Every year, my friends and I put together a “Friendsgiving” in November – I like to bring homemade macaroni and cheese. This is a dish I make often. But did I mention it has to be gluten free?
So when I’m picking out my ingredients, I have to be mindful of the food items that aren’t always gluten free – the pasta, flour, and breadcrumbs. As I’m walking down the grocery store aisle and pick up an item, I turn to the back of the package until my eyes lock with the gluten free logo.
I often wonder how accurate those labels are. Who makes sure they’re right? And if a particular batch is in the wrong packaging, is someone going to flag it in time before I serve it to my friends?
Blockchain is a technology businesses can use to prevent production mistakes, and offers many more advantages to all kinds of companies and industries. In this blog post, we’ll focus on how food supply companies can utilize SAP’s blockchain solutions to maximize supply chain efficiency.
Blockchain and SAP
Blockchain is one of a handful of core intelligent technologies that SAP is invested in. This distributed ledger technology (sometimes shortened to DLT) allows partners in a peer-to-peer network to share a series of data and provide a secure way to store and transact forms of value, such as currency, stocks, contracts, votes, etc. If you were to visualize it, blockchain would be pictured as a series of blocks, each representing single, auditable transactions from participants. As each participant adds another piece of data (or block) to the “chain,” the block must be approved by a consensus mechanism and, once approved, cannot be changed or deleted. Only the most recent block can be modified through a combination of private or public keys.
Companies might turn to SAP for blockchain services to help them reduce transaction costs and to increase efficiency and speed, since blockchain automates processes and completes transactions faster. This eliminates the risk of human error. The blockchain logs historical data transactions to verify authenticity and prevent fraud. It leaves a cookie-crumb trail that displays where an asset came from along with every transaction it underwent. Hence, every mistake or market threat can be traced back to its origination. Blockchain has the ability to flag a problem during the time of occurrence so it can be fixed as soon as possible, which is how companies can ensure products are in the right packaging before they get placed on the shelf.
When cooking for Friendsgiving I usually purchase Barilla, which is one brand of pasta that has implemented blockchain technology. On the packaging, customers can scan the QR code which provides the ability to trace the entire chain of production for the ingredients and where they came from, along with how the product arrived to the store. So when I pick up a box of Barilla gluten-free pasta for my macaroni and cheese, I can be confident in the ingredients and that proper security measures were taken when it was produced.
SAP’s approach to blockchain is found in the SAP Blockchain Business Services tool and is focused around two main options.
SAP Cloud Platform Blockchain application enablement services is a blockchain-as-a-service that allows for applications to be developed and adapted to integrate blockchain capabilities. It enables users to build a holistic solution that’s integrated with the SAP landscape, create blockchain networks, build applications and smart contracts, and develop extensions for existing applications, just to name a few capabilities. (Learn more about SAP Cloud Platform here.)
The SAP HANA Blockchain service helps to integrate blockchain data into SAP HANA and transactions can be accessed using standard APIs and standard SQL interfaces. Users are given the ability to build analytical scenarios by combining blockchain data with master or transactional data from their central SAP systems (such as CRM or ERP).
Without utilizing technologies like blockchain to mitigate potential setbacks such as food fraud or packaging mistakes, companies may find themselves encountering more obstacles than necessary. The food industry is one of many that faces challenges that are constantly disrupting business processes, impacting the outcome of products, and even sometimes harming consumers.
Challenges Faced by the Food Industry
The food industry incorporates various partners in order to produce products: the suppliers, aggregators and retailers, and vendors selling the products. There is always potential for mistakes during and threats to the supply chain process, and these issues can instill distrust in consumers as they question the integrity of the products.
One issue the food industry faces is the lack of communication between partners. Have you ever played a game of “telephone” where the sentence you started out with doesn’t quite match the sentence someone else ended with? When there’s even the slightest misinterpretation, it will affect the rest of the game – and it’s the same for food production. Especially when there are many partners involved, the fragmentation of processes and who they’re fulfilled by makes it likely for involved parties to know very little about one another’s actions. This not only leaves the process open to mistakes, but also makes it harder to trace the products back to where they came from.
Another major issue is fraud. Food Fraud Advisors describes fraud as an instance when food or drink products are sold in a misleading way with the intention of deceiving consumers for financial gains. This could mean making substitutions or additions, misrepresenting the product, or any other kind of tampering done to food or food packaging without approval. Repercussions of food fraud include serious consumer health risks, loss of credibility, tainted reputation, financial issues, and more.
When there are multiple partners involved in a supply chain, there is room for mistakes, whether it’s due to human error or a lack of security. However, by utilizing a blockchain technology, partners can be confident in the supply chain process and the items they’re producing.
How the Food Industry is Using Blockchain
To best understand how the food industry can utilize SAP’s blockchain offering, let’s take a look at an example of how SAP Blockchain Services can maximize supply chain efficiency. According to Bumble Bee Foods, it began using SAP Cloud Platform Blockchain services in 2019 to track the journey of yellowfin tuna from the Indonesian ocean to a consumer’s dinner plate.
The blockchain implementation allowed consumers and customers to access information about product journeys with their smartphones by scanning a QR code on the product package. Details about the fish-to-market course of the tuna is immediately at hand – everything from size and weight to location, authenticity, and freshness.
Using SAP blockchain services allows Bumble Bee Foods to bring transparency to consumers, providing peace of mind that the products they’re purchasing are of the best quality and sourced fairly. The company can also store data and create a secure supply chain history that is tamper-proof.
In another example, when consumers purchase cartons of eggs tracked by a blockchain such as SAP’s, they can be confident in where the product came from as well as any other specific detail that is included in the chain: information like when a hen was born, whether or not they were vaccinated, if they were given antibiotics, etc. can be conveyed to the consumer.
Let’s use another poultry-based example from our SAP Leonardo book (which explores the various technologies in SAP’s intelligent suite): “Through blockchain technology, a chicken can be tracked from when it was just an egg, to the farm where it was raised, through the network as the chicken moves through the store before landing in a customer’s basket.”
Loyalty from customers comes from their confidence in products that are good and reliable. When I purchase gluten-free foods, I want to be confident that they were made correctly and that the packaging is accurate. Technology like blockchain helps consumers like me trust products, and helps manufacturers ensure their foods are being produced correctly and truthfully.