WHAT ROLE DOES
For all the hype of the past two years, blockchain, and its application in supply chain transparency, is still widely misunderstood. Blockchain can play a critical role by providing a trusted record of products as they are moved and transformed through the supply chain. Still, it requires three things: 1) digitally-enabled stakeholders 2) a strategic mindset of cooperation and transparency and 3) a compelling business case suitable to drive leadership, change and transformation. By itself, blockchain is not a silver bullet that can make an industry more sustainable. What it can do is to provide a platform upon which the industry can build trust through transparency.
There is considerable pressure across the food industry to provide evidence of sustainability and to provide assurances regarding a food's provenance and safety. There are numerous articles, case studies and reports of how blockchain can be the ultimate panacea to address these challenges. As business leaders, it is essential to differentiate between what is possible in the future and what can be done today. Exactly where is blockchain being used in the food industry today, and where can it best be deployed for maximum impact in the near term?
Food safety has become a significant issue over the past few years. "Food events" (such as contaminated produce) can have public health impact and can be costly for every enterprise along the supply chain. Providing greater transparency and traceability for supply chains is an excellent way to mitigate risk. And blockchain is forming part of the solution.
Started in 2018, Walmart and IBM collaborated to create the IBM Food Trust. Today, dozens of global multinationals ranging from Carrefour to Unilever to Nestle are either running pilots are actively involved in integrating the Food Trust network into their supply chain. By using the Food Trust network ,participants can positively impact millions of consumers by providing them with greater transparency concerning the source of their goods as well as greater safety in case of a food event.
Beyond traceability of products throughout the supply chain, the IBM Food Trust also provides support for registering, accessing, managing and maintaining certifications of enterprises along the supply chain. Certifications include organic, free-range, green transport, hygiene, safety - and sustainability. By making these certifications available within the network, they are more readily available and less likely susceptible to fraud.
Another example is the TradeLens platform started by Maersk. Traditionally shipping documents were on paper and physically transferred along with the goods as they progressed through the supply chain. By moving these documents to digital form and registering them on the TradeLens platform, the supply chain operates far more efficiently. Maersk has claimed that they have reduced oceanic shipping times by as much as 40%. Participants in the TradeLens network are not only maritime shippers but also include logistics companies, inspectors, customs houses and others who need secure access to the documentation as products move through the supply chain. An additional benefit of the TradeLens is system is that with greater efficiency in the supply chain comes greater liquidity. Not only to goods move faster and more efficiently, so do payments and remittances.
TradeLens and the IBM Food Trust are two leading examples of how blockchain - not just in pilots or proof-of-concept - but in live production, adding incremental business value today. There are numerous other projects in adjacent industries also adopting blockchain as a secure means of adding transparency to their business and benefiting from an increased trust by their end consumers and between members across their supply chain.
WHERE IS BLOCKCHAIN BEING USED TODAY?
Blockchain Rookies | United Kingdom
Troy Norcross is an international speaker, educator and strategist on Blockchain as an enabler for transforming business models. Troy specialises in business model transformation projects where Blockchain technology enables new business models, strategies and efficiencies.
Co-Founder of Blockchain Rookies, he has a 25+ year career covering multiple market verticals including agriculture, aerospace, IT infrastructure, telecoms-media-technology (TMT), digital music, healthcare, and eCommerce.
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Information stored in a blockchain is a series of records covering the identity of an asset and the subsequent transfer or transformation of an asset. Transformation, in this context, includes both packaging transformations (from an individual unit to a pallet of units or a container load of pallets) as well as incorporating an asset with one or more other assets in the role of manufacturing (turning bolts of fabric into individual garments). With the right access to this information, any asset is trackable (where is it?) and traceable (where has it been?).
Whereas this is already possible across a supply chain, blockchain makes the process far more efficient, transparent, accessible and direct. Utilising blockchain, some low-value-add intermediaries can be removed from the supply chain entirely. Equally, poor performing or fraudulent actors can be identified and brought up to standard or removed. But this is not without its challenges.
WHERE CAN IMPLEMENTING BLOCKCHAIN ADD BUSINESS VALUE?
The number one challenge to blockchain adoption by enterprises today is identifying a specific business problem to solve. The selected problem must be part of a strategic imperative which extends beyond the boundaries of the enterprise. For the IBM Food Trust, the imperative was to provide a system whereby companies could minimise the cost and risk of food events by adding transparency across the supply chain. And to achieve that they needed the participation of every member of their supply chain. What Walmart also discovered was that to drive adoption, they needed to build a platform which could benefit not only themselves but a full group of enterprises, including some of their customers.
The first challenge is to find a problem that is broad enough to attract a diverse set of stakeholders and participants and to create an urgency/demand for them to work together. And a sub-challenge here is to create an external entity like a consortium or other non-profit and to develop a governance model which builds trust between the members and encourages participation and adoption.
The next challenge is two-fold. First, to ensure that where possible data is no longer on paper but is digital. It is not possible to store paper on a blockchain (other than to scan documents into PDFs). Once digital, the participants in the network must agree on standards so that the data stored on the blockchain is accessible to everyone from a common set of metrics, units, standards and rules.
For projects to succeed, there must be business cases identifying how participating in a blockchain network will support cost reduction, supply chain efficiency, build brand value, reduce fraud or support business model innovation. The time for doing blockchain-theatre projects has passed. Now is the time to get down to the real work of building strategic networks of enterprises with a focus on creating incremental business value.
So what can you do today? Start by looking across your industry to see what blockchain projects may already be underway. Join, or start, a consortium of like-minded strategic enterprises to identify one or more common problems for which blockchain may form part of the solution. Or even more simply, invest in your education on how successful blockchain projects are adding incremental business value.
The technology for blockchain is the easy part. The real challenge in maximising supply chain transparency is finding the right strategic imperative that will drive cooperation, collaboration and coopetition.
WHAT IS NECESSARY TO START?
"Take the next step:
Learn more, start a consortium,
join a blockchain"
Improving supply chain transparency can add incremental brand value in demonstrating provenance as well as improving consumer confidence in food safety. The combination of market forces and opportunities is driving cooperation across the supply chain and a move towards digitalisation of the supply chain. Blockchain technology can provide an underlying fabric for sharing information in a safe and secure fashion across multiple enterprise participants - even when some of the participants are competitors. Now is the time to develop a roadmap and a strategy to capitalise on these opportunities and to begin with early stage pilots in blockchain technology either through the development of pilots or in joining existing consortia. Blockchain isn’t a silver bullet by itself, but it does provide a fabric of trust to benefit the industry as a whole.