Blockchain: Gamechanger for the Food and Beverage Industry
Author: Jack van den Brink
Partner Digital @Quistor
The food industry is known for its complex supply chain models, for example the difficulty to trace food all the way back to the growers and farmers. From seeding till eating, numerous actions are performed which we aren’t aware of. It is common to see fresh and tasty food in stores in all its variations, but we hardly know about all the steps and actions that were taken before it got there.
Did you expect your green beans or brussels sprouts to come all the way from Morocco, Egypt or Senegal? Do you know that the food supply chain involves many parties? Typically, it looks like this: farmer – local market – local handler – international handler – shipping company – logistics company – producer – packing station – handler – retailer. And they all have their own IT systems, hardly any integrated.
Over the years, consumers have become more critical of the food they buy. Is it fair trade? Is the food produced well? Which pesticides have been used? Was it well-treated during transit? These and many other questions are raised by consumers. Besides consumers, governments and regulatory institutions keep demanding more information over the whole supply chain, from seeding to feeding, to ensure internationally agreed quality levels are always respected.
Transparency and immutability of all records in the supply chain can drastically improve fair trade and significantly reduce fraud. Transparency and immutability are excellent use-cases for Blockchain or Distributed Ledger Technology.
As most of us know, blockchain technology is the foundation of cryptocurrencies. But the blockchain technology as such can do so much more than only that. It provides a great foundation to create smart solutions around contracts and traceability.
In the food industry we see several solutions where blockchain technology can be the enabler for innovations.
Looking at ingredients or food traceability, we can build up a distributed ledger with a complete trace of all steps and actions the produce has taken all the way up to the consumer. Every blockchain transaction is immutable, meaning no one can change it after the transaction was executed. Blockchain does not have one single owner. It is controlled by the majority.
Furthermore, records aren’t stored in a database where controls are centralized. They are stored on the internet, in a so-called blockchain. So, if we create a record at every step of the supply chain, we can easily trace the produce back to his origin. For instance, take a chocolate candy bar. We can create blockchain transactions from the moment of the seeding of the cacao plant, the water spent for irrigation, the fertilizers used, the date of harvesting, the sale from the farmer to a local handler, the transportation from the local handler to the international handler, the shipping to the local producer, the ingredients used during the production of the candy bar resulting in a detailed product specification and finally, the delivery to the local stores.
We can easily show all related transactions on a website or an app so the consumer can see when and where the cocoa was originally harvested and where all the other ingredients came from.
2. Fair Trade
If we would complement the information with actual pricing and harvesting conditions, we would also be able to see if the plantation was properly and fairly paid out. We furthermore can enable pricing transparency throughout the whole supply chain to avoid excessive trade commissions.
3. Smart Contracts
We can even take a further step by implementing Smart Contracts on the blockchain. With Smart Contracts, tasks can be automated to increase efficiency and reduce fraud. You can, for example, create a Smart Contract ensuring the farmer automatically gets paid in case he delivers a pre-agreed amount of cocoa within the agreed quality levels. Additionally, Smart Contracts can be used to automate transportation and custom documents based on a mutually agreed set of rules.
What I just described are just some examples of what you can achieve using Blockchain in the food and beverage industry. Quistor implements Blockchain solutions from Oracle. Oracle's Blockchain Cloud Services (OBCS) are based on the Hyperledger Fabric, an open-source implementation of the blockchain. Hyperledger is the standard for business-oriented blockchain solutions and supported by most global operating Tech companies such as Oracle, IBM and Intel. Financial institutions such as JP Morgan, ABN AMRO and American Express are supporting members of the Hyperledger initiative.
If we need to develop further additions like mobile apps or customer portals to make the blockchain data accessible on a user-friendly way, we can create mobile apps or portals with Oracle Visual Builder or Mendix to create Low Code applications for those specific requirements. orchestrate automatic actions. For Netsuite integration, SuiteTalk will be used to interconnect with OBCS.b
If we need to develop further additions like mobile apps or customer portals to make the Blockchain data accessible in a user-friendly way, we can create mobile apps or portals with Oracle Visual Builder or Mendix to create Low Code applications for those specific requirements.
If you need more information or if you’re interested in specific use cases, please contact us. If you’re not sure whether blockchain is the right solution for you, you can easily follow the below flow diagram to see if blockchain can add value to your business challenge.
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