Is IoT the missing link for blockchain in the supply chain?

Gartner’s opinion

In August 2018, Gartner positioned blockchain as entering into its “trough of disillusionment” in its Hype Cycle for Emerging Technologies for 2018. This means that a technology has been overhyped and people are becoming skeptical about its value. Some technologies emerge from the trough as legitimate use cases are established for the technology. Others never emerge as reality sets in that there may not be a use case that is practical or viable.

Then, in February 2019, Gartner stated in a press release that “it will be several years before four or five major blockchain technologies become dominant. Until that happens, technology end users will be forced to integrate with the blockchain technologies and standards dictated by their dominant customers or networks. This includes integration with your existing data and analytics infrastructure. The costs of integration may outweigh any potential benefit. Blockchains are a data source, not a database, and will not replace existing data management technologies.”

In April 2019, Gartner issued a press release with the headline: “Gartner predicts 20% of top global grocers will use blockchain for food safety and traceability by 2025.” Gartner said that consumers’ interest in fresh foods is continuing to increase and, with that, “customer understanding has increased for the source of the food, the provider’s sustainability initiative and overall freshness. Grocery retailers who provide visibility and can certify their products according to certain standards will win the trust and loyalty of consumers.”

Most recently, on May 7 Gartner issued a follow-up release that is even more cautious in stating that blockchain remains a popular topic, but supply chain leaders are failing to find suitable use cases. By 2023, 90% of blockchain-based supply chain initiatives will suffer “blockchain fatigue” due to a lack of strong use cases. A Gartner supply chain technology survey of user wants and needs found that only 19% of respondents ranked blockchain as a very important technology for their business, and only 9% have invested in it. This is mainly because supply chain blockchain projects are very limited and do not match the initial enthusiasm for the technology’s application in supply chain management.

Gartner has been pragmatic about blockchain for a while now, cautioning people to carefully evaluate blockchain for supply chains before jumping in with both feet. A noted above, while many have been touting that blockchain is ready for prime time, Gartner is saying just 20% of grocers will implement it by 2025 — over five years from now.

Instead of blockchain being the solution, many are saying blockchain is a part of a broader supply chain solution and we should proceed carefully.

Blockchain for fresh food supply chains: What’s holding it back

When it comes to implementing blockchain for fresh food supply chains, what’s been holding it back from widespread adoption? I believe there are three key issues:

1. It’s about the data: The industry is finally realizing that any technology — blockchain for supply chains or otherwise — is only as good as the data that goes into it. And while there’s lots of industry data related to e-commerce and what consumers buy at the grocery store as tracked through point-of-sale systems, there’s not a lot of data, particularly pallet-level granular data, about produce or protein as it moves from harvest or processing through the supply chain. Manual data collection is expensive, time-consuming and error prone. It may be paper-based or in a spreadsheet, but both are rather unruly to work with, particularly when we’re talking about the volume of data needed for traceability and food safety, for example.
2. Blockchains for supply chains must benefit everyone in the supply chain: If someone doesn’t see a benefit in doing something, they’re not very likely to do it. So, for example, if you’re a produce supplier, you’re going to want to get some benefit from implementing it — not just the cost. Suppliers, just like anyone else, need a positive ROI for any investment.
3. Blockchain is not a standalone technology and needs to be better assessed for the value it brings to the supply chain: The value of blockchain for the fresh food supply chain is in its networking/sharing capabilities and security. It can best be viewed as a component or value-add to a supply chain management system.

What’s best for blockchain for fresh food supply chains

For blockchain to be a successful component of supply chain systems, we need to solve for these issues. Specifically:

• Automate data collection: IoT sensors, beginning at harvest or processing, can automatically collect data about fresh produce or proteins. This data can be wirelessly sent to cloud-based applications for processing and analysis. This reduces or eliminated impact on labor — the industry’s most precious and limited resource — and reduces data errors and costs.
• Make the data useful: By collecting data about the produce or protein from the beginning of the supply chain, we can capture information and insights of value to growers, processors and suppliers, such as cut-to-cool time metrics and cold chain integrity.
• Integrate with a value-add solution: Use a technology that is designed to improve supply chain operations and provide traceability, transparency and visibility. As needed, integrate blockchain into that system and control data access for each of members of supply chain, based on their need to have that access. This can be termed as a “hybrid approach.”

A hybrid approach for blockchain for fresh food supply chains

A recent ChainLink Research report discussed the value of a hybrid approach for blockchain. The report stated:

Blockchain technology alone cannot provide freshness, safety, provenance and recall capabilities. That requires data and capabilities from outside the blockchain. It seems that the best emerging approach will be a hybrid consisting of 1) a centralized networked SaaS platform providing economical scalability and deep algorithmic and process capabilities, combined with 2) blockchain and smart contracts for transparency and validation. Blockchains are attractive because of their ability to create a shared, trusted single‐version‐of‐the‐truth between trading partners. However, a networked SaaS platform can provide a shared, trusted single‐version‐of‐the‐truth at a much lower cost.

A use case for IoT: Preventing food waste

A study by the National Resource Defense Council stated we waste 40% of our food and grocery stores waste about 12% of fresh fruits and 10% of fresh vegetables. IoT sensors can play a key role in addressing this food waste problem.

IoT sensors and other post-harvest technologies can make the supply chain more efficient because they help identify exactly where problems arise in the supply chain. The data collected by IoT sensors help provide those answers and insights.

Most of the factors leading to fresh food waste happen upstream in the supply chain and even within the first 24 hours after harvest. Studies indicate that improper or inadequate temperature management — starting at harvest — is the primary contributor to early spoilage and food waste.

The impact of temperature on produce often cannot be seen until it’s too late. In order to prevent waste, we need granular, pallet-level data — and that means using a data collection technology that scales. Physically inspecting each pallet is inefficient, impractical and a big undertaking in an industry where there aren’t enough workers and the cost of employing people is on the rise. Therefore, automated data collection is necessary in order to gather the insights needed to have an accurate view of the supply chain’s effectiveness.

This is where IoT sensors play a huge role in solving the waste problem. By deploying them on every pallet, beginning at harvest, we can collect the data necessary to identify the causes of waste and then find ways to prevent them.

Capturing the produce condition data in a cost-effective, autonomous and reliable way is a critical component of getting the complete picture of what’s going on along the supply chain from harvest to processing to distribution to retail. But equally important is the analysis and application of that IoT sensor data.

Cloud-based software that uses data from IoT sensors coupled with predictive analytics and real-time alerts can identify and prevent issues that lead to fresh food waste along the supply chain, from harvest to store. By collecting and analyzing the data, we can identify problems every step of the way. For example, did the produce wait in the field for several hours before being cooled? This is important because, as a rule of thumb, each hour produce spends in the field costs about one day of shelf life. As such, produce waiting several hours in the field or waiting for cooling can lose significant shelf life leading to premature spoilage and waste.

Pallet-level IoT sensors can identify that pallet X has an issue that needs attention and a cloud-based system can send a real-time alert to workers notifying them to take action to locate and cool that pallet quickly. As a result, the pallet can be “rescued” and cooled, minimizing the impact on shelf life and preventing it from spoiling prematurely at the store or with the consumer — leading to waste that goes into landfill.

Utilizing IoT sensors throughout the produce’s journey along the supply chain can continue to identify other issues that lead to food waste.

Experience has shown that post-harvest technologies, such as IoT sensors, combined with cloud-based analytics can reduce fresh food waste by 50% or more. This approach identifies where the problems arise, provides an automated mechanism to address them and ultimately ensures that each pallet of produce is delivered with sufficient freshness to prevent waste.

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