Food plays a fundamental role in human societies and is essential for the well-being of people and the planet. However, to fulfill the aspirations of an inclusive, efficient, sustainable, nutritious, and healthy food system, a fundamental transformation is needed. Nearly a third of global food production is wasted, yet up to 800 million people are chronically malnourished. In addition, food systems are responsible for 25% of global greenhouse gas emissions, while climate change threatens up to 25% of crop yields.
The increase in the world's population, which is expected to reach 10 billion by 2050, will strain food systems.
Modern supply chains are inherently complex chains. The expansion of current supply chains and their wide geographical spread have faced many challenges in the management of supply chain processes. Globalization, diverse regulatory policies, and diverse cultural and human behaviors in supply chain networks have faced many complications in evaluating and managing information. Improper transactions, forgery, fraud, and poor practices by supply chain parties have led to the need for greater trust and, consequently, the need for better sharing and stronger validation of information.
One of the best solutions to improve management of supply chain processes is to use the technologies developed in the field of information technology. Blockchain technology is one of the emerging technologies in this field that has the potential to improve supply chain performance.
Considering the increasing number of international industries to join international supply chains, the vertical and horizontal globalization of industries, and the challenges of international trade, as well as the desired added value created by the applications of information technology in this field, a lot of motivation has been created to identify the different aspects of commonality of two areas of information technology and supply chain management and to take steps to meet the industrial and technological needs of industries. In the opinion of industry managers and researchers throughout the world, Blockchain technology has been able to gain a high position in this regard. Therefore, suitable opportunities have been provided for research and identification of operational applications; however, before this technology is introduced to the operational level, it is important to know in which areas the implementation of this technology is more necessary and also which features of this technology will be effective on which functions of the supply chain.
Today, cryptocurrencies have become a buzzword both in industry and academia. With a specially designed data storage structure, transactions on the Bitcoin network can happen without any third parties. The main technology behind Bitcoin is Blockchain, which was first proposed in 2008 and implemented in 2009. In Blockchain, all validated transactions are stored in the list of blocks. The chain is constantly growing by growing new blocks into it.
Blockchain is a technology that can enable the communication of authentication data of each player in a supply chain without the intermediary of a trusted central organization. By verifying and adding data in real-time, Blockchain can increase transparency throughout the supply chain.
Blockchain features: traceability, time recording, censorship resistance, with distribution center, and near real time.
Replaced technologies:
Blockchain technology generally has the main features of decentralization, stability, anonymity, accountability, and traceability. By using these attributes, Blockchain can save a lot of money and improve efficiency. Food supply chain is a complex chain including financial flow, commodity flow, and information flow, which involves all joint enterprises of raw material suppliers, manufacturers, logistics parties, wholesalers, retailers, and consumers.
Addressing food system challenges requires a transformative approach rooted in technological investments, partnerships, and incentives. However, despite the need for technology to meet food system requirements, Food and Agriculture Sector lags behind other sectors in technology investment and adoption. This need is especially evident in developing countries.
Blockchain technology can increase the efficiency of food supply chain in food flow, information flow, or financial flow.
Lack of transparency is one of the challenges that creates economic, environmental, social, and even safety problems throughout complex supply chains. Lack of timely tracking has caused a lot of damage to the supply chains. And counterfeiting and fraud have caused the entry of many counterfeit raw materials, parts, and products in the supply chains. These challenges may impose huge costs on supply chains. The production and distribution of low-quality and spoiled food in food and agricultural supply chains, the lack of access to correct and timely information, and such things, increasingly reflect the importance and necessity of using solutions that provide transparency and traceability with the aim of building trust in supply chains. Blockchain technology may have the potential to solve the aforementioned challenges and problems.
The impact of Blockchain technology on supply chain operations
There are two main features of Blockchain technology that are important for its implementation and meaningful use in logistics and supply chain networks:
Based on these main features of Blockchain, its implementation fields for use in logistics and supply chain are being developed in different aspects. Some of the most important areas of current implementation of Blockchain in logistics and supply chain are: tracing the origin of the product, tracing the product through the supply network, forecasting demand, reducing the risk of counterfeiting and fraud, and free access to information in supply chains.
Lack of coordination among food supply chain players causes information delay and information asymmetry which affect the quality of shared information, so resulting in inefficiency. Blockchain technology can be effective in building trust and increasing cooperation in supply chains.
Making a transformational agenda that accelerates progress toward a healthy, nutritious, sustainable, efficient, and inclusive food system requires unique collaboration within and across organizations, initiatives, and players.
Mutual understanding of these opportunities and challenges, and enabling priorities will be the foundation of effective cooperation.
Governments can encourage traceability and support the adoption of it.
Technology companies have the potential to develop the transformative traceability technologies needed to reduce costs, improve delivery, and maximize efficiency.
Retailers can take the lead when meeting with other stakeholders to develop appropriate multi-stakeholder partnerships with the aim of creating transparency.
By coming to the negotiating table with an open mind, considering new business opportunities, and advancing existing commitments, Agribusiness Companies may support the traceability application for food value chains.
Food producers, especially small-scale producers, are at risk of being left behind. They need to clearly identify what they need to ensure that traceability helps their operations.
Civil society and system leaders can play a convening role to ensure that all stakeholders have an opportunity to contribution when developing standards and requirements.
Food traceability system is considered as a record keeping system that helps in identifying the source of all food inputs such as raw materials, additives, and packaging. The traceability of a product is very important and has a direct relationship with the risk of supply; if the origin of a product is tracked, it provides exact information related to the product such as production location, production date, and suppliers. Tracking the origin of products is also important in the food supply chain, where it is necessary to record which product comes from which field. In addition, damaged items can be identified and removed from the market using tracking system.
