Panel: Blockchain Needs Total Supply Chain Buy-In

By Pan Demetrakakes. Senior Editor

Nov 14, 2018

Blockchain technology has excellent potential for maintaining food safety, but there are many unanswered questions about factors like return on investment and buy-in from supply chain partners, according to panelists at a session of the Food Safety Consortium.

The five-person panel spoke Nov. 14 about the practical use of blockchain in food safety at the Consortium, held in suburban Chicago. The panelists agreed that blockchain, a technology that encrypts data and makes it traceable and unalterable throughout a customized network, is ideal for helping track product movements through a supply chain. Walmart informed all of its suppliers of fresh greens on Sept. 24 that it will require them to use blockchain by Sept. 30, 2019.

But one panelist expressed skepticism that blockchain is in a position, at least in the near future, to deliver what it promises.

Even if the food stores and restaurants at the end of the supply chain were able to track shipments with perfect precision, executing a recall would still fall on their shoulders, said Jorge Hernandez, chief food safety officer for Wholesome International, a Pittsburgh-based owner of 25 restaurants. In practical terms, that means erring on the side of caution by taking out all product from the affected manufacturer—not just what blockchain says should be removed.

“What I’ve seen happen most of the time is that [the retailer says], I’m sorry, I’m taking all of that product out of my business,” Hernandez said. “I’m not going to rely on a 17-year-old boy or girl to go into my walk-in cooler, look for that [lot] code and then just pick the ones that are wrong. If this is a risk, I’m going to take all of the product that comes from that manufacturer.”

Another problem Hernandez identified is that for blockchain to work, there must be buy-in from all parts of the supply chain. Even if suppliers are willing to use blockchain, they may not have the capacity to do so. He mentioned that Wholesome International sources some foods from Amish farmers, whose religion forbids them to use electricity in any way.

“You’re not only asking me to make a change in my business, you’re asking me to make a change in my business relationship with everyone who does business with me,” he said.

But that might be precisely what’s needed, another panelist suggested. Allan Young, co-founder of Pavocoin, a provider of blockchain services for agriculture, said that retailers and their customers are logically in a position to pull demand for blockchain down the supply chain.

“It’s a pull from the consumer in the retail space,” Young said. “It’s a pull from the restaurants that want to offer that sort of transparency.”

Shawn Stevens, an attorney with the Food Industry Council, said that a lack of transparency is what makes food unsafe, because it enables some suppliers to cut corners. Blockchain “can illuminate the corners of the industry,” he said, encouraging suppliers to consider quality and safety as well as cost.

Such prodding is needed, Stevens said: “As an industry, we want more transparency—but we don’t. We do our own internal testing, but we don’t want anybody to know what our results are. We are very secretive as an industry.” Blockchain has the potential to break down those barriers, he said.

One questioner pointed out that food is a low-margin business and asked if the costs of blockchain could be distributed along the entire supply chain, even including consumers. Young said that might be possible if consumers could be made to see the security assurances of blockchain as an added value. He said Pavocoin is working toward a phone app that would give a grocery shopper the history of an individual product throughout the supply chain.

“The cost will eventually be shared throughout the supply chain, one way or another,” Young said.

Another questioner, who identified himself as an employee of Cargill, said he didn’t think it was even appropriate to consider costs and ROI in connection with technology that enhances food safety.

“The discussion around ROI is ridiculous,” he said. “The ROI is, you’re going to save a life. The ROI is, you’re going to prevent some foodborne disease. The ROI is, you’re going to make safer food and a safer supply chain.”

Stevens acknowledged the urgency of safety but said that the business case for blockchain will still have to be clear to all involved.

“As a food-safety advocate, I’m not interested in the ROI discussions,” he said. “I’m interested in the food-safety discussions. How can we prevent more illnesses? How can we prevent those deaths? But on the ROI point, we also have to sell this. Companies have to be willing to invest.”

Read more about the Mark Twain Approach to Block Chain in our December Food Safety column

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