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

Interview – Audit and Control Specialist, Johnny Helt

You buy your food products every day from your favorite store. Bring them home for you and your family to eat. But what you might not be aware off (and rightly so), is all the hard work that has gone before the food product lands on the shelfs. Some are working to make sure there is transparency and traceability of the food we eat. I think it is important to know how the system works now, to know what can be done to improve the transparency and traceability.

That’s why I have made this interview blog post.

One of these great people that are are trying to make sure that the food we eat, are safe to eat, is Johnny, an Audit and Control Specialist. Johnny works at COOP Trading which is a procurement company for COOP in the Nordics. I had the pleasure of interviewing Johnny as a part of my data collection for my thesis. During my thesis process I could feel his personal commitment to make sure that the food products he handles, is investigated as best as possible with the tools at hand. So here goes!

Can you start with telling us a little about yourself?

My name is Johnny Helt and I am hired in Coop Trading as Audit and Control Specialist. My primary work are audit and control, but I also process and develop tools to make our control and audits more agile and more professional. I have a bachelor in Nutrition and Home Economics and I am ISO 9001 IRCA approved lead auditor.

What is quality control and auditing, and why is it important?

Quality control and audit are the same, just with other words. As I see it, audit is also control. Control is to ensure that processes comply with the legislation, specifications, procedures and specific demands from third parties. The importance of quality control and auditing is described as a deeper investigation of the specific product or processes to ensure that it comply with the demands, if not you will get products and processes that are out of control and the outcome will fail. That’s why control and auditing are important.

Great, but how did you first get involved with quality control and auditing?

I have always been dedicated to quality control; it is part of my “way of working”. I worked in DLG (Dansk Landbrugs Grovvare Selskab) for almost 10 years, with implementing HACCP and process control.

What are your current work in relation to quality control and auditing?

My current work are to evaluate and prequalify suppliers to Coop Group, doing supplier audits all over the world (app. 50 audits a year), developing new tools to make the work with audit and control more agile, delivering input to our team, handling complaints for all countries in Coop Group, handling recalls, and a lot more.

What is the most challenging aspect of your work with quality control and auditing?

The most challenging aspect of working with control and auditing are that “things” are not always as they seem to be, and you have to be very process orientated and get into the mindset of the supplier/producer, to see and evaluate the performance of the supplier. Especially when I do traceability on the audits, I feel I have to think like “a criminal”, how could I cheat and how would I do it…. Especially on high value products (Extra Virgin Olive Oil, meat, etc.)

Building on that, from your knowledge, what can be done to create greater traceability of food products and why?

Based on the European legislation the suppliers has to trace “one forward and one backwards”. Today we live in a world where “everything” is possible and I think that revising the demands to traceability should be developed, especially on products, which are high value products. So it would be a great idea to build a system, where you also could “follow the money”, and not only the product.

This was a short glimpse of just one role “behind the scenes” of getting your food products safe and sound to the dinner table. So, thank you Johnny for this insight, and if you want to read more on supply chains and how blockchain can change it for the better, read this post.

PS: I will follow up on Johnny’s “follow the money”, on how to use blockchain as a Supply Chain Finance tool for better transparency. Stay tuned!

© 2018 Kristoffer Just Petersen

Interview – “Mr. RFID”, Henrik Granau (Part 2)

Welcome to Part 2 of my interview with Henrik Granau, or more correctly, Mr. RFID. If you haven’t read Part 1, I urge you to do that, to get a good understanding of Henrik, RFID and its challenges. Simply click here!

If you already have read Part 1, I love that you did, then you know that this part is going to focus on the opportunities with RFID within food traceability/transparency. No more small talk, let’s dive into it!

And then turning from the challenges, what are the general opportunities with RFID?

There are a lot of application areas and certain Industries where there are still obvious opportunities, but in general I believe it is in the combination with other technologies we see the huge potential;

By using RFID you create a transparency on how goods, assets etc. are flowing through your operation and if you add to this detailed information on how the workflow is actually being performed, you have established the foundation of making better decisions in your organization.

When combining these operational data with other data (‘Big Data’) and Software Robots (Artificial Intelligence), you can create new services and business models (‘disruption’).

Almost everything within the area of ‘Internet of Things’ involve wireless communication with a device which has to be uniquely identified to make sense – hence “RFID” will be ‘pervasive’.   

