When it comes to implementing blockchain for fresh food supply chains, has reality set in? Back in late 2017, blockchain was seen as a messiah, of sorts, for food safety and traceability. It seemed like it was hard to go a day without seeing an article in the press about this. Blockchain was going to solve all of our supply chain problems for freshness, traceability and food safety.
Last year, in August of 2018, Gartner, the internationally recognized analyst firm, in its Hype Cycle for Emerging Technologies for 2018, positioned blockchain as entering into their “trough of disillusionment.” This means that a technology has been overhyped and people are becoming skeptical about its value. Some technologies emerge from the trough as legitimate use cases are established for the technology. Others never emerge as reality sets in that there may not be a use case that is practical or viable.
Then, in February of this year, Gartner stated in a press release “However, it will be several years before four or five major blockchain technologies become dominant. Until that happens, technology end users will be forced to integrate with the blockchain technologies and standards dictated by their dominant customers or networks. This includes integration with your existing data and analytics infrastructure. The costs of integration may outweigh any potential benefit. Blockchains are a data source, not a database, and will not replace existing data management technologies.”
In April, Gartner, issued a press release with the headline Gartner Predicts 20% of Top Global Grocers Will Use Blockchain for Food Safety and Traceability by 2025. Gartner says that consumers’ interest in fresh foods is continuing to increase and, with that, “customer understanding has increased for the source of the food, the provider’s sustainability initiative, and overall freshness. Grocery retailers who provide visibility and can certify their products according to certain standards will win the trust and loyalty of consumers.”
Then, on May 7, Gartner issued a follow-on release that is even more cautious stating: Blockchain remains a popular topic, but supply chain leaders are failing to find suitable use cases. By 2023, 90% of blockchain-based supply chain initiatives will suffer ‘blockchain fatigue’ due to a lack of strong use cases. A Gartner supply chain technology survey of user wants and needs found that only 19% of respondents ranked blockchain as a very important technology for their business, and only 9% have invested in it. This is mainly because supply chain blockchain projects are very limited and do not match the initial enthusiasm for the technology’s application in supply chain management.
Please don’t get me wrong. I am not picking on Gartner. In fact, I agree with them. They’ve been pragmatic about blockchain for a while now, cautioning people to carefully evaluate blockchain for supply chains and other use cases before jumping in with both feet. When many have been touting that blockchain is ready for prime time, Gartner is saying 20 percent of grocers will implement it by 2025 – over five years from now.
What’s been interesting is that others are now saying the same. Instead of blockchain being the solution, many are saying blockchain is a part of a broader supply chain solution and we should proceed carefully.
Blockchain for Fresh Food Supply Chains – What’s Holding it Back
When it comes to implementing blockchain for fresh food supply chains, what’s been holding it back from widespread adoption? I believe there are three key issues:
- It’s about the data: The industry is (finally) realizing that any solution – blockchain for supply chains or otherwise – is only as good as the data that goes into the solution. And, while there’s lots of industry data relating to e-commerce and what consumers buy at the grocery store as tracked through point-of-sale systems, there’s not a lot of data, particularly pallet-level granular data, about produce or protein as it moves from harvest or processing through the supply chain. Manual data collection is expensive, time-consuming and error prone. It may be paper-based or in a spreadsheet and both are rather unruly to work with when we’re talking about the volume of data needed for traceability and food safety, for example.
- Blockchains for supply chains must benefit everyone in the supply chain: If someone doesn’t see a benefit in doing something, they’re not very likely to do it. So, for example, if you’re a produce supplier, you’re going to want to get some benefit from implementing it – not just the cost. Suppliers, just like anyone else, need a positive ROI for any investment.
- Blockchain is not a stand-alone solution and needs to be better assessed for the value it brings to the supply chain: The value of blockchain for the fresh food supply chain is in its networking/sharing capabilities and security. It can best be viewed as a component or value add to a supply chain management solution.
What’s Best for Blockchain for Fresh Food Supply Chain Solutions
For blockchain to be a successful component of supply chain solutions, we need to solve for these issues. Specifically:
- Automate data collection: IoT sensors, beginning at harvest or processing, can automatically collect data about fresh produce or proteins. This data can be wirelessly sent to cloud-based applications for processing and analysis. This reduces or eliminated impact on labor – the industry’s most precious and limited resource – and reduces data errors and costs.
- Make the data useful: By collecting data about the produce or protein from the beginning of the supply chain, we can capture information and insights of value to growers, processors and suppliers such as cut-to-cool time metrics and cold chain integrity.
- Integrate with a value-add solution: Use a solution that is designed to improve supply chain operations, provide traceability, transparency and visibility. As needed, integrate blockchain into that solution and control data access for each of members of supply chain, based on their need to have that access. We call this a hybrid-approach.
A Hybrid Approach for Blockchain for Fresh Food Supply Chains
A recent ChainLink Research report “Blockchains Role in the Produce Supply Chain” discusses the value of a hybrid approach for blockchain solutions. The report states: Blockchain technology alone cannot provide freshness, safety, provenance, and recall capabilities. That requires data and capabilities from outside the blockchain. It seems that the best emerging approach will be a hybrid consisting of 1) a centralized networked SaaS platform providing economical scalability and deep algorithmic and process capabilities, combined with 2) blockchain and smart contracts for transparency and validation. Blockchains are attractive because of their ability to create a shared, trusted single‐version‐of‐the‐truth between trading partners. However, a networked SaaS platform can provide a shared, trusted single‐version‐of‐the‐truth at a much lower cost.
Our Zest Fresh for Produce solution utilizes such a hybrid approach when it comes to implementing blockchain for the fresh food supply chain. We utilize IoT sensors to autonomously collect data, simplifying implementation and reducing costs. We provide insights for everyone across the supply chain – growers, suppliers, processors and retailers – that can benefit their business and generate a positive ROI on their investment – and we integrate with blockchain for those that want to utilize it to security share information.