Blockchain is Offering Some Exciting Possibilities to Enhance Traceability for Food and Beverage Industry

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Among the dizzying array of new technologies that are reshaping business today, blockchain is among the most intriguing.  The theory behind blockchain is quite compelling. Networks of computers use consensus mechanism and cryptography to allow each participant on the network (or along the supply chain) to update a distributed ledger in a highly secure manner, without a central authority.  For a hacker to breach one of the blocks in the chain would be difficult, but breaching all links in the chain at the same time would be nearly impossible.  In private blockchain, this can be complemented by access rights rules defined by each participant of the blockchain based solution, so that it is difficult to access the data of the ledger without the proper access rights. Moreover, some blockchain technologies have ‘smart contracts’ capability so that defined rules can be executed on the data of the ledger, in a similar secured way.

As a result, the level of trust built into such a system is high. When working within a trusted system, the time and cost associated with lengthy back and forth business processes is reduced.  The ability to track movements across the various stages of a product lifecycle become much more acute, thereby improving the efficiency of the entire supply chain (i.e., defective products can be quickly tracked and traced so that loss of revenues and damage to reputation is limited).

Food & Beverage industry blockchain advantages

A blockchain approach offers some exciting possibilities as it pertains to the Food & Beverage industry’s attempts to enhance traceability. In the U.S. alone, food recalls and foodborne illnesses bear an annual price tag of $77 billion, including discarded products, loss of revenue, damage to corporate reputations and healthcare costs. Better traceability can significantly reduce these costs.

Blockchain comes in to its own when the data needs to be highly secure or if smart contracts are to be managed. If a Food & Beverage manufacturer is handing off a finished product to a logistics company, who then delivers it to a third-party company that stores it within a cold storage facility, the Food & Beverage stakeholders want to make sure that the logistics company doesn’t damage the product and that it gets to its destination on time.

These verifications can all be dealt with within blockchain through the smart contracts. At the IoT level, sensors can be placed on transportation devices such as pallets and packages, so that variables such as temperature and vibration level can be monitored and the environmental data stored in the blockchain.  Therefore, blockchain stakeholders have real-time visibility into the stipulations of that contract and whether or not any of the agreed-to rules have been breached.  This becomes a very powerful tool for providing traceability, security, transparency and real-time access to contracts that impact the upstream and downstream supply chain.

Food & Beverage organizations will be given the ability to be much more precise in how they can track their goods, and simplify the execution (invoice/payment) of supply contract. When an issue occurs, they can be more accurate on what needs to be removed and what can be kept in the food distribution pipeline.

More work to be done

Although blockchain is still clearly in the experimental and pilot stages, Schneider Electric is investigating how to leverage its expertise in plant automation and process control to build and develop solutions that improve traceability across product life cycles. By partnering with blockchain technology specialists like Microsoft and IBM, Schneider Electric is assessing its contribution to the development of blockchain solutions that will support a multitude of key manufacturing and process industry requirements.

To learn more about recent Schneider Electric and Microsoft proof-of-concept efforts, click here.