The Blockchain Bandwagon

 
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A while ago, a publicly traded beverage company called Long Island Iced Tea Corp, not far from our office, changed its name to Long Blockchain and announced that it was focusing on blockchain technology. Their stock surged 200% on the news.

Last week, Chanticleer Holdings, which owns burger restaurants and is a franchisee of Hooters, said that it was using blockchain for a new customer rewards program across its restaurants. Their stock shot up by 50%.

Blockchain is suddenly in the conversation and companies are being asked, “what’s your blockchain strategy?” Blockchain is the shiny new thing of 2018. See my article “SOS Shiny Object Syndrome”.

And as with every shiny new thing, there’s potential, but it gets masked and obscured by all the hype (Wal-Mart Story). With a complicated technology like blockchain, there’s a lack of understanding of what it even means.

 

I think the food industry has a tendency to get so worried about the next proclamation from the FDA that they lose sight of the fundamentals. Is this going to be more work which drives up overhead or make their food safety labors more efficient?

So, the question is; what is Blockchain and how does it relate to traceability in the food industry?

Blockchain, also known as Distributed Ledger Technology (DLT), was the technology buzzword of 2016. This technology has been around since 2008. It underpins the digital cryptocurrency, Bitcoin, and was conceptualized as a solution to the problem of securing a database and removing the requirement for a trusted administrator.

For the past few years, blockchain has been the topic across many different food industries, outside of its cryptocurrency origins. The food industry, with key retailers and suppliers like Walmart, Cargill, Tyson, Coca-Cola and Starbucks all announcing pilot programs over the past two years.

Blockchain has great possibility to make recalls in minutes or seconds and enable the information security and transparency that retailers demand, However, there is important technology that must be in place before executing a blockchain implementation.

Blockchain is basically a shared database. This makes blockchain special because it is a distributed and unalterable ledger. There is no single point of failure in a distributed ledger because it is replicated and synchronized digital data spread across multiple sites. This decentralized network structure makes the data impervious to a technical or database failure.

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It will take time for blockchain to become a universal implemented technology. However, with the commitment from technology providers like IBM, Microsoft, and SAP to develop blockchain enterprise programs and many food industry players like Walmart, ConAgra, Costco, and Kroger, blockchain will become the new standard just like HACCP, Lot Traceability, FSMA, BRC, and SQF did.

Blockchain software cannot just be purchased to create a traceability program. You need a system such as Focus Works’ PRIMS which has Blockchain functionality built into it which leverages the GS1 Standards, to enable traceability by ensuring all trading partners communicate in a uniform manner. Standards ensure systems interoperability, and provide a singular approach to creating, sharing and maintaining product information that supports, at the very least, “one up/one down” visibility of the product’s movement through the distribution network. The internal data and processes a system uses to track products needs to be integrated into a larger system of external data exchange that takes place between trading partners. This will allow traceability to move faster, to expedite the flow of data between supply chain partners.

Blockchain will reduce food recalls from weeks to minutes with a food traceability program like PRIMS in place. Leading retailers have a history working with farmers, distributors and processors on effective food traceability programs in order to achieve a level of traceability, but product recalls are much slower without standards in place to help break down any barriers caused by non-standardized numbering systems and manual business records.

The interesting question arises as to the security of manufacturers’ data such as who they shipped to (ie; customer database). With Microsoft’s Coco Blockchain they have put in a confidentiality model such that one supplier cannot see another supplier’s orders or inventory and retailers cannot see each other’s data.

Although the food industry is many times slow to implement new technology it will require not just the mega-companies like Costco and Wal-Mart but all the small, medium and large companies to join in to make Blockchain a food industry standard.

 

Robert White, PhD
President
Focus Works Inc.
bob.white@focus-works.com