You’ve likely heard of the term blockchain—a system in which a record of transactions is maintained across a distributed, decentralized peer-to-peer network—and have also likely heard it touted as a cure-all for everything from payments to inventory control. Initially used as the tracking and transfer mechanism for Bitcoin transactions, the underlying technology has a much broader use.
However, much like everything that exists in the technology landscape, there’s hype and there’s reality, projections and use cases, theories and facts. The term business intelligence got this treatment, artificial intelligence and virtual/augmented reality have seen the hype, but few things were pitched as heavily—especially during the Bitcoin boom—as blockchain technology.
Simple, Visible, and Immediate: The Basics of Blockchain
However, if you can see through the hype, it’s really quite simple and realistic for product-based businesses. Investopedia explains it as digital information (the “block”) stored in a public database (the “chain”), elaborating that blocks store the following information:
- Information about transactions like the date, time, and dollar amount.
- Information about who is participating in transactions (using digital signatures rather than identifiable information).
- Information that distinguishes one block from other blocks.
Investopedia goes on to explain that in order for a block to be added to the chain, the following four things must happen:
- A transaction must occur (i.e. buyer initiates a purchase).
- The transaction is verified. In this step, a network of computers confirms the details of the purchase, including the transaction’s time, dollar amount, and participants.
- Once the transaction is verified as accurate, it is stored on a block including the digital signature of both parties, joining thousands of other transactions like it.
- Finally, the block is given a hash (a unique identifying code) before being added to the chain.
While anyone can view the contents of the blockchain, privacy is still prioritized, as no one has information into personally identifying information, rather able to see basic information like username and signature. Added to this, security and trust are prioritized—the exact information of a transaction is stored in chronological order and hash codes are single use; if information is edited in any way, the hash code changes as well.
Where Food and Beverage Companies Could Benefit: A Completely Transparent Supply Chain
Imagine a situation in which a consumer could scan a QR code on a tomato, immediately see the location of the plant and every single step of processing along the way. Better yet, say you have to complete a mock or real recall. You can receive even more granular information than you already do, making the speed of a recall faster and the recall more accurate.
With track-and-trace initiatives being prioritized as a result of changing or anticipated legislation changes at the FDA, blockchain could have a place sooner rather than later. For retailers and wholesalers, the dream of deploying blockchain in the food supply chain is to control food freshness and safety to limit recalls and liability issues, while also increasing efficiencies and reducing waste.
An Example of Blockchain in Food: Tuna Tracked from Bait to Plate
Knowing this, despite the nascency of blockchain, food and beverage companies may be taking on the technology faster than many other industries, according to Computer Weekly, who noted that the World Wide Fund for Nature (WWF) charity is currently involved in establishing a blockchain system to track tuna from shortly after a fish is caught to when it is bought for consumption – or more snappily, from bait to plate.
Often, what starts as a seemingly normal catch becomes quite convoluted during the processing step—in which database tampering and fraud often results. The project involves an RFID tag being fixed under each tuna’s gills when caught, which is used to track it into processing, beyond which QR codes take over.
During the processing phase, illegal or unregulated fish are often snuck in, often from areas that are overfished or unsustainable. For fishing companies who do use sustainable methods, the use of blockchain will help to squeeze out illicit operators. Consumers can see exactly where fish came from, fisheries can see where the fish ends up.
“If you have a 40-kilo fish going into a processing facility, you shouldn’t see more than four 10-kilo pieces coming out of it,” says Bubba Cook of the WWF.
Minimized Use of Intermediaries, Better Prices, and Cheaper Transactions
Sea Quest, the company initially testing the use of blockchain, believes that it will help the company to sell more effectively, cut out intermediaries, and secure better prices. Better yet, it could further reduce fraud by potentially allowing smaller, more frequent payments to suppliers, such as a boat’s operator. These cheaper, more frequent transactions would provide less incentive for the boat operators to sell other products under the table to unscrupulous processers. For more information about the test, read the entire WWF interview with Sea Quest here.
Potential for Consumer Benefit
Beyond the world of fishing, this could present major advantages for consumers, especially in the wake of recalls over tainted spinach and romaine lettuce in the past couple years. Ideally, this would result in a consumer being able to scan a QR code and seeing exactly where an item is coming from.
Better yet, it could create even marketing or branding opportunities—scan a QR code on a bottle of beer and the consumer could see which farm that the grains and hops came from, allowing a brewer to reinforce their supply chain transparency and tell a story about the source.
Blockchain is Approaching in Food and Beverage: Be Ready
For many food and beverage companies the prospect of any disruptive technology comes with concerns. Many companies will be left asking how they can expect to manage all of the data. Often the answer comes from finding a system that can incorporate an initiative and make sure that your business can change with it.
With so many use cases—especially in supply chain visibility—it’s better to focus on the underlying framework so you can adapt when the time comes. The right ERP solution can work with technologies coming in the future, allowing for a fast and easy transition when the time comes. For our food and beverage clients, we recommend NetSuite, a leading ERP solution that is used by thousands of food and beverage companies worldwide to address the challenges and grow their business. Ready to learn more? Contact us to schedule a free consultation with the experts.