Blockchain in Food Industry: Advantages and Implementation

"Perhaps more than any other, the food industry is very sensitive to consumer demand."

-Michael Pollan

 

Every industry has begun to experience a rapid disruption from blockchain since 2019. According to studies by Gartner, by 2025, blockchain will be used by more than 20% of the largest worldwide corporations. In light of this, it can be assumed that the food industry will increasingly use blockchain technology in the years to come.

 

Why are the biggest companies in the food industry beginning to put their own solutions into practice using this technology? One can learn more about the impact of Blockchain in the Food Industry in this blog.

 

What is meant by Blockchain in the Food Industry?

 

Blockchain was at first only supposed to be applicable in the financial sector, according to experts. But as time went on, blockchain has become more and more of a technology for adoption in sectors other than finance. 

 

Currently, it has been seen that one of the most diverse applications of blockchain technology is in the food industry. Over the past few years, numerous companies in the food industry have announced their own blockchain initiatives in food industry which bring about security, traceability and decentralization.

 

Issues faced by Food Industry

 

Before we dive into how Blockchain has been helping the food industry let us first take a look at the issues the food industry has recently come across with : 

 

1. Lack of traceability

 

Tracking the merchandise is a big challenge because most businesses appear hesitant to do so. Without good tracking in place, consumers do not know anything about the food's processing methods. 

 

They, therefore, have doubts towards every single ingredient they consume.The problem is that a lot of money is required to trace the food ingredients or the process from the suppliers to the consumers. Because of this, many businesses are not ready to invest more money on this venture than is necessary.

 

2. Changing rules and regulations

 

There are many rules and regulations that apply to the food and beverage industry. Therefore, a number of agencies, including the EPA, FTC, FDA, and OSHA, are working hard to uphold a number of standards relating to healthy products, food labels, and hygiene.

 

The majority of the time, businesses adhere strictly to the guidelines; but sometimes, occasionally, miscommunications cause the industry to suffer from an excess of raw materials, poor food quality, and food waste. As a result, they wind up wasting both crucial time and money.

 

3. Complications in Inventory Management

 

Given that almost all food products have expiration dates, inventory management in the food industry can be a bit challenging. Therefore, the upkeep of these food products is more stringent than in other industries. 

 

Furthermore, they also need to keep a sharp eye on the storage facilities' conditions in order to maintain hygiene. Manual monitoring however requires a lot of time.

 

Furthermore, many businesses lack the necessary tools to oversee the management during peak seasons. As a result of which, there is improper inventory management in the industry, which causes financial losses and food waste. Therefore, the shipments may frequently come late or they may also send the incorrect goods that have a reduced shelf life.

 

4. Generational Demands

 

Food demand differs from generation to generation. Different generations have different preferences in food and drinks. As a result, it becomes very difficult to manage all the issues at once. 

 

In actuality, all the six main generations, starting from infants to the elderly, must be satisfied by the food production companies. They can provide data derived from user preferences, but there are only a few effective techniques available.

 

Companies can therefore observe the fundamental needs of their customers, but further development is required. They may make calculations that might be incorrect and mistakenly expand production of a product that is not in high demand.

 

5. Lack of Transparency in Labeling

 

For instance, nowadays, vegetarian or vegan cuisine is becoming more popular among the masses. However, a lot of dishes that require vegetables also contain some elements made from meat-based goods. 

 

Additionally, companies frequently classify these ingredients as chemical elements to make it hard for the general public to understand what they are consuming. Some businesses may even utilize dangerous chemicals without even disclosing them on the label which isn't a legitimate way to conduct business.

 

6. Counterfeit Food Products

 

The growing prevalence of counterfeit goods is also a serious issue in the food industry. There are lots of concerns with counterfeiting that affects almost every sector of business. People might become seriously ill and even die if they consume fake goods. 

 

Additionally, nefarious businesses have been launching counterfeit goods alongside other genuine ones at an increasing rate with time. As a result of which it has become challenging to tell them apart.

 

However, there aren't many choices left to the mother firm for resolving the problem. This problem will cause harm to both the business and the customer if it is not resolved quickly.

 

7. Slow Product Innovation Cycles

 

In the food industry, it may become difficult to come up with fresh items. Actually, businesses should conduct a thorough analysis of their customer demographic in order to determine what kinds of foods they want. 

 

Additionally, the success of any new product also depends on timing. The popularity of the product might fluctuate from a few months to even decades at times. 

 

As a result, the organization must take extra care to produce them which takes a lot of time and use technology to foresee and assist in improved customer demand analysis. 

 

8. Poor Food Safety

 

Contamination can result from even minor misconduct or careless handling of food ingredients. Unfortunately, the food industry is still ill-equipped to identify the original point of contamination. Often, it might even go unnoticed until it's too late.

 

Also Read | What is Blockchain Mining in 2022?