The Global Center for Food Traceability is intended to help companies better understand and implement ways to track products through food chain, improve food safety and security, and prevent or reduce adverse health and public health impacts. However, we want to emphasize that food traceability is more than a recall.
Traceability technology in the food value chain is on the rise, for example, IBM has developed IBM Food Trust, which engages food and agriculture players in its blockchain-based traceability system, including several food and agriculture companies. Walmart requires all US spinach and lettuce suppliers to track products on Blockchain. Trimble Inc., known for its GPS technology, has acquired HarvestMark, a provider of food traceability and quality inspection solutions.
Achieving full-scale traceability would be difficult for a single food value chain player, as the barriers to large-scale adoption (such as financing capital costs and establishing consistent standards) are significant. Collaborations are likely to take one of three forms: horizontal (e.g. the largest global retailers and "brands" work together to harmonize standards and pressure the rest of supply chain to comply), vertical (e.g. a retailer collaborates with all of them. Supply chain to align with standards), or multi-stakeholder (downstream competitors collaborate with players from the whole value chain, with support from government and civil society). Multilateral cooperation is preferable to the other two forms because it helps to set coherent standards taking into account the needs and perspectives of the whole value chain.
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In addition to describing the necessity of traceability and sustainability, Food Supply Chains highlight the importance of transparency in food supply chains. As the transparency of the activities that go into food production increases, the level of traceability and sustainability improve due to new data and information, which is based on the evolving available technologies.
Mao et al. (2018) presented a performance evaluation system of all stakeholders in the food supply chain. In this system, the transparency of reliable and available information in real time is made in the supply chain deployed by Blockchain technology; increase in accuracy and fairness in this system guarantees performance evaluation. Transparency may lead to increased sustainability and food safety in these supply chains.
Walmart is known for efficiently managing its supply chain through large distribution centers and advanced information systems such as vendor managed inventory (VMI), electronic data interchange (EDI), and radio frequency identification (RFID).
In addition, Walmart has been an early adopter of technology since it opened its first store in 1962.
Companies such as Walmart, IBM and its partners are working to develop standards and solutions for greater food safety throughout the whole food supply chain by testing the tracking of food products such as Chinese pork and US mangoes. According to Walmart, Blockchain supply chain reduced the time it takes to track a package of farm-to-store mangoes from days or weeks to two seconds.
On May 31, 2017, Walmart released the test results of its food safety and tracking protocols that had begun in China in October 2016. Walmart reported that Blockchain would help reduce the time it takes to track food from days to minutes. In particular, tests conducted on Chinese pork and US mangoes showed that the origin of food products may be tracked in 2.2 seconds; however, in the past, it took several weeks with non-blockchain technologies.
Alibaba partnered with AusPost, Blackmores, and PwC to use Blockchain to tackle food fraud, involving the sale of low-quality food products often with adulterated ingredients. The four companies are developing a "Food Trust Framework" to help improve integrity and traceability in global supply chains. They are working to develop a Blockchain prototype model that participants across the supply chain can use it.
The estimated annual cost of food fraud is 30-40 billion dollars. Bad players in the industry may pose risks to public health (such as milk contaminated with melamine or olive oil contaminated with common allergens such as seed oil).
While consumers refer labels and certifications to make their purchasing decisions, many believe that labels are insufficient to provide the transparency they need – the information is incomplete, sometimes confusing, or subject to fraud.
Food fraud may be widespread. According to Food and Agriculture Organization (FAO), food fraud is defined as "deliberate adulteration of food products to obtain financial gain". This may include deliberate substitution; dilution; and adulteration or misrepresentation of food, ingredients, or packaging; or even false or misleading statements made about a product.
In a crisis involving contaminated food products, one can easily identify the source of contamination and engage in strategic removal of contaminated products instead of rescanning the whole production line. Blockchain also enables a more effective response if tainted products are discovered. In this way, the company can maintain the confidence of buyers in other products and avoid the risk of consumers getting sick.
Another benefit of Blockchain adoption in the food supply chain is the reduction of food safety risks, so that human errors can be limited and the corruption can be reduced because no one can change the history of data; as a result, it is expected to prevent food fraud.
Blockchain technology reduces food spoilage by planning the best delivery routine and reducing the delivery time for perishable food, thereby reducing food waste and costs.
The emergence of 4IR technologies is a significant opportunity to enable and accelerate the transformation of food systems.
The main barriers to food systems
The lack of a comprehensive approach in related sectors (including agriculture, health, and environment) prevents policy makers and investors from making the right decisions to improve food systems
Blockchain enables unprecedented visibility at every stage of the food supply chain, helping to increase transaction transparency, food safety and quality, as well as to reduce food fraud and waste. In addition, it serves as a digital solution to reduce operational costs and improve efficiency in the food supply chain.
"Twelve transformative" technologies affecting food systems and, if scaled, could have a significant impact by 2030 are as follows:
1- Changed form of demand
2- Promoting value chain links
3- Establishing effective production systems
Implementing Blockchain solutions may help participants record price, date, location, quality, certification, and other relevant information for effective supply chain management.
Blockchain is an emerging technology with potential for advancement; however, achieving return on investment (ROI) requires careful assessment of the technology's suitability for your company's supply chain profile, as well as predictability of ROI. The following five features may help Blockchain prototyping timing and value decisions. Once a concept is agreed upon, before piloting the Blockchain externally, one may start with a prototype on a test network with mock data to prove the concept before investment. Blockchain is still a nascent technology, so its limitations and improvements are constantly being discovered and developed. Some of today's potential limitations and risks include:
• Cultural acceptance
Ms. Sima Tafakkorimanesh
M.A. in Industrial Engineering - Logistics and Supply Chain