Building on that, from your knowledge, what are the potential of RFID tags to create greater traceability of food products and why?

Internationally we already have a number of good cases in food traceability (Fish, livestock, vegetables) with RFID and combined with temperature sensors, we have established better cold-chain management. I believe that traceability within the supply chain can still be improved, but in general the technology is in place and we have the good cases with documented results.

The challenge is that we want the consumers to be able to have the complete history of each item available on their smartphone with one scan. If it’s RFID (NFC) or 2D barcode doesn’t matter so much – the challenge is to capture all the information during the product’s lifetime automatically which is achieved by using RFID on the transportation unit. For this to work, the unique item numbers which are packed has to be associated with the unique identifier of the transportation unit, and in some areas you will then have to add some evidence that the goods hasn’t been tampered with during transportation.

So creating greater traceability is possible with RFID, but you have other issues depending on the objectives; 1) for manufacturers to issue effective recalls, 2) for consumers to check the goods before consumption, 3) for protecting against fraud, etc.  

What potential do you see in a RFID/Blockchain combination to create greater traceability of food products, from your knowledge?

I am not a blockchain specialist, but I understand that what blockchain can add is a bulletproof distributed verification mechanism. So, when the issue is to have verification that a specific organization is guaranteeing that their part of the traceability data are valid, then you could use blockchain to lock a certain ‘hand-over’ transaction with some associated data. If RFID is used then this process could be done automatically at choke points. As an anti-counterfeit method.

I believe I can learn more about the potential with RFID/Blockchain by being kept updated on your progress.

If someone was interested in RFID, what would be a few things you would suggest to investigate further?

I will start with recommending to vist www.rfididk.org. This is RFID I Danmark’s website where we have tried to give a good introduction to RFID – especially through cases and slides from presentations held at our conferences.

As a special service the RFID I Danmark Association is offering that anyone for free can contact me with initial questions. You can mail me at henrik@rfididk.dk or you can call me at +45 21 832 835.

Thank you to Henrik, for his great insights into RFID and the opportunities. From this and what I learned from the RFID in Denmark conference, I see great potential for a RFID/Blockchain solution in supply chains. RFID will secure correct data inputs, which can’t be tampered or adulterated, which then are data inputs for the immutable blocks in the blockchain application.

One of the key takeaways from the conference, was the lack of adoption and their one-sided focus on RFID being a inventory solution, and not grasping a more holistic picture of what the tech can do. And I feel that, that is a general thing when investigating new technologies, that it is very one-sided and not trying to connect all the dots.

Thank you reading, have a great day!

© 2017 Kristoffer Just Petersen

Interview – “Mr. RFID”, Henrik Granau (Part 1)

As the second interview post I wanted to, hopefully, expand your knowledge about what tech can help with better traceability and transparency of food products. One of these tech’s is RFID. RFID is not new to scene of tech developments, but maybe looking to be a “revival”, due to its capabilities for easy tracking and tracing of products. So if you want to learn about RFID, from Mr. RFID himself, you have to read this.

I had the pleasure of meeting Henrik at the RFID in Denmark conference at IT University in Copenhagen this summer. I had touched upon RFID during the writing of my master thesis, and wanted to learn more about it’s potential in retail, and to know about where we are in terms of adoption by companies. To get those learnings, you have to read part 2. But for now, lets talk about RFID, here goes!

Can you start with telling us a little about yourself?

Well, I am what you would call an experienced executive, having conducted most of my career in international IT Companies, where I have developed my strategic outlook and knowledge for the successful Marketing, Selling and Implementation of high level and complex business solutions.

I was originally an IT Expert working with development of large complex IT Systems. As an example, I was Project Manager for the development of the world first distributed real time trading system for Financial Instruments (for Copenhagen Stock-Exchange 1986-1988).  Since 1990 it has been General Management at C-level.

What are RFID technology and why is it important?

RFID is an abbreviation for Radio Frequency Identification – using radio waves to identify objects or people. This could be done on very long distances (Satelites, GPS etc.) and on very short distances (Access to buildings, wireless payments etc.). Some Frequency bands are in the regulation allocated to RFID use and a lot of people only perceive these as “RFID”, but in my definition it is everything using radio waves to identify – including WiFi, Bluetooth etc.