 

Uses of Blockchain in Food Industry

 

Blockchain in the food industry, works in various ways. Some of them are given below :

---

Uses of Blockchain in Food Industry

---

1. Improves Food Traceability

 

The use of blockchain in food traceability has the potential to change everything. The tracing of food starting from the suppliers upto the consumers who purchases it can be handled easily via blockchain. The businesses can use this opportunity to enhance their visibility on the production line and provide a higher quality of food in the market.

 

2. Ensures Food Safety

 

Consumers may feel at ease and will be able to purchase all of their products without worrying about contamination or any other food safety issues thanks to blockchain in food safety. 

 

Since the food industry is still ill-equipped to identify the real source of contamination, the majority of the time, it may even go unnoticed by anyone until it is too late. 

 

Therefore, businesses can take the help of blockchain to track how they can handle raw materials and the completed goods. They will be able to treat their byproducts with more care in order to maintain the standard and quality of their products without any problems.

 

3. Food Industry Supplier Selection

 

Companies are able to connect with better suppliers in the food industry supply chain by utilizing the help of blockchain, where the suppliers have to provide proof of their high-quality goods. 

 

So, using blockchain, a marketplace can be created where providers and consumers may interact with each other and bid on specific projects based on the quality of the resources.

 

4. Meets Operational Demands

 

Companies sometimes struggle to keep up with the rising demands of the consumers and to produce them in a timely manner. This is because the food industry sometimes lacks the necessary infrastructure to meet the huge operational demand burden.

 

As a result, it becomes challenging for the companies to meet the diverse needs of multiple generations at once. However, the businesses can address the issue with the use of blockchain in the food industry supply chain. 

 

With the help of this technology, they are able to meet the requirements of the daily operation and keep up to date track of all the components in the manufacturing line.

 

5. Prevents Price Coercion

 

The price ranges in the food industry vary extremely. Consequently, it is regarded as one of the most volatile industries. Companies' prices may change due to a variety of reasons, including social or environmental concerns. However, as consumers also have a restricted budget to utilize on food items, this price change results in a detrimental impact on them.

 

Blockchain can therefore help in lowering the cost of producing the goods. Additionally, by elimination of all the middleman expenses, the final price paid by consumers is reduced. In fact, several uses of blockchain technology that is used in the food sector can help to provide this capability.

 

6. Improves Inventory Management

 

The phrase "Lead time" is used widely in  the supply chain. This is the period of time from the very beginning of the process to its conclusion. The corporation can manage its stocks effectively when the time is shorter. However, reducing the lead time is rather hard by using conventional techniques, and only a few tech giants are able to do it successfully.

 

Blockchain, on the other hand, has the capability to automate the manufacture of food and thus eliminate inconsistencies in the production line. Because of this, it can also reduce Lead Time considerably and enhance inventory management.

 

7. Proves Label Claims 

 

When it comes to labeling, companies frequently mislead their consumers. In many instances, they might even utilize dangerous chemicals while still giving the impression that they are just using organic elements. 

 

Due to the toxic chemicals found in processed foods, many fatalities may arise. In order to combat these issues, companies can employ blockchain in food safety projects.

 

The company can make that record available to their customers in order to support their label claims because blockchain will help to keep track of every element employed by the company in the production process of a product.

 

8. Reduces Food Waste

 

Food waste can be reduced by the help of blockchain for food traceability. Food losses have a wide variety of causes, from poor inventory control to delayed product delivery. 

 

There are always significant losses in the food industry, which puts even more pressure on the companies to manufacture more goods quickly in order to keep up with demand.

 

Blockchain enables businesses to track the food in order to adhere to regulations, uphold health laws, and enhance management systems. It's simple to cut food waste to a minimum and increase productivity, even in real-time, because they are able to keep track of everything online.

 

9. Eliminates counterfeit products

 

The problem of fake goods can be immediately resolved with the help of blockchain in food tracking. Blockchain can help to verify whether a product is real or not by following every product from the assembly line to the consumer. Furthermore, by determining the cause of the issue, it can also help to lessen the likelihood of counterfeit goods  entering the market.

 

10. Provides Food Supply Chain Provenance

 

The absence of a provenance system for food resources is another significant barrier. Although a product may make certain claims in its advertising, it may not provide what it claims to. The consumers do not always trust the goods they buy from stores without question. To know precisely when and how the food was produced, they require provenance.

 

Blockchain is quite ideal for that. It can be used to ensure food safety by providing provenance from farmers to retail stores. Customers can check the authenticity of a food product by scanning the QR code on the packaging in order to view the product's history.

 

Also Read | Hybrid Blockchain: Working and Benefits

 

The food industry can greatly benefit from the use of blockchain. There are numerous problems in the food industry, and unless a suitable solution is found for the problems, consumers are put in danger. 

 

Therefore, implementing blockchain in the food industry can help in eradicating the majority of the current problems and also guarantee a healthier and better community in the future.