The food and beverage supply chain from farm to table continues to increase in complexity with pressures from changing customer interests, regulatory controls, and global competition. Companies can respond by adopting technologies – including IoT and blockchain - to improve control and flexibility while increasing food trust and brand protection, but they need more supply chain transparency.
Increasingly Dynamic and Complex Supply Chain
The food and beverage industry has a fiercely competitive environment at each step in the supply chain with dynamic costs and prices and regulatory compliance. Commodity products predominate with each category having multiple participants. Companies compete with similar products that also have alternatives that can be substituted. Meanwhile, fierce competition and changing government regulations force the need for increasing speed and efficiency.
Foodborne Illness and Recalls
Companies are under increasing pressure to manage foodborne illnesses. About 128,000 people are hospitalized, and 3,000 die each year in the US from foodborne diseases, according to data from the Centers for Disease Control and Prevention. A good public relations campaign can mitigate some of the impact of food safety outbreaks where a contagion is identified, and users are unharmed. But, outbreaks that harm people can be devastating for both brand protection and unexpected costs for recalls, disposal, litigation, and penalties.
Gaining Control with Supply Chain Transparency
Corporations in the food and beverage industries worldwide are experiencing increasing pressure to improve food safety from both a liability viewpoint and a regulatory compliance requirement. Technology has had a transformative effect on most industries. Digital disruption has and continues to reshape how consumers become aware of products, engage with companies, and make purchases.
Digital disruption involves modularization, data exchange, and business process automation throughout manufacturing and the supply chain to improve overall operational performance for a company and its partners. The technologies deployed typically start with Industrial IoT (IIoT), cloud computing, analytics, machine learning, manufacturing operations management, and cyber-physical systems and extend to blockchain distributed databases.
Role of IoT and Cloud Platforms
Consumer IoT – including smartphones, apps, networking, cloud computing, analytics, and security – created economies of scale and a robust infrastructure for IoT. Now, industrial organizations are adapting proven IoT technologies for their industrial and supply chain applications. They obtain the needed real-time data through the internet and apply it for analytics and alerts when conditions warrant. This includes predictive maintenance to prevent unplanned downtime in operations and monitoring the cold-chain in real-time to prevent spoilages.
Where Blockchain Fits
With blockchain, each step in the supply chain adds its transaction to the accumulated data in a “block.” New entries are added as they occur to make a “chain.” Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data that all participants can view. Proof-of-concept trials are now in progress to apply blockchain for authentication and security of a supply chain. If these trials are successful, blockchain will be used to assure the integrity of track and trace across the whole supply chain – from farm to table.
IoT and Blockchain Complement Each Other
Applications built on Industrial IoT platforms, such as Siemens Mindsphere, can support the implementation of track and trace use cases. However, to gain acceptance, these solutions also need the trust that blockchain technology can provide. The inclusion of blockchain allows companies to subscribe and contribute to the chain of custody. IoT and blockchain complement each other and this combination creates a trusted and scalable solution. Siemens merges its Mindsphere platform, private track and trace repositories, and blockchain management applications to achieve a more complete solution.
Project by the European Institute of Innovation and Technology (EIT)
EIT Food, a pan-European partnership, includes over 50 of Europe's leading food companies and research and educational institutions. It covers the whole agri-food value chain for consumer-centric and trusted food production and supply. A major innovation goal of EIT Food is to create solutions for the digitalization of food value chains to improve trust and transparency of food supply. For one of the first projects, Strauss, Givaudan, Fraunhofer, Technical Univ. Munich and Siemens are developing a solution to enable business partners, authorities, and consumers to exchange information on products. To help assess blockchain, this technology is also part of the solution.
Many factors are driving adoption of digital technologies in the food and beverage supply chain. Some provide flexibility to manage the increasingly dynamic market environment like changing consumer interests and product proliferation. Others are driven by internal issues including margin pressures, capital expenditure constraints, and managing recipes across many geographies and cultures. A third aspect involves governments’ growing interest in food safety for its constituencies, which has resulted in new regulatory requirements. These include the associated track and trace initiatives.
Food and beverage companies should consider engaging in proof-of-concept (POC) projects to apply new technologies such as:
- IoT for track and trace compliance
- Global recipe management for improved flexibility and operations
- Blockchain for governance of food trust and supply chain integrity
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Keywords: Supply Chain, IoT, Blockchain, Food and Beverage, Track and Trace, ARC Advisory Group.