When RFID back in 2004-2005 was hyped as the next big thing – the replacement of barcodes – it was however very much focused on what we call “passive RFID”, where the term ‘passive’ means no power source on the RFID Tag itself (no battery). A passive RFID Tag is a very simple microchip with an antenna and only when it is in the proximity of an RFID Reader the chip is powered up (by the radio waves from the Reader) and it can do very limited operations, such as telling it’s unique Identifier.

Different RFID Tags

Passive RFID Tags are now standardized and the prices has decreased to a level where it really make good sense to attach RFID Tags to single items. Because of the lack of battery, the lifetime of an RFID Tag can be considered like ‘forever’.

The technology is used across Industries and in a lot of different application areas. You can track a product throughout it’s entire lifetime establishing complete transparency in your business operation. Examples are Library books, Fashion clothes, containers, airplane parts etc. etc.

We have thousands of successful implementations – the technology is working and the cost is justified through achieved business benefits – but a lot of organizations have never learned about the technology in relation to their operation.

Great, but how did you first get involved with RFID?

I was introduced to RFID when I accepted the challenge to be heading a Danish start-up company, RFIDsec in 2005 – a company with a mission to set new standards for security and privacy in RFID. We developed our own security features at the chip level as well as at the solution level with end-to-end control. Unfortunately we had to close RFIDsec in 2010, but all our features are now a part of the new international standards which were finalized in 2015.

During my 5 years as CEO for RFIDsec (2005-2010), I established my international network within the RFID world – because I had to get involved in all formal as well as informal standardization activities around security and privacy issues with RFID technology.

I was a co-founder of the RACE Network (Racing Awareness and Competitiveness in Europe) who was advising the EU Commission in RFID matters 2008-2011. The RACE Network was later renamed to ‘RFID in Europe’.

What are your current work in relation to RFID?

In 2010 I founded the thematic network “RFID i Danmark” where I am still putting a lot of time and effort into nursing the initiative. Every year we are organizing the largest RFID Event in the Nordic countries – the 7´th of its kind was held in Copenhagen at the IT University on June 14’th 2017.

In the network I am known as “Mr. RFID” and since 2014 I have also taken on the challenge to build up a strong organization in the Nordic countries for AIM Global. I am also Vice Chairman of the Board at AIM Europe.

In addition to the networking activities, I work as an independent Management Consultant where most of my activities are in the area of tracking, tracing and locating.

I help companies select the most appropriate technologies and standards to their usage and keep myself updated on the technological development through a good relationship with the manufacturers and resellers of RFID products.

I am the guy who knows what is going on internationally and nationally within the area of RFID.

What is the most challenging for a general RFID adoption at the moment?

Well, in general Supply Chain Management, in Fashion clothes and apparel, in Libraries, in ticketing, access cards etc. I believe that we on an international level actually has reached ‘general RFID adoption’. If you look at the hype created back in 2004-2005, where RFID was predicted to be a general replacement of barcodes, though I will still state that this will never happen with the current silicon based RFID technology. It just doesn’t make sense to put RFID tags on each item of bubble gum, milk etc. – the total cost of attaching an RFID Label is still 30-40 times the cost of using a traditional barcode.

Across Industries I would however still claim that lack of knowledge is the most important reason for not implementing RFID.

Want to read about the opportunities that Henrik sees with RFID in supply chains? RFID’s possibility to create better traceability in food products? And Henrik’s thoughts on a RFID/Blockchain combination to greater traceability in food products?

Then stay tuned for part 2 next week!

© 2017 Kristoffer Just Petersen

What is Blockchain? And how does it work?

The Genesis

The blockchain technology was invented by a person under the alias Satoshi Nakamoto, to support the cryptocurrency Bitcoin (Nakamoto 2007). For the first time it was possible for many users to trade values with each other over the Internet without the need for a third party or intermediary – typically a bank – to verify the transaction. A blockchain is a ledger of facts, replicated across several computers assembled in a distributed peer-to-peer network. Or put simply, a chain of blocks (Beck 2017). Anyone participating in a blockchain can review the entries in it; users can update the blockchain only by consensus of a majority of participants. Once entered into a blockchain, information can never be erased (Nakamoto 2007: 2).

