Quick, think of the last disastrous food recall that hit the headlines. Hard to put your finger on it? That’s most likely because there hasn’t been one for a good long while. Considering the astonishing complexity and inherent vulnerabilities of the food supply chain — especially the temperature-controlled supply chain — it’s remarkable that we hear about them so rarely.
The temperature-controlled food supply chain differs from other industries’ supply chains in key ways — it doesn’t have to concern itself with postponement, mass customization or even reverse logistics very much (except when there are recalls). But it has long had to take a great deal of care with two factors that are becoming increasingly important in other verticals’ supply chains — traceability of raw materials, and full transparency in exactly what happens to goods in transit.
For the purposes of food safety and food recall, traceability and transparency are both of critical importance for pretty obvious reasons. You want to be able to pinpoint a processing plant that turned out to be infected with listeria, in order to follow the chain of distribution from that single source and catch absolutely every last piece of contaminated product out there. You also need to know if a tanker full of milk got stuck without electricity on a hot loading bay, and whether its contents’ temperature rose above an acceptable level for too long. Not to put too fine a point on it, people’s lives are at stake.
Now, just about every business from car manufacturing to fashion retailing is under pressure to be completely transparent and accountable when it comes to where raw materials were sourced, and who is involved in the labor force, often many steps removed back up the supply chain. Child labor is a serious concern. So are conflict minerals used in metal production, sourced in areas where there’s a war going on, with the money from selling them used to prolong the conflict. These are tricky to avoid, as they are used so commonly. Raw materials such as cassiterite (for tin), wolframite (for tungsten), coltan (for tantalum), and gold ore, are extracted from the eastern Congo, and passed through a variety of intermediaries before being purchased. So-called blood diamonds are a better-known phenomenon, and still constitute the same sort of problem. Even petroleum can be a conflict resource; ISIS has used oil revenue to finance its military and terrorist activities.
Steering clear of these issues is not just a nice-to-have aspect of corporate responsibility; the law is demanding increasing accountability from businesses. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act required manufacturers to audit their supply chains, and makes individual executives responsible for infractions of U.S. and international law. No longer is it possible to point to a devilishly convoluted supply chain that snakes through multiple countries and intermediaries; your company is on the hook for everything.
It’s no wonder, then, that the capabilities of blockchain have caused such a buzz in supply chain management circles.
In case you’ve been living in a cave for the past six months, here’s a plain-English explanation of blockchain from The Motley Fool. “Blockchain is the digital and decentralized ledger that records all transactions. Every time someone buys digital coins on a decentralized exchange, sells coins, transfers coins, or buys a good or service with virtual coins, a ledger records that transaction, often in an encrypted fashion, to protect it from cybercriminals. These transactions are also recorded and processed without a third-party provider, which is usually a bank.”
Although blockchain was initially developed to enable cryptocurrencies, it represents a stand-alone opportunity to gain extraordinary access to the exact provenance and history of commercial transactions of any kind. That makes it perfectly placed to serve the growing need for transparency and accountability in supply chains. It represents a game-changing opportunity to trace activity across multiple IT systems, countries, and business partners.
So, clearly, blockchain is a big buzz term, but we in the chilled food supply chain management industry have been achieving similar capabilities for a long time, simply because we have to. We’ve been doing “blockchain” for decades! That means we have much to teach other industries.
Chilled food supply chain operations have stayed on top of the need for transparency via in-transit traceability protocols, and through exacting inventory management processes, but one of the most significant technologies to offer maximized visibility has been Web-based portals. This is where other businesses need to take a leaf out of the chilled food supply chain book.
The bald fact is that not every company is big enough or has sufficient in-house IT resources to implement great new technologies as perfectly or as comprehensively as they might wish. They gain enormous leverage by seeking help from external services, such as 3PLs, capable of providing Web-based portals to supply chain management systems. These bridge a gap where small companies don’t have large IT departments, and don’t have the capital to invest in cutting-edge technology. 3PLs that run multi-tenant, easy-access information-processing platforms do more than provide seamless interactions between large and small business partners. They also allow for a common capability and high level of sophistication across all stakeholders in a supply chain, beyond each company’s internal logistics technology resources.
For exactly these reasons, and despite the daunting need to adopt advanced business management processes, now is probably the easiest time in history to start your own company. That’s because third-party providers can take care of the professional requirements, not just in the area of logistics technology, but sourcing, accounting … you name it. What the chilled food industry has learned in advance, because it absolutely had to, is that trusted outsourced service providers can take care of matters that lie outside your core capabilities — such as keeping your supply chain absolutely transparent and accountable — while you focus on what got you into business in the first place. You might be terrific at baking cakes or raising cattle or designing T-shirts, but if you can’t get your product from point A to point B, where your customers are, you’re out of business. These days, with third-party help, if you have a smart phone, you have control of your supply chain.
Traceability and accountability are not just legal considerations; there’s a growing demand for transparency. Look at the recent scandals where organizations have been caught behaving badly — Volkswagen, Oxfam and Uber to name a few. People are voting with their dollars in support of socioeconomically responsible companies. Providing a clear line of sight into exactly where and how your products come into being will bring an increasing competitive advantage. Blockchain can help; implementing it is another matter. Making smart choices about external IT providers who can help you maximize your resources will put you ahead in the coming race to be transparent enough for tomorrow’s consumer.
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