Blockchain For Food Traceability – How Close Are We?

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March 31, 2015
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Blockchain For Food Traceability – How Close Are We?

The term Blockchain is everywhere these days and the technology was originally developed to keep track of Bitcoin transactions. As it applies to the food industry, it is a distributed ledger; essentially a big database that different partners can send and receive information from and have access to see, at least portions of the full chain that pertain to them. The potential to mine this database for information such as performing a traceability recall quickly is exciting, however, I feel we are quite far from that becoming a reality across all our food products. The challenge as I see it, is having each individual food manufacturer truly able to provide the required information to feed the chain. So many food manufacturers are still doing traceability on paper. To contribute information to make something like a Blockchain recall possible, all the players in the chain need to participate and get the required information into the chain in a timely and sustainable way.

Food manufacturers may get mandated by their big retail customers to participate in blockchains and that will certainly motivate them to adopt digital traceability. While traceability is a government requirement and the ability to perform a recall within 24 hours is a requirement, electronic traceability, while recommended, is not yet mandated, under The Safe Foods for Canadians Act. Many manufacturers face even tighter timelines for being able to do a recalls by their customers or by various GFSI program auditors than they do the government. Ultimately it is the consumer that demands fast answers in this information age.

To make a traceability for food blockchain work, each participating member of the chain would need to have their lot information in an electronic form if they are really able to quickly and easily share it in a meaningful way. My understanding of current blockchains for food is that partners in the chain are recording what items and lot numbers were shipped to their participating customer. The supplier and customer both have access to the chain and the business customer in the chain acknowledges that what the supplier said they shipped them, is what they received. For a manufacturer, this would mean sending information to the chain each time they ship finished goods lots, with the customer who receives those goods acknowledging that is, in fact, what they received.

But the blockchain is not yet verifying what lots of raw ingredients went into what finished goods within that manufacturer. That is internal traceability, the responsibility of the manufacturer and information currently kept within that one company. It is problematic that even for food manufacturers that are recording the lots of raw materials electronically, they may not be doing so in a software program that validates the information. By validated I mean using software that is checking to make sure that the transaction involving each lot number is possible and preventing impossible transactions from being recorded. Such validation would involve looking at the information in a live environment to ensure that for each transaction you had enough of that lot, in that location, in stock to make the transaction possible. Using scanners to get lot information into an electronic system is a good option, but so many raw materials in the food industry are not being shipped with the lot information encoded into useful barcodes, like code 128 barcodes. That means the manufacturer often doesn’t have the information upon arrival to scan many of its ingredients and is left with the job of trying to relabel goods upon arrival, which slows down the receiving process. In a market where margins are slim and competition high, people time is costly.

If companies are using programs like Excel to store their lot information, it’s important to remember that Excel isn’t a validation program, it is a spreadsheet; Excel allows you to enter information into a cell. Similarly, many inventory and ERP systems have a field for a lot number, but it is an open field where someone can enter whatever they want. There is good reason for the lot number field to allow both numbers and letters at receiving, because it is acceptable for lot numbers to be alphanumeric and the various different suppliers will format their lot numbers in a variety of ways. However, from the point of receiving forward, validation is necessary or true traceability can be lost very quickly.

For example, if someone looked at some paperwork and transcribed lot L001 as LOO1 (letter ‘o’ instead of zero in this example) and they are using a system that allows the user to enter whatever they want into a field, the traceability will break down very quickly. Let’s say 10 cases of L001 came into the plant. Without validation, someone may enter that 10 cases of lot LOO1 were used to make an item. You could end up with a system that thinks you used lot LOO1 (a lot that was never received) and that you still have 10 cases still of L001 in stock, when in fact you used them already. In a short amount of time ,your inventory can become a mess in unvalidated systems. Fortunately, Minotaur’s program is a validated one.

With all members of a supply chain participating in a blockchain, trace reporting should be able to quickly determine what companies were shipped what raw material lots because each partner in the chain has verified receipt. It is then up to any manufacturers or re-packagers in the chain to determine from their own systems where they used that raw material and what the lot numbers are of the affected finished goods, so that the recall chain can continue to only alert the affected partners further down the chain. It is the manufacturing step that causes the chain to be challenged.

Block chain shows great promise for traceability in the future, as demonstrated by Walmart’s first trial with mangoes, where they were able to trace two mangoes back to the original farmers field in just 2.2 seconds. (For more on Walmart’s trial, click here) While that is impressive, notice that they started the trace with a finished good where no changes had been made to that finished good along the supply chain. They also had the farm and all distributors along the distribution network participate in the blockchain pilot. Each participant recorded shipping and receiving that lot of mangoes so ‘farming’ that data quickly for the source was easy.

It is not as easy when a product is transformed through manufacturing. While Blockchains may become relevant to mainstream food manufacturers in 5+ years, the first step is ensuring that food manufacturers get digital control of the traceability within their own manufacturing organization and get it into a verified electronic form, so they have accurate information available to feed whatever blockchain or blockchains their customers want them to participate in.

Consumers would like, I am sure, to be able to scan a package or QR code on a product in a grocery store and find out where and when it was made. A large investment in technology for traceability within manufacturers of food products would need to be made, to make that vision a reality.

But in my opinion, we are far from having accurate end to end digital traceability in many food manufacturing companies. Some have achieved and others are working hard on it, which is great. But a vast number of manufacturers are still using paper and unvalidated systems, where the information is not being input and checked on the production floor as it happens, but being recorded after the fact from paperwork, so the accuracy of the information they have may be questionable.

It is not clear if there will be multiple blockchains that manufacturers will be asked to participate in. For example, will each retailer start a blockchain or will one organization ‘win’ and be the blockchain all retailers and suppliers participate in. It also requires buy-in from all members in a chain and that buy-in won’t necessarily be easy. Some companies use ingredients from around the world and unless all participants are on the chain a trace back to origin is not really feasible. So many questions remain around blockchain. My recommendation for individual food manufacturers is that you work on automating traceability within your own organization so that you are ready when the request comes to participate in a blockchain.