Food and Beverage Services has a Supply Chain Problem. Blockchain is the Solution

According to The Center for Disease Control (CDC), over 3,000 people die from foodborne diseases every year in the United States alone. This statistic shows that improving the accuracy and transparency of traceback investigations is increasingly important to public health. In response, the Food and Drug Administration (FDA) is implementing the Food Safety Modernization Act Proposed Rule for Food Transparency. With a tentative implementation date of November 2022, the act will promote the use of blockchain to track critical events in the food supply chain. These include growing, receiving, transforming, and shipping.

In the past, food supply chains have been tracked through conventional databases, but these have proven to be unreliable and difficult to manage. Below, we break down the ways blockchain technology can improve legacy systems.

When we discuss supply chain management, one of the key metrics is product lead time. Lead time refers to the time that passes from the start of an order to delivery. The shorter the lead time, the better the company can manage its inventory. However, decreasing the lead time is difficult when using traditional methods. 

One eye-opening statistic from the World Food Programme is that 1.3 billion tons of food produced for human consumption is lost or wasted every year. If that food wasn’t lost or didn’t go to waste, we could feed two billion more people—more than double the number of undernourished people. Through that lens, it’s easy to see why we must innovate beyond traditional methods. 

This is where blockchain comes in, leveraging smart contracts to automate the process of food production and eliminating discrepancies in the production line. This automation eliminates manual entries and shortens lead times, improving inventory management.  

There are many potential causes of food waste, in part because of how many parties are involved in the process, from inventorying to management and shipping. In these cases, the industry must cope with the losses, which increases pressure to produce more in less time to keep pace with demand. 

Using blockchain, companies can effectively trace food and beverage products, ensuring they adhere to health codes and follow guidelines. These insights allow organizations to improve their own supply chain management systems. As tracking becomes more robust, it’s easier to identify inefficiencies and address them, reducing food waste. 

One Mexico-based fast-casual restaurant used blockchain to reduce the number of middlemen, which increased their coffee farmers revenue by 700%! More on them at the end of this blog. 

Modern consumers are savvier and want to know the foods they buy come from ethical, organic, and/or sustainable sources. Being able to reliably track products has been a major issue, but many companies are mistrustful of potential solutions. Without proper tracking, consumers have no way of knowing how food has been handled nor processed. 

Introducing blockchain into the process would allow the technology to streamline every step of the process. From suppliers to consumers, blockchain allows companies to see every movement the product makes, leading to higher-quality food making it to market. 

Blockchain can also help decrease the number of counterfeit products on the market. Take, for example, the prevalence of counterfeit Hawaiian coffee. Hawaiian Kona coffee beans are among the highest quality, most expensive in the world. This makes them a target for counterfeiters. In fact, a 2019 lawsuit filed by Hawaiian coffee farmers said there’s only 2.7 million pounds of authentic Kona coffee beans produced every year, yet over 20 million pounds of coffee sold at retail are labeled as ‘Kona.’ 

Traceability is key to how blockchain helps. The ledger tracks all the products from the production line to the consumer, which can determine the product’s authenticity. Also, it can reduce the prevalence of counterfeit products on the market since we can better identify the source of the problem. 

Food and beverage makers have been moving away from chemicals and other harmful ingredients as consumers seek to know more about their food—just look at the Google Trends for “gluten” and “gluten-free” after 2010. This has led to companies making claims about their ingredients. However, not all such claims are true, reinforcing trends like greenwashing, and in the worst cases, fatal results. Fortunately, blockchain can be used to record every component in the production process. This record can then be shared with the public to authenticate company claims. After all, if you have nothing to hide, why not prove it?

The coffee supply chain is inherently complex—mostly because there are multiple intermediaries involved. Growers, traders, roasters, curers, packagers, shippers, retailers, and customers all represent steps in the process. 

For Toks, coffee is a core menu item across its 200 Mexico-based fast-casual restaurants. So, when Toks was looking to improve transparency across its coffee supply chain, they turned to SIMBA Chain. 

“It is important that we authenticate, track, and trace every bag by farmer, coffee grade, and production dates. SIMBA Chain’s smart contract solution will help Toks maintain the high quality our customers expect and enjoy,” says Pérez Berlanga, Senior VP of sustainability and Social Responsibility at Toks. 

Working with SIMBA Chain, Toks developed a blockchain-based application to register and track coffee beans as they’re purchased, processed, packaged, and sold. To learn more about the project, be sure to read the case study. 

For food and beverage service providers, blockchain is certainly an exciting technology, but implementation is not without challenges. The main challenge is that it’s hard to build a blockchain solution that easily integrates with current ERPS, WMS, etc. SIMBA Blocks solves that with dynamic APIs.  SIMBA has the experience, knowledge, and dedication you need to make the process fast, simple, and cost-effective.