Blockchain Gains Traction in the Food Supply Chain | Logistics Viewpoints

A recent Wall Street Journal article reported that “after initial tests, 12 of the world’s biggest companies, including Walmart and Nestlé, are building a blockchain to remake how the industry tracks food worldwide.” I reached out to IBM to learn more. The traceability platform the article is referencing was based on technology provided by IBM. IBM has been one of the most active blockchain innovators. The group is focused on solving the traceability problem is known as “IBM Food Trust.” IBM Food Trust’s main mission is to improve traceability.

Blockchain

Contaminated Romaine Lettuce Kills 5

Food Safety is an Issue Not Well Resolved with Current Technologies

There are safety implications. In early spring this year, romaine lettuce contaminated with E. coli bacteria got onto store shelves. The U.S. Centers for Disease Control and Prevention (CDC) reports that 210 people were infected with the outbreak strain across 36 states. 96 people were hospitalized, including 27 people who developed a type of kidney failure called hemolytic uremic syndrome. Five deaths were reported. It was not until June 28th, over two months later, that the CDC reported that “this outbreak appears to be over.” The CDC estimates that foodborne illnesses affect 47.8 million people in the U.S. every year, putting 127,000 into the hospital and killing more than 3,000.

Why does tracing back product to the site of the problem take so long? The Food Safety Modernization Act (FSMA) requires companies in the food supply chain to provide “one back, one up” traceability. “One back” refers to where the food came from, “one up” who it was sold to. In short, when a food poisoning incident occurs, the problem can’t be solved quickly because this is a serial, one step at a time, process. The problem is made worse by the fact that many participants may have to go into paper records to figure out the information that needs to be provided.

Retailers want to keep their customers safe. But they have other motives as well. In a YouTube video, Frank Yiannas, Vice President of Food Safety at Walmart, told of a day he brought a pack of mangoes into a staff meeting, put it on the table, and said “Your traceback exercise starts right now.” The food safety group then timed how long it took to get each piece of information back from store, to distributors, to processers, and finally to farmers. Red faced and laughing he said, “I’m not going to give you the results.” But it was clearly too slow.

“When there is a food event,” Mr. Yiannas said, “you want to be fast, but you want to be right. That food product is guilty until proven innocent. We at Walmart will pull all the product until we know what the implicated product is and can put the safe product back out.” The existing traceability process is costly and leads to considerable food waste.

The Food Trust Solution is Built with Blockchain

As previously mentioned, one of the leaders in the IBM Food Trust consortium is Walmart. Kroger, another leading retailer, is also part of the group. Leading food companies, in addition to Unilever, include Tyson Foods, Dole Food, Driscoll’s, Golden State Foods, McCormick and Company, and McLane Company.

What is blockchain and how does it help? Blockchain is a distributed database that holds records of digital data or events in a way that makes them tamper-resistant. While participants in a blockchain may access, inspect, or add to the data, they cannot alter or delete existing data. The original information stays put, leaving a permanent and public information trail of transactions. It provides a single version of the truth about transactions and activities occurring across complex supply chain ecosystems. Traceability is potentially a great application for this technology.

I talked to IBM’s Suzanne Livingston, Offering Director, IBM Food Trust and Ramesh Gopinath, VP Blockchain Solutions, to get more details on the IBM Food Trust solution and its status. Ms. Livingston said, “We have been in production for close to a year.” The Food Trust has recorded over half a million transactions in total so far. This includes full end-to-end traceability for roughly 200 stock keeping units (SKUs).

But it is not fair to say that blockchain is available for sale yet. “We are working with handful of companies, Ms. Livingston said. “General availability will be announced in the third quarter. We can then onboard higher volume of companies. We are starting on a small scale to make sure getting it right. We are very close to being there.”

Architecturally, this is a distributed system; in other words, a system that runs on multiple nodes in multiple data centers. The nodes are run by “trust anchors” – basically, some of the largest companies in this end-to-end supply chain. A blockchain involves having copies of the transactions being stored across the different database nodes. IBM believes that a few dozen nodes are necessary to establish a trusted chain of data.

GS1 standards are used to make sure all participants are speaking the same language. But in addition to providing the hardware, software and Cloud components, insuring that the data is clean and logical is a big part of what IBM brings to the table. Some players in the food supply chain will provide serialized numbers at the case layer, some at the pallet level, and some only at the lot level. “Not everyone is at the same level of maturity,“ Mr. Gopinath stated. “There are data gaps.”

IBM just wants new participants to give a bare minimum of data to get started on a trace. “Then we will work with companies to grow their maturity.” It is likely that once companies get started, some participants in the value chain will want additional information. For example, retailers may want to know whether refrigerated products were kept in the proper temperature range and may also want visibility to in transit information. A food manufacturer may want to know how much product has been received at myriad different stores in a retail chain.

IBM is taking an interesting approach to pricing the solution. Companies that want to joint the Food Trust, will be able to provide traceability data for free. These companies will need to inform IBM on who they are, the products they want traced, and who they will be interacting with from a one up, one down perspective. That company may need to do some work to understand the GS1 standards, make sure they can provide clean data, and figure out how that data will be sent to the blockchain.

IBM seeks to monetize their effort by charging to display analytics information, for example statistics on the timeliness and quality of transactions provided to other members of the chain. And IBM will charge a subscription fee to share certificates. For example, a farmer may claim that they offer organic strawberries. An auditing firm verifies this, and IBM charges for uploading the organic certification to the blockchain.

While the initial focus is traceability, the solution could easily grow into something much bigger. Mr.  Gopinath pointed out that this is a platform for sharing information. Initially that shared information is focused on traceability, but “food waste, food fraud, food safety issues are all related to problems with effectively sharing information.  We want to leverage by third parties to deliver more value to the ecosystem.”