For grocery operations, logistics represents a major portion of product cost. Given the industry’s small margins and high volume, any savings can add significantly to a company’s bottom line. But logistics is a highly complex system that has evolved from a linear process to what Deloitte calls the “digital supply network,” a dynamic web capable of adapting to shifting supply and demand scenarios for maximum efficiency and value. This is the second blog post in a two part series where we interview Nikhil Vadgama, a Research Fellow of the University Centre London Centre for Blockchain Technologies (CBT.) Part one of this series was titled "How Blockchain Can Transform Consumer Products."
Blockchain, particularly when paired with Internet of Things (IoT) technology, seems to be an ideal solution to the challenges that can hinder food supply chains with waste and delay. Here are just a few ways in which these technologies can work in tandem to transform the food supply chain as we know it.
Consider the case of fresh or frozen food that’s highly susceptible to damage by fluctuations in temperature and humidity. Current practice typically relies on trusted partners checking cargo along the way to ensure consistent environmental factors, but this is an inefficient process that’s difficult to scale. By contrast, IoT sensors can accompany a product throughout its journey from origin to shelf, recording any deviation from the required conditions onto the blockchain for all stakeholders to see.
This is already happening in the pharmaceuticals industry in a way that could easily translate for food distribution for building more reliable and resilient cold chains—where cold chain tracking can provide useful metrics for blockchain transparency and tracing. The MediLedger Project, launched by Chronicled in 2017, validates each transaction in the supply chain onto the blockchain, with the provenance of each item verified at every step. In addition, it enables automated business actions based on IoT monitored conditions. The system also includes what the company calls “CryptoSeals,” which are tamper-evident package seals with Near Field Communication (NFC) chips embedded with unique identity information, which is immutably registered and verified on a blockchain.
Albert Heijn, Holland’s largest supermarket chain, uses blockchain to make the production of its house-branded orange juice transparent. Consumers can scan a QR code on the juice carton that will trace the end-to-end route of its production, from Brazil to the Netherlands. The system reveals grower ratings for quality and sustainability, as well as information about the oranges themselves, such as when they were harvested and their sweetness level. Consumers can even tip farmers using the system’s “Like2Farmer” feature.
Dynamic supply networks. When paired with other emerging technologies, such as artificial intelligence (AI) and IoT, blockchain can facilitate the creation of the digital supply networks I discussed earlier. These networks can leverage AI to respond dynamically to discrepancies in supply and demand, shipping goods from where they’re available to where they’re needed and pricing them accordingly.
Speeding port and customs clearance. Documenting the movement of shipments in and out of ports hasn’t really changed much in the past century, relying as it does on reams of paperwork. Until now, this was necessary because paper was the most reliable medium for tamper-evident shipping documentation, such as bills of lading. Blockchain-based solutions (such as those implemented by CargoSmart using Oracle Blockchain) can enable these transactions in a fraction of the time while actually providing greater data security. The system could see further efficiencies with the tokenization of shipments, permitting the direct transfer of ownership subject to permissions and approvals that could be encoded in smart contracts.
Facilitating financial transactions. FinTech startup GrainChain offers farmers, silo operators, buyers, and consumers a blockchain-based platform through which they can buy and sell produce directly, effectively connecting supply with demand. The company created a token called GrainPay to settle each transaction based on smart contracts and assign a monetary value to the tokenized goods on up the value chain from farmer to consumer. This process increases the speed and efficiency of payments through a supply chain by huge magnitudes. Currently, these waiting periods burden stakeholders with huge working capital costs and the accrued interest expense that comes with them. Within the blockchain ecosystem, farmers get paid more quickly and avoid waste by reducing the need for inventory to buffer supply and demand. The platform also includes integration with grain sensor equipment to automate inventory certification, invoice settlement, and reporting to buyers and sellers. Contracts between buyers and sellers are negotiated through the portal, then stored on the blockchain with an agreed payment held in escrow until delivery.
These technologies are still in the early stages, so it’s fair to ask, where are they headed? There are already some really novel use cases that suggest the sky’s the limit. Just one example: Two companies, ripe.io and FoodWiki, have created a partnership with the idea of developing a product that tracks how food actually tastes through the supply chain so that it’s at peak flavor at point of sale. I think as more and more projects get exposure, we’ll start to see some real traction as well as new use cases. The true beneficiaries will be consumers, who will have more information to make buying decisions and potentially pay less thanks to new efficiencies.
To learn more about how Blockchain can transform supply chain logistics, particularly for the food industry, register to attend the Oracle/InfoSys Webcast "Blockchain-Powered Advancements in Consumer Packaged Goods Industry." To learn more about Blockchain Technology, visit the Oracle Blockchain website.
About the Author
Nikhil Vadgama, Research Fellow at UCL CBT
Nikhil Vadgama is a Research Fellow of the UCL CBT and was responsible for orchestrating the world first accredited Blockchain Executive Education Programme. His experience has spanned multiple sectors including Education, Real Estate and FinTech. Most recently he has been involved in commercialisation of academic research in the AI and Blockchain domains. He was previously an Investment Banker with HSBC. Nikhil has an MBA from INSEAD, an MPhys from Oxford University and has passed all three levels of the CFA programme.