Tracing the supply chain: How IBM Food Trust is revolutionizing the F&B industry with blockchain

A Blockchain is a type of distributed ledger technology (DLT), that is decentralized and immutable used to record and chain together transactions across the network of computers participating in the blockchain and to monitor assets in a corporate network. Said assets may be both tangible and intangible; Anything of value could be tracked and traced with a dramatic reduction of the costs of transactions and lower risks. The lists of records in a "Blockchain", known as blocks, grow continuously on a distributed database linked using cryptography. Blockchain technology is a digitally distributed, decentralized public record keeping system, for the purpose of maintaining and sharing digital records across several entities. However, once records are collected in a chain, data becomes unalterable and may not be tampered with individually in a retroactive way. Moreover, the blocks are securely linked back, each referring to the previous block in the chain, ensuring that no one can disrupt the chain by modifying or deleting data.   

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What Best Describes a Blockchain?

A blockchain is a form of distributed ledger technology, which is a computerized method for recording transactions and creating secure immutable records and smart contracts. The distributed ledger technology implies that participants at each node of the network can access the distributed ledger and its immutable transactions record, recorded only once, eliminating traditional business network duplications. However, transactions and data records are permanent and may not be altered, reversed, or undone once the block is valid. Even in the case of an unsuccessful or wrong transaction, the user should reverse it by creating another transaction to cancel the first. The last element consists of including smart contracts that speed transactions and work on pre-programmed terms and conditions for corporate bond transfers.

In the light of the definition of a blockchain, its importance and key elements, the present article will now elaborate how a blockchain works. As each transaction is performed, it is recorded as a data "Block”, with each one securely linking two existing blocks to prevent any block alteration or insertion between two existing blocks. Therefore, blockchain is a shared immutable digital database where encrypted blocks of digital asset data are stored and irreversibly chained together delivering the ability to remain unalterable, creating a ledger of transactions that the network could trust for further security and efficiency. 

Companies have developed a unique approach to help food and beverage companies implement a strategy that differentiates their products by improving their competitive advantages in the market, thanks to IBM research technologies. 

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Major Challenges Facing the Food and Beverages Industry

 A behemoth, the food and beverage industry are plagued with numerous obstacles. Many of the challenges that have cropped up lately are attributed to the complexity of global supply chains coupled with inadequate logistics that can have a major impact on food and product quality, thus increasing the likelihood of food recalls.

 One of the controversies that have surrounded the stagnant consumer demand is the soiled information on the origins and quality of food products. Thus, IBM Food Trust recognized the need for trust in food creation through traceability, aiming to drive an end-to-end supply chain visibility, and an enhanced blockchain empowered collaboration. The use of such technology results in brand trust building and fostering stronger customer loyalty, streamlining the grocery supply chain and reducing food waste particularly during its transport, providing proof of origin, accelerating track and trace in supply chain, and preventing mislabeling of packaged foods.

As the global food supply chains widens and international supply networks become more complex, food fraud and adulteration have increased and nowadays constitute a growing problem worldwide such as recent news about horse meat in beef products drawing worldwide attention to this issue. A few years ago, the Food Safety Authority of Ireland reported in their findings a fraudulent substitution of horse meat for beef in the market after testing a range of beef ready meals and beefburger samples from supermarkets for the presence of unrecognized species DNA. Horse DNA was found in over one-third of the beefburger samples, and pig in 85% of them. Fingers of blame were pointed at the beef suppliers, manufacturers and retailers who immediately withdrew their products from the market. In Italy as well, an enforcement operation has taken down a large-scale criminal network selling counterfeit olive oil starting with low quality sunflower oil adulterated with colorants to change its appearance, making it look like extra virgin olive oil being sold on the European market. 

In other less revolting scandals, FDA tests revealed that several products passed off as “100 percent Parmesan” contained fillers like cellulose, a common anti-clumping agent made from wood pulp. Some brands such as Kraft and Heinz Co. among others promising 100 percent purity contained no Parmesan at all. 

The cost of food fraud in the United Kingdom’s F&B industry alone is estimated at £11 billion annually. This challenge has emerged as a significant threat to various countries, owing to the complexity of global food supply chains and its direct implications for public health within the international trade of livestock.

