockchain is tamper resistant, meaning that data cannot be altered or deleted after it has been processed on the blockchain. Blockchain technology can greatly improve supply chain efficiency compared to a traditional database.
Real world use cases
Replacing cow meat with horse meat, like the 2013 meat scandal portrayed, can be avoided by tracking the meat starting at its origin. If checking the ‘cow meat’s’ origin, states it started at a horse meat factory, its authenticity is most likely invalid. Another example where adding blockchain technology to the supply chain will be a great fit is in the baby-formula industry in China. The industry has been dealing with the existence of counterfeit and low-quality formula for years.
It appears that more and more companies, manufacturers, distributors and government entities are adopting blockchain technology. Spanish olive grove pioneer Galpagro is using blockchain technology to record all phases of olive oil production and distribution. Last week, the Russian Ministry of education introduced a system for tracking diamonds on the blockchain.
There are roughly two approaches for supermarket outlets to start adopting blockchain. The first one is customer focused. A recent research study shows, that only 33% of consumers trust the food system. By leveraging the power of blockchain technology, supermarkets are able to show consumers a transparent and traceable production and distribution process, in an attempt to restore some of the lost trust.
The second approach is business oriented. By fully digitizing the supply chain, with the ability to be updated on a real-time basis, the entire process can be monitored more closely, and in the event of for instance a temperature drop, measures can be taken much quicker and misplaced cargo can be traced in seconds by checking the digital ledger.
By following the entire supply chain on the blockchain, supermarkets see a lot of benefits opposed to the traditional supply chain system. Benefits include: optimizing the supply chain’s efficiency, reducing food waste, ensuring honest food with a transparent origin, trust and a speedy distribution process.
The following supermarkets have adopted blockchain technology to offer more transparency in their product’s supply chain from farm to supermarket shelve.
Supermarket brand and multinational, Walmart, collaborated with IBM on building a food safety solution. Besides Walmart, other food industry multinationals, like Nestle SA, Dole Food Co and Unilever N.V., are also contributing to the IBM Food Trust Solution project. The project launched in 2016 and in the summer of 2017 the first trial runs started by tracking the entire distribution process from pork and mango suppliers in China and the US. Walmart aims to provide high quality and affordable fresh products to approximately 270 million weekly customers. The company goes as far as stating they expect every supplier of leafy green vegetables to upload their data to the blockchain by September 2019.
Walmart’s Vice President Frank Yiannas stated:
‘The blockchain was not ready in time to help in tracking the E.coli-contaminated romaine lettuce in the US that has infected more than 197 people across five states. Even if it takes years for the food industry to completely adopt blockchain, in the future, outbreaks don’t have to be this big and this long.’
Carrefour, Europe’s largest food retailer, is using blockchain technology to track eggs, chicken and tomatoes as they travel from farms to the supermarket shelves. Blockchain technology is an important feature in Carrefour’s 2022 transformation plan. Blockchain will play a big part in their intention to grow their fresh food market in France. Improving product traceability is part of the food retailer’s support plan to grow their business with an additional one million customers in their fresh food market.
Carrefour is already using blockchain to track the farm-to-fork process for its free-range Carrefour Quality Line Auvergne chickens. Additionally, it will be rolled out to eight more animal and vegetable product lines, such as eggs, cheese, milk, oranges, tomatoes, salmon and ground beef steak. An innovative system is designed to guarantee consumers complete product traceability.
French-headquartered retail group, Auchan, the 17th largest retailer in the world, has signed a collaboration with blockchain-based TE-Food, to oversee their blockchain-based food traceability. TE-Food created a mobile app called FoodChain. Customers can scan the products in the supermarket with a QR code, and the app shows where the product came from, who handled it and how it reached its end destination.
TE-Food already has a large network in Taiwan, where they operate the largest farm-to-table traceability program. Over 6,000 companies are using it, some of which include leading international food conglomerates like, AEON, CP Group, Lotte Mart and Japfa.
Food retail group, Ahold Delhaize, initiated a project for Dutch supermarket brand Albert Heijn where customers can track the entire supply chain from their orange juice, facilitated by blockchain technology.
How does it work? Customers scan the QR code on the orange juice packaging, allowing them to check the entire journey from the orange grove alliance in the Brazilian Rainforest to the shelve in the customer’s local supermarket.
Albert Heijn’s commercial director Marit van Egmond stated:
“Every day we provide millions of customers with delicious food and drinks. We want to make an active contribution on issues that are important to our customers. Transparency in the chain is becoming increasingly important. We know all the steps that our products go through to ensure that they are produced with respect for people, animals and the environment and we want to show these steps to our customers, in an open and transparent way.”
Leading global supermarkets and large food retail groups are seeing the benefits of blockchain technology and have started to use it.
While some supermarkets, like Albert Heijn, Carrefour and Auchan want to show their customers transparency and product’s origin, there is something to say against trying to achieve transparency on a private permissioned blockchain. I could not find specifics on the type of blockchain these companies use, but if the blockchain is not permissionless it is not automatically publicly verifiable, making it not a transparent solution, but more of a blockchain marketing gimmick.
What are your opinions about supply chain management through distributed ledger technology? Do you foresee any barriers? Or do you only see positive things? Please let me know in the comments below.