The grower-owned cooperative seeks to expand visibility of its product “from farm to fork,” in a pilot program undertaken with SAP and a group of supply-chain partners.
If blockchain is ever to move beyond the hype and become an everyday tool for managing supply chains, the need to ensure food safety could be the thing that puts it over the top.
When it comes to getting product to market, nothing is more important than ensuring consumer safety. Incidents of tainted food and subsequent recalls send producers and retailers scrambling to uncover the source of the outbreak. Delays in obtaining that crucial information can lead to further cases of sickness and even deaths.
Blockchain would seem to provide an answer. It’s predicated on the notion of a distributed, immutable ledger that records every key transaction — whether an order, payment or hand-off of product from one entity to another — and can be consulted at a moment’s notice.
Blockchain also presents a possible solution to another food industry quandary: waste. According to the Food and Agriculture Organization of the United Nations, more than 30 percent of the food produced in the world is either lost or wasted.
Both concerns drove Naturipe Farms LLC to pursue blockchain technology. Formed more than 100 years ago, it’s owned by a group of four family farms that grow Fair Trade-certified berries.
The grower-owned cooperative first came into contact with software giant SAP 10 years ago, when it sought to implement a new enterprise resource planning (ERP) system to help manage growth.
Last year, Carol McMillan, Naturipe’s director of information technology, got wind of a pilot project that SAP was conducting with blockchain. It eagerly joined up to pursue a proof of concept.
The goal was basic, says McMillan — “to get some exposure to what blockchain is, how it can be used in the agribusiness area, and what’s the potential for it.”
SAP’s dive into blockchain began with a survey of customers to assess interest in, and progress of, the technology. The first pilots launched last year, according to Gil Perez, senior vice president of products and innovations, and head of the company’s digital customer initiatives.
Moving Into Supply Chain
Initial use cases were aimed at financial transactions, in partnership with Canada’s ATB Financial. But SAP quickly saw the potential for applying blockchain to the supply chain, especially for audits and compliance. It proceeded to undertake more than 40 pilots with some 85 customers.
The pilot involving Naturipe focused on the ingredients of a ready-to-eat chicken Caesar salad — meat, cheese, lettuce, cherries and blueberries. Other participants included J.R. Simplot, Johnsonville and Maple Leaf Foods.
“From our perspective,” says Perez, “it was a good combined product that would tackle the challenges of being able to address the problem of food recall.”
The partners were concerned with issues such as marking, tagging and serialization of pallets. Each had its own method for carrying out those functions, making integration of efforts essential.
As the ingredients came together from multiple sources, the companies were able to incorporate vital information into a common blockchain, enabling them to trace back the provenance of a given package all the way to its original producers. Equally essential, says Perez, was the ability to conduct root-cause analyses once the whole process was complete.
The pilot was deemed a success. After six months, “everybody came away with the understanding that they can collaborate with competitors and get value without compromising their business,” says Perez.
As for Naturipe, it found significant value in the potential for blockchain to improve traceability, which McMillan calls “the produce industry’s biggest supply-chain challenge.”
Blockchain offers a means for every participating entity to contribute information, “with the end goal of full supply-chain visibility,” McMillan says.
Far From the Finish Line
The biggest lesson to emerge from the pilot, however, was the realization of how far the technology has yet to go.
“There’s a lot of work to be done,” says McMillan, citing “the whole concept of interoperability.” Companies involved in the creation of a given product — even nominal competitors — must be comfortable with exchanging sensitive information. (Even though in a private blockchain, certain bits of proprietary intelligence are not made visible to all.)
“There’s a lot of hesitancy along the supply chain of people sharing information, even in a private blockchain,” says McMillan. “It’s a fear of trade secrets or the source of product being given away. We need to find a balance between that and what’s beneficial [to share].”
Naturipe’s approach to traceability has historically centered on the concept of “one step forward, one step back,” McMillan says. For example, it can quickly ascertain the farm where a certain product came from, and the customer distribution center to which it was sent. Once that product gets to the store, however, things get fuzzier.
“Nobody within the supply chain has complete visibility of that product from farm to fork,” says McMillan. It’s an age-old problem for the food industry, and one for which blockchain seems especially well-suited.
Naturipe intends to continue working with SAP on the development of blockchain. It’s in the final stages of making a decision to join another exploratory group formed by the software vendor.
The company might also reach out to partners outside of SAP’s orbit. Up to now, it hasn’t worked with any retailers, although it’s considering some candidates. “They’re in the same boat,” says McMillan, “exploring the benefits to see where the ROI is for each of them, and the industry as a whole.”
Perez says it’s crucial to create an atmosphere of trust among putative partners. “We have to slowly walk all of the participants through this process.”
Moreover, as more companies sign on to blockchain, the technology needs to prove its ability to scale. Smaller groups of supply-chain partners aren’t a problem, but blockchains involving a million or more computer nodes still must figure out how to get key data posted in a timely fashion.
Blockchain technology offers huge potential for food companies such as Naturipe, as well as those in other industries. “But there’s a big difference between saying that and getting big companies to do it,” Perez says.
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