Category Archives: Supply Chain

The current food supply chain is broken. Here is 5 reasons

Supply chains. We know surprisingly very little about most of the products we eat every day. Before even reaching the end consumer, products travel through an often-vast process flow of retailers, distributors, transporters, storage facilities, and suppliers. Here is five reasons the current system aren’t working:

1. Complexity – In the beginning, two centuries ago, the supply chain was a revolutionary idea. The idea was improve visibility and control of products through interorganizational exchange, as they moved from A to Z. But this old concept and the inherent technology can no longer support today’s production and supply cycles of products, which have become extremely fragmented, complicated process and geographically scattered across the globe. The effect is, that supply chains now is a blurred process that is extremely hard to manage for retail businesses, to effectively track and trace their products, and thereby paving the path for, e.g. fraudulent behaviour. The emphasis on providing cheap food has led to complex supply chains which are ripe for fraudulent activity, according to Prof. Chris Elliot.

2. Demand – We, as consumers, are very demanding when it comes to food. We want fresh bananas, juicy tomatoes, tasty mango all year long, no matter the season, we want it. And your local supermarket knows, and are trying to deliver out-of-season food all year long. It takes a lot of resources to ship non-local goods around the world, which from a sustainability stance, is very damaging.

3. Traceability – With more companies outsourcing for raw materials and distribution, having end-to-end visibility in a supply chain is an absolute necessity in order to ensure public safety, as well as brand protection. The information and data is an integral part of the product quality, so this information needs to provide an accurate picture of where your products are at any given time in your supply chain. A food traceability system is only effective if it can track and trace every component of every product, which the current system can’t.

4. Certifications – On the face of it, certifications on everything from fish to timber can be seen as progress, with a promise of better standards and the pursuit of sustainability. But what purpose are the certification labels actually serving? Can we assume that they are beneficial to producers? Do consumers understand what’s behind a certification label, as there seems to arise new certifications all the time? Today, the industry is more aware that certification alone isn’t addressing problems of low productivity, poor infrastructure and child labour, which continue to destabilise the supply chain. An example is Fairtrade, which is not that fair at all.

5. Transparency – With the requirement of only knowing one step back, and one step forth, actors in food supply chains have very little transparency of where their products come from. This, and other factors, leads to scandals like horse meat in cow meat, harmful pesticides in bananas, Chinese terrified of eating processed food and fraud with extra virgin olive oil.

References:

https://www.theguardian.com/sustainable-business/2016/mar/10/fairtrade-labels-certification-rainforest-alliance

https://www.businesswire.com/news/home/20120511005906/en/trace-Lack-traceability-product-integrity-%E2%80%93-profits

Blockchain as a food supply chain

How to improve trust in supply chains – by blockchain

Introduction 
The main purpose of this blog post is to state how Blockchain Technology influence the role of trust and how it might solve the challenges in tracking and tracing products throughout its supply chain, by identification of opportunities with blockchain as a platform of traceability, information and documentation sharing regarding Extra Virgin Olive Oil (EVOO). The case partner was COOP Trading. This blog post is an executive summary of a master thesis on the matter.

We know surprisingly very little about most of the products we eat every day. Before even reaching the end consumer, products travel through an often-vast process flow of retailers, distributors, transporters, storage facilities, and suppliers, yet in almost every case these journeys remain unseen. This can lead to fraud of adulteration and tampering with the products we consume everyday. Which the The Danish Veterinary and Food Administration action team found, by adulterated EVOOs at Dagrofa and Dansk Supermarked. Out of the 35 tested bottles, only 6 could be classified as EVOO.

Challenges
The identified challenges from the gathered data, were the difficulty to qualify trust as it’s very ambiguous of what it entails, but is key to have an effective supply chain. Regarding the actual process of EVOO, the law requirement of only knowing “one step back, one step forth” of where the product came from, the lack of interoperability of systems along the supply chain, formats rangning from paper slips, oral communication to large ERP systems. The low traceability and documentation sharing hinders an effective supply chain, especially when fraudulent behaviour seems a great concern.

Results
One of the outcomes where what kinds of trust might be influenced by blockchain. Contract trust, predictability and dependability was chosen from 21 different kinds (Seppänen 2005). After a workshop with COOP Trading employee’s, they deemed contract trust as a central aspect of trust in a supplier out of the 21. It was found that blockchain and smart contracts inherent qualities that might qualify the technology to accomplish a form of digital trust, by managing one of the approaches to measure trust, contract trust.
The outcome for COOP Trading was conceptual UML blockchain design, illustrating the possibilities of enhanced traceability, information, documentation sharing along the supply chain of EVOO. The challenges depicted was information quality, legal implications and digital trust.

  • With information quality, is the issue with garbage in, garbage out as data transferred to the blockchain needs to be truthful and of high quality for the blockchain platform to work. This might be solved by RFID tags to get quality data.
  • Legal implications is the current legislation challenging greater traceability and information sharing, due to contractual bindings between buyer/supplier (FPA), and on blockchain application legislation as it is highly unregulated.
  • With digital trust would be a form of calculative trust, that one can place trust in a technology to handle what is to be expected of it, and thereby handle aspects of trust.

The takeaway
Blockchain have great opportunities to influence the role of trust, by developing a form of digital trust, and be a platform for greater traceability, product information and documentation sharing among supply chain participants. With any new technological improvements it should sprout internally, teaching management of the possibilities, internal meetings and identify other areas where the technology can be applied in the future. Take time to do a simple test, gain knowledge and grow from there.

If this has your interest, raised some questions or just got you curious for more, please contact me. I have a 12 page summary that gives a lot more detail, and of course the 109 page long full thesis on the matter, if you´re really into it.

Looking forward to hear from you.

Kristoffer Just

Below is the illustrations made, first the current supply chain of EVOO and then with blockchain as a platform.

Current


Blockchain supply chain

© 2018 Kristoffer Just Petersen