Using Blockchain for Supply Chain Visibility in the Food Sector
You know blockchain as the technology backbone of cryptocurrency. If you’re like most security professionals, as demonstrated by an ASIS Foundation research project completed in 2020, you probably also know blockchain has other uses, but it gets a bit hazy beyond that. (ASIS members can log in and access the report for free.)
Any organization with a supply chain may want to take another look to demystify some of that haze. That’s especially true in the food and beverage sector, as The Wall Street Journal reported on U.S. Food and Drug Administration (FDA) regulations in the works that may require detailed record-keeping from companies in the industry.
“The rule, which the FDA expects to complete in November, would require the food industry to maintain records associated with critical tracking events on the supply chain for certain products, according to Frank Yiannas, deputy commissioner for food policy and response at the FDA,” the Journal reported. “Those events include growing, receiving, transforming, creating, and shipping food products, according to the proposed rule.”
The regulations, part of the continued interpretation and implementation of the Food Safety Modernization Act enacted in 2011, are not likely to require blockchain use or, indeed, even electronic record-keeping.
However, the article cited the successful case study in the food and beverage industry of a blockchain consortium powered by IBM called Food Trust as the type of record keeping and supply chain visibility that the new regulations will require. “Food Trust was an early testing ground of that vision, with members seeing in blockchain a way to preserve one consistent history of a food item’s path to the aisle of a grocery store,” according to the Journal.
The ASIS Foundation report also had a section highlighting Food Trust as a case study:
Use Case: Food
Begun in 2017 with 11 founding members, the IBM Food Trust digitizes transactions on every link of the food chain for its now 200-plus members, from growers to retailers. A lettuce leaf or wild scallops, for example, can be traced virtually from farm to table, documenting information such as holding temperatures, shipping dates, and certifications.
According to Offering Director Suzanne Livingston, the Food Trust uses a permissioned HyperLedger blockchain. To get buy-in from major companies such as Carrefour and Walmart, IBM assured potential partners that it does not own the data on the system. That decision eliminated issues over competition and trade secret protection. “That’s probably the number one reason this works,” Livingston says. “Because we don’t own the data.”
Participants can only view certain transactions, she explains. For example, Carrefour can’t see what Walmart is buying from a certain apple farm.
What if there’s a discrepancy between the record and an actual shipment? “We ask the parties to resolve their differences,” Livingston responds. IBM doesn’t change the ledger. “A company might send an auditor who can then upload documents to blockchain to support their hypothesis,” she continues, “but more often they talk to each other and resolve it.”
Most surprising to Livingston is the number of transactional mistakes that happen naturally but don’t get resolved. “The issue is lack of communication,” she says. But, she adds, “We’ve accomplished our goal of growing a food ecosystem in an industry that didn’t want to share.”
Richard Widup, CPP, group head of corporate security for Reckitt and a member of the ASIS Food Defense and Agriculture Security Community Steering Committee, describes the potential benefits of blockchain in an interview with Security Management.
“There are many advantages from a public health perspective as well as marketing and sales,” he says. “For public health, it would greatly help with more efficient recalls, better tracking for waste disposal, enhanced brand protection, and it would assist in mitigating diversion and theft investigations by enabling better tracking of how stolen goods are re-sold, etc. From a sales and marketing perspective, this is a great tool to monitor and manage sales patterns, marketing campaigns, etc.”
Coupled with the advantages, however, are significant challenges. “There are several, however from my experience there are two big ones: manufacturing costs associated with technologies to track and trace products and adoption by everyone else in the supply chain for it to be most effective,” Widup says.
The challenges are indeed pretty high barriers. “In the food industry, similar to the pharma industry, it likely will not get jump-started without rulemaking by the FDA and similar regulatory agencies.”
The promise of supply chain visibility is not just an aid to the food and agriculture sector. Widup mentions the pharmaceutical sector and its Drug Supply Chain Security Act (DSCSA) regulations, which seek to document the integrity of the prescription drug supply chain.
The ASIS Foundation report noted that an FDA report had this to say: “Blockchain has the capability to be the technology underlying an interoperable system for the pharmaceutical supply chain, as mandated by DSCSA. When using a single blockchain solution, transaction throughput, speed, and reasonable cost can be achieved to meet stakeholder needs.”
The report also highlighted a case snippet of how blockchain could aid in the supply chain of the mining industry.
While the emphasis of The Wall Street Journal article and this post has been how blockchain has the potential for efficient and useful visibility into an organization’s supply chain, it’s important to remember that supply chain visibility is just one application of blockchain technology.
Jason Bashura, who is also on the ASIS Food Defense and Agriculture Security Community Steering Committee and as well as serving as the deputy sector chief for the Infragard Food and Agriculture Sector, says an Infragard working group is looking at various applications of blockchain-like technology to help protect critical infrastructure in the United States.
Indeed, the ASIS Foundation research highlights case snippets of possible uses in a variety of sectors from using it to manage corporate financial assets to validation of event ticket sales to managing copyright protections. Perhaps it would be helpful to end this post with something that could have been at the beginning: a description of what blockchain is. From the foundation study:
Blockchain is a shared database among a group of individuals or organizations. It doesn’t exist in a central repository, but rather in a network of computers around the world. Advocates of blockchain say that the technology is immutable, decentralized, secure, irreversible, distributed, and anonymous. To a large extent, all those claims are true; the challenge is that none of them is 100 percent true.
By removing a central authority, a blockchain relies on the crowd to verify transactions, and they are rewarded for their troubles. A transaction is entered into the system and is typically stored with many other transactions within a block. Subsequent transactions form new blocks, and each new block is linked to the previous block via a unique digital signature. If someone tampers with a transaction recorded in a block, it alters the digital signature and unlinks that block. That’s what makes it so difficult to alter data on blockchain.
For more on blockchain and security, see these articles:
Blockchain Buzz (July 2018)
Can Technology Address Warranty Fraud? (March 2020)
For more on food safety and security issues, see these articles:
Food Defense and the Insider Threat (January 2020)
Raising the Bar: Food Defense (June 2018)