Food for Thought: Blockchain for the Food & Beverage Industry

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February 19, 2019
Food for Thought: Blockchain for the Food & Beverage Industry

From contaminated produce and packaged goods to mislabeled ingredients and allergens, 2018 was a major year for nationwide food recalls. A whopping 12 million pounds of raw beef products were recalled due to salmonella contamination; tortilla chips were pulled from shelves across 32 states after coming into contact with an undeclared milk allergen; and grocery stores, restaurants and consumers across the United States threw out mass quantities of romaine lettuce after multiple E. coli outbreaks left hundreds sick and five dead.

Even big name brands like Kellogg’s and Pepperidge Farm weren’t immune to food safety scares. The former recalled its popular Honey Smacks cereal and the latter its Goldfish crackers over salmonella concerns. The cost of these high-profile recalls is more than financial; they can cause irreparable damage to a brand’s reputation and put consumers’ health and safety at risk.

However, ensuring the safety and quality of products can be a major challenge with today’s fragmented food & beverage supply chains. These complicated networks span from raw ingredient suppliers, production sites, distribution centers, and shippers, to the retail level (and back). Each link in the chain often uses its own disparate system to manage the processing and movement of goods, making it difficult to trace a product’s lifecycle, monitor shelf life, maintain regulatory compliance, or make critical business decisions.

To solve these challenges, food & beverage producers and retailers need to create a holistic supply chain that provides complete transparency from farm to fork.

The solution? Blockchain technology.

Traceability from farm to fork

Blockchain creates an immutable, digital ledger that tracks a product from raw ingredients to the store shelf. Critical lifecycle information can be verified about its origin, processing, packaging, transportation and storage. This ensures product quality and integrity, as businesses can guarantee without a doubt that goods have been labeled correctly, handled safely, and kept in a proper environment.

Frozen food manufacturers, for example, can confirm their perishable goods are kept at optimal temperatures throughout the cold chain and remain fit for consumption.  And when properties such as “organic,” “dairy-free” and “gluten-free” are backed by irrefutable data on the Blockchain, health-conscious consumers and buyers with food allergies can have confidence in the safety and integrity of the brands they purchase.

Further, Blockchain can help mitigate damages and minimize waste when a food safety incident does occur. Using historical data on the Blockchain, businesses can trace any issue back to its source. They can then perform a targeted recall by pinpointing exactly which retailers received the affected products and pulling only the offending items from store shelves—protecting both brand reputation and their business.      

Proactive planning to meet market demand

Beyond its potential for ensuring food safety, Blockchain can also allow food & beverage manufacturers to overcome major challenges in demand planning and inventory management. Fragmented supply chains force most companies to operate under a reactive model. When demand for a particular product spikes, manufacturers increase production. And when the item sell out, grocers order a new shipment.

This reactive approach results in costly supply and demand imbalances. Businesses end up with excess inventory when once-high demand drops. Since food & beverage items can’t be sold past their expiration dates, all this overstock goes to waste. On the other hand, manufacturers also run the risk of under-projecting demand. Without adequate replenishment, companies face out-of-stocks that result in unsatisfied customers and lost profits.

Real-time data on the Blockchain enables companies to more accurately forecast consumer demand, as well as track what products are nearing expiration, and plan production accordingly. This proactive approach ensures the right quantities of the right products are on store shelves to satisfy demand, eliminating excess inventory and maximizing product freshness for consumers. By optimizing shelf life and minimizing waste, food & beverage companies can efficiently meet market demand while boosting profitability.

Blockchain adoption in the supply chain is growing at a slow but steady pace. Major brands are beginning to explore the technology, proving its potential is more than just hype. Walmart, for example, recently announced its plans to track and trace fresh produce using Blockchain, while companies including Nestlé and Kroger have followed suit. And with Blockchain solutions now available through a software-as-a-service (SaaS) model, food & beverage suppliers and retailers of all sizes can capitalize on its benefits to create a safe, efficient, and profitable food supply chain.  

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