How processors can improve supply chain safety

Big shifts in thinking about the supply chain are happening because of two developments: excitement about blockchain’s potential and regulations requiring companies to shoulder more of the burden for verifying whether suppliers keep food safe.

First, FSMA forced a change in the mentality, “well-ingrained in the entirety of the food industry,” that companies are responsible for ensuring safety when products are in their possession, says Jennifer McEntire, vice president of food safety and technology for United Fresh Produce Association. “Historically I think there’s also been a sense that ‘I can only control what goes on when the product is in my possession, and I can’t control what somebody else did.’”

Attempting to further lower the foodborne illness rate, FSMA now requires businesses to have plans to manage potential risks from upstream. For example, companies have the right to ask suppliers to verify safety measures, such as temperature checks or antimicrobial levels in wash water, under the rule for Hazard Analysis and Risk-Based Preventive Controls (HARPC). Plus, importers are now required to take steps to confirm incoming food’s safety under the Foreign Supplier Verification Program.

“There’s increased transparency so that I know what my supplier did in their operation and I can make a determination whether I’m comfortable with that or not. And if I’m not, I find a new supplier because I don’t want to inherit their problem,” McEntire says.

The second shift under exploration comes on the supply chain’s traceability side. The focus on blockchain is pushing companies to consider implementing tracking changes that have been talked about for years, but have typically been seen as too expensive.

Proposals to connect all partners in a product’s lifecycle so they can log movement data in a shared depository—that’s the blockchain—has led to breathless discussions and copious commentary, with a partnership between IBM and Walmart stirring interest. The retailer added pressure with an announcement in September that leafy greens suppliers will be required to enter tracking data in its blockchain within a year.

To get quality data needed for more sophisticated linked record-keeping, companies would need to invest in upgrades to coding and tracking food at key locations. One benefit of increased data collection could be speeding up searches for the root causes of some recalls, potentially cutting the time from days and weeks to seconds.

While track-and-trace systems don’t protect products before sale, functionality is important to how consumers view the safety of the food supply when recalls activate, McEntire notes.

If the industry could achieve this higher level of connected tracking—even for only some products—that would be a shakeup from the norm: companies diligently monitoring products in their possession and faithfully recording one-step-forward and one-step-back movements. 

Companies in a chain would still collect and manage their own data, but with blockchain, that information would be linked. “Blockchain is that final step that facilitates … rapid, touch-of-a-button connections between the supply chain, which are definitely for the most part lacking today,” says McEntire, who serves on the Leadership Council for the Produce Traceability Initiative (PTI).

Some companies still file one-up, one-down transactions on paper. With PTI, about 60 percent of cases are marked with tracking codes using GS1 standards, but McEntire says she often sees the codes pass by without being scanned.

The entire supply chain needs to scan cases in and out, she says. “It’s not like you can be a grower or a processor and have a very archaic system now and tomorrow you’ll be on the blockchain and solve all your problems,” she says.

The drive to contain recalls, along with organic certification, is pushing companies to experiment with blockchain and the increased data it needs, says Gil Perez, senior vice president of products and innovations and head of digital consumer initiatives at SAP software corporation. SAP is running pilots with Bumble Bee tuna, Naturipe Farms berries and other companies, and it expects its first blockchain systems to go live early next year.

“There is a sense of an agreement that consumers are expecting it and also if they (SAP customers) don’t do it, there’s going to be more and more regulation and they prefer being ahead of it,” Perez says.

But developing reliable ways to track food divided into many pieces or made from numerous ingredients is difficult, he says. Think of chunks of tuna cut apart on a fishing boat, with pieces tossed in plastic bags. A code is put on the bag, but Perez says challenges develop when the bag rips and when the tuna is divided further by a processor and again at a sushi restaurant.

“We’re still working on it. There isn’t a clean solution,” he says.

Tracking becomes progressively more cumbersome with more ingredients, such as Caesar salad kits traced in one SAP pilot.

However, McEntire says tracing multi-ingredient products is doable because each company would still collect only its data. The expense of installing improved tracking isn’t as prohibitive as the resources to scan the sheer volