Blockchain is here, and it has the potential to significantly improve supply chain and distribution operations
Blockchain. It’s a word that, depending on your aptitude for technology – or, indeed, your patience for buzzwords – can either inspire or confuse. But here’s the thing, blockchain really is the future. That’s none truer than for businesses that operate or rely on national or international supply chains and complex logistical operations.
To give a simple indication of the advantages of implementing blockchain, consider this example: a package of mangoes that you may find at a grocery store can typically take six days, 18 hours and 25 minutes to track back to their farm of origin. Using blockchain it takes 2.2 seconds.
The particular blockchain in question is IBM’s Food Trust Blockchain solution. The company is collaborating with a number of businesses, including leading food processor and distributor Golden States Foods (GSF), across the global supply chain to implement blockchain technology into the worldwide food ecosystem.
The suggested benefits of doing so are far reaching, and include improved traceability and transparency, optimised delivery and efficient transport operations, improved strategic decision making related to cargo and shipping, better supply chain collaboration, fewer operational costs and improved food safety.
Critical for logistics and distributors
“Blockchain establishes a trusted shared environment for all transactions, providing permissioned access for all verified partners,” says Bjorn Kutz, Program Director, Watson IoT and Blockchain. “It’s a secure solution that simply and quickly tracks products and transactions with visibility to the different parties throughout the chain.
“This is critical for logistics and distributors because it enables businesses to quickly track when and where products have travelled, react to changes and to minimise impacts for all vendors involved.”
Blockchain is an open, distributed ledger system that records transactions between two parties efficiently, but also in a verifiable and permanent way. As it’s secure by nature, it is the perfect solution for recording and tracking events, records and management activities, as well as transactions, provenance of any documentation and issues such as food traceability.
The latter makes blockchain the ideal solution for food logistics and distribution organisations according to Kutz, who states that blockchain improves visibility and accountability from all parties.
“By establishing a trusted environment for all transactions, any business and its food distribution partners – from farm, to restaurant, to customer – can utilise real-time, trusted information regarding the origin and state of food for their transactions to maximise freshness, minimise risk and improve distribution and restaurant operations.”
IBM and Golden States Foods
IBM is presently collaborating with GSF – which has a fleet of 1,000 trucks that make over 25,000 deliveries each week – on a project combining blockchain technology with innovative internet of things (IoT) solutions.
IoT refers to any network of devices that uses embedded technology to communicate and interact with an external environment – think connected security systems, sensor systems or, in the case of GSF, real-time data that actively monitors its fleet operations.
“IBM’s IoT for Automotive incorporates weather, traffic and telematics data that enables GSF to improve its fleet operations and ensure deliveries are made on time,” Kutz elaborates.
“Using this solution, GSF is infusing cognitive computing and augmented intelligence into its distribution operations to improve fleet management, enhance driver safety and test new capabilities that optimise decision making in areas like energy, equipment and restaurant wellness management.”
Leveraging blockchain technology into this system can, through the recording of the information, provide a single source of insights that helps all in the supply chain.
IoT can, for example, provide fleet sensor data through a blockchain smart contract that is then shared with other parties in the supply chain, enabling the entire network to have improved visibility of a shipment’s status. The end result is a streamlined and more transparent supply chain.
“Using the two technologies together,” says Kutz, “companies can quickly identify potential problems, streamline transactions and identify new opportunities.”
Transparency and safety
Of course, an efficient and streamlined supply chain is an essential requirement for any business but ask a food distributor to name key drivers and you’ll likely receive the same answer: transparency and safety.
Indeed, the World Health Organisation estimates that one in 10 people fall ill due to contaminated food each year and, with increased regulation and a growing understanding among consumers of issues surrounding food hygiene and provenance, the message for any business involved in food supply chain is clear – there is no margin for error.
Because blockchain provides a real-time, and instantaneous view of the entire supply chain it creates an entirely transparent – and trusted – environment for all transactions, from the farm the food is grown at until it’s sold to consumers.
“Blockchain is all about transparency,” states Kutz. “It allows for key information to be recorded on a shared, immutable ledger. By inputting critical data points throughout the entire supply chain process, all parties involved can view the transactions taking place and access the data. For it to work, everyone needs to participate, which increases accountability.”
And, in the unlikely event that a contamination issue should occur across a food distribution chain, blockchain’s recording power is such that it’s capable of reducing the amount of time required to identify the exact point at which contamination occurred from weeks to a matter of seconds.
The nature of how blockchain works means that there are associated benefits to implementing it into a supply chain. For some, there’s a common misconception that, because blockchain is decentralised, it’s somehow open to access to anyone. In fact, according to Kutz, it’s one of the most secure methods of recording and managing a supply chain.
“Permissioned blockchains make it so only approved parties have access to the information recording,” he states. “This ensures that information is kept secure, private and transparent, but only for the parties involved.”
A new way of operating
Alongside its work with GSF, IBM is also working on blockchain-based solutions with food giants such as Dole, Driscoll’s, Nestle, Tyson Foods, Kroger and more, implementing advanced technology that can improve comms, security and safety, and which has the potential to bring significant benefits to the global food ecosystem.
Naturally, the complexity of global supply chains and distribution operations means that the implementation of a technology as innovative as blockchain isn’t without its challenges. Kutz, for example, cites the fact that it is a ‘team sport’, in that everyone along the chain must be willing to participate.
Predominantly, though, he explains that “blockchain requires new thinking and a new way of business operations that can be unsettling for business that aren’t quite sold on the benefits”.
Those businesses need only look at the tangible evidence to understand the potential of a blockchain based supply chain – safety, security, real-time strategic decision-making capabilities, transparency, cost efficiency and more.