Blocks are an order of facts in a network of non-trusted peers, similar to how Uber’s technology intermediates between suppliers and consumers of transportation. Facts are grouped in blocks, and there is only a single chain of blocks, which then is replicated in the entire network. Each block has a reference to the previous block, through the hashing cryptography that links the blocks. Some of the nodes in the chain create a new block with pending facts. They, in the case of bitcoin miners, compete to see if their local block is going to become the next block in the chain for the entire network, called proof of work. Then this block is sent to all other nodes in the network. All nodes run a check on that to see if the block is correct, then add it to their copy of the chain, and try to build a new block with new pending facts (Nakamoto 2007: 3).

But it has gradually become clear that the technique has much broader applications than just acting as the backbone of Bitcoin. One of the key elements is the ledger, which is a database of the content of the blockchain – whether it is bitcoin transactions, intelligent smart contracts, or something else (Boye 2016).

Blockchain is a type of electronic ledger created to ensure that once a party transfers a digital asset, he cannot transfer it to anyone else, prevent double spending. Unlike other ledgers, blockchain is owned by its participants, and decisions about what it records are subject to participant consensus.

Recording accuracy is ensured by duplication: every participant has a copy of the ledger. Discrepancy-resolution mechanisms ensure that all copies reflect an identical history. Though permissions can be managed with a fair degree of control, by default any permitted participant can view all transactions. Thus together with immutability, notarization and assured provenance, transparency is a core blockchain attribute (1).

There are many ways of applying a blockchain technology, in short, either as a public blockchain, a private blockchain, or as a consortium blockchain. A public blockchain is a blockchain that anyone in the world can read, through which anyone in the world can send transactions, and include transactions if they are valid, i.e. Bitcoin (Buterin 2015). A fully private blockchain is a blockchain where write permissions are kept “centralized” to one or few institutions, i.e. banks (Buterin 2015). A consortium blockchain is a blockchain where the consensus process is controlled by a pre-selected set of nodes. An example, is a consortium of 15 financial institutions, each of which operates a node and of which 10 must sign every block in order for the block to be valid. A consortium blockchain can be altered to fit the need of the one using it, ex that the R3 consortium want different “rules”, than the Hyperledger consortium or Ethereum Alliance (Buterin 2015; R3; Hyperledger).  

Public blockchains can offer advantages that a private blockchain and consortium simply cannot, and vice versa. The take-away with the different ways of adopting blockchain technology, in relation to COOP Trading, is what they want to gain from a blockchain solution, who should be a part of it, who should have read and write permissions and what data can’t be shared. One must have a high due diligence in order to research the possibilities and challenges with a blockchain solution.     

Factbox:

“A block is the ‘current’ part of a blockchain which records some or all of the recent transactions, and once completed goes into the blockchain as permanent database. Each time a block gets completed, a new block is generated. There is a countless number of such blocks in the blockchain. The blocks are linked to each other (like a chain) in proper linear, chronological order with every block containing a hash of the previous block.” (Investopedia)

Finally, blockchain isn’t simply a secure collective database. In addition to transactions, it also records and executes simple programs.

The idea of pre-programed conditions, interfaced between users, and then broadcasted to everyone, is called a smart contract. A contract is a promise that signing parties agree to make legally-enforceable. Proponents of smart contracts claim that many kinds of contractual clauses can be partially or fully self-executing, even self-enforcing, or both. The aim of smart contracts is to provide security, which is superior to traditional contract law and to reduce other transaction costs associated with contracting (Tapscott 2016: 105-108). Buterin explains it as: “(…) then we can cut costs to near-zero with a smart contract.” (Parker 2016).

Blockchain smart contracts may also influence, or be influenced by, product movements. For instance, a positive QA test indication can release a part for assembly. However, today that role is played by ERP systems. Blockchain technology doesn’t necessarily add value in such traditional operations management tasks (1).

Factbox:

“An asset or currency is transferred into a program and the program runs this code and at some point it automatically validates a condition and it automatically determines whether the asset should go to one person or back to the other person, or whether it should be immediately refunded to the person who sent it or some combination thereof.” (BlockGeeks)

  1. http://www.sdcexec.com/article/12247812/supply-chain-finance-on-the-blockchain-enables-network-collaboration

© 2018 Kristoffer Just Petersen