Blockchain Technology is Revolutionizing the Food Industry

A 2015 E.coli outbreak at a Chipotle Mexican Grill resulted in 55 customers falling ill. The chain’s reputation tanked with the share price dropping by 42%. It never really recovered and is still languishing in a three-year low. These kinds of outbreaks are common and, quite frankly, unsurprising given the complexity and lack of transparency of the supply chains that provide restaurants and supermarkets with ingredients.

Greater Transparency, Improved Accountability

The solution? Blockchain technology is improving transparency with the sharing of information and accountability at every step in the process. You will probably recognize blockchain as the technology underlying cryptocurrencies such as Bitcoin. Here computers from across the world constantly update a shared ledger using a cryptographic protocol. Each user adds a single block to a chain, so no single company or user has control. The block is added in real time so it’s impossible to counterfeit.

How Blockchain Works

Every user has access to the entire blockchain database and its history. That means no one user or corporation controls the data, and everyone can verify records without any intermediaries. Each transaction (and its associated value) is accessible to everyone who has access to the system. The transactions occur between blockchain addresses which make them traceable. Users can choose to remain anonymous or disclose their identity.

Every transaction that is entered into the database is final. Records cannot be altered because they are linked to every other transaction in the blockchain’s history. Every transaction is permanent, recorded in real time, chronologically ordered and visible to all users on the network.

What blockchain brings to the table is increased trust, improved transparency and better sharing of information. While this improves the information available to consumers, it also presents many advantages to suppliers. Greater safety is coupled with an increase in the flexibility of markets. Blockchain technology allows users to attach digital tokens to goods as they move through the supply chain from production, to shipping and handling and finally to delivery.

This affords corporations increased flexibility to identify risk and find suitable markets by knowing the value of their investment in the goods at any point along the supply chain. This results in dynamic demand chains in place of static supply chains.

Chip and sensor technology improvements can help to record and share data as goods move through the supply chain. This improves the traceability of goods and lends itself to greater automation. This applies to both goods and people. Not only can goods be tracked and monitored, but the people in the supply chain (protected by cryptographic permissions which hide personal information) could be monitored by all members of the supply chain.

For example, any member of the network could see (in real time) if a properly credentialed employee is carrying out the appropriate sterilization procedures at a processing plant. These improvements in trust and efficiency could revolutionize the supply chains for all major industries.

So Why Isn’t Everyone Already Using Blockchain?

There are some inherent issues to overcome. Ideally, companies would utilize public blockchains which are not controlled by any one entity to ensure transparency. Of course, private supply chains will also arise. These would be run by a consortium of private companies and would lack the transparency of public ledgers.

To date, public blockchains are plagued by constraints in their open-source communities which make it difficult to agree on protocol upgrades. A lack of standardized protocols and standards create difficulties when private and public blockchains need to cooperate with each other.

The global supply chain is a complex network of laws, regulations, maritime laws and commercial standards. That means issues of privacy, ownership and regulatory constraints differ from country to country and along shipping routes. Combining this network of regulations with the humans that run the supply route with the automation that blockchain brings is a difficult balancing act.

Corporations will have to agree on industry standards, best practices and contract structures on a global level. However, any global system that can help to improve standards, promote transparency, improve safety and increase control for customers and suppliers while removing barriers that currently hamper free trade is worth exploring.

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