Furthermore, the F&B industry is facing a critical challenge in food and beverage labeling. Considering said challenges, numerous food operators are struggling with labeling accuracy, traceability, and compliance as well as with meeting an increasingly complex set of global regulations and standards that may include:

FDA labeling requirements that should disclose nutrition facts, serving sizes, calories, added sugar, vitamins, and minerals as well as daily values. Another label should include the allergen labeling requirements set by the European Union Food Information for Consumers Regulation (EU FIC) to prevent allergen-cross contamination when producing prepacked foods and to improve consumer safety by mentioning allergenic ingredients on the label. The last food labeling regulation is PTI, which stands for Produce Traceability Initiative, aimed at developing the transparency, safety and traceability of the food supply chains by using standard labels that have the lot number, voice pick code and packing date.

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The Role of IBM in Eliminating the Occurring Challenges.

As previously mentioned, food trust is a major challenge within the F&B industry. To portray this issue, we will tackle the case of Carrefour and how IBM contributed to the enhancement of food trust within the industry.

Carrefour has always been striving to improve its customer service standards and to effectively streamline its operations, having a significant presence in the industry. Carrefour's policy of providing its customers with the best marketing mix that encompasses a range of factors and are wisely implemented in the marketing of its products, such as the products' origin and nature, creates a trustful bond with more than 100 million customers around the globe, offering them the benefit of end-to-end product visibility through its supply chain.  

To further promote food quality, credibility and safety, Carrefour joined IBM Food Trust. The latter provided Carrefour the ability to leverage blockchain to provide unprecedented credibility, transparency, and safety to consumers. Using their smartphones, shoppers may scan a QR Code on any participating product and get instant access to actionable food supply chain data from farm to grocery in real time. This game-changing technology improved their customer service relationships and drove sales growth at unprecedented amounts. 

They added a QR code to selected products only. As the saying goes, “What is Beautiful is Good”, stemming from the belief that attractiveness and celebrity endorsements correlate to other good qualities, particularly in the history of marketing. As a result, when shoppers started trusting these appealing products, Carrefour created a halo effect as people started to trust carrefour's unlabeled products as well.

Another case worth mentioning is Raw Seafood Inc., which announced in 2019 its collaboration with the IBM Food Trust blockchain platform to enhance seafood traceability and to provide customers with trustworthy provenance information.  Built on the IBM blockchain platform, the process is launched by digitizing the scallops’ supply chain sourced from the Atlantic Sea Scallop Fishery.

Scallopers started uploading their "catch data" on the platform, thus acquainting retailers and distributors with the date and place of each harvested scallop. Furthermore, the platform provides an innovative solution for fishing boat tracking that offers an end-to-end tracking of the products and a tracing of the boat location, route, selection, packaging, and shipment process until reaching the destination hub.

What did such a collaboration aim at? The seafood industry had planned to tackle several issues that occurred back then. For instance, seafood fraud taking place on a vast global scale resulted in a decreased consumption of seafood by 80 to 90 percent of Americans. Furthermore, according to the Centers for Disease Control, each year, food borne diseases cause 1 out of 6 Americans to get sick, 128,000 to be hospitalized, and 3,000 to die in the United States. Moreover, it is estimated that the majority of the seafood consumed in the United States are imported and are often of lower quality, resulting in an increase of the consumers’ level of concern in regard to the safety of foods and their micro-biologic hazards.

Sustainability-wise, the data collected and stored on the blockchain enabled boat owners to be directly connected until the last phase of the distribution process. Therefore, providing a stable record of origin increases a trust-based knowledge about the duration of the catch, its quality and freshness.

Daniel McQuade, co-founder, and CEO of KnowSeafood,  declared that they have always strived to allow their seafood harvesters to provide the best in the market. Therefore, he added that IBM solved this problem, enabling them to create a bond between the fisherman and the consumer, resulting in a massive sales increase.

Hence, collaboration with IBM contributed to the solution of three of the major problems that prevented people from consuming unsafe seafoods: sustainability, safety, and authenticity. Additionally, with respect to the Geo-specific data provided by IBM, fishing boats are further informed about the market’s demand to ensure that sales are maximized and delays in the supply chain are minimized. Hence, avoiding over-fishing that resulted in the past collapse of the fishing industry and fishing ecosystem.

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Conclusion

In a nutshell, the emergence of blockchain technology proved to be a tool that can highly improve upcoming  food systems policies with far-reaching implications for the food industry. Improved visibility, immutability, data integrity, and enhanced transparency have significantly contributed to the reduction of food fraud and adulteration to fulfill the consumer’s goal of actually “Eating what is Ordered”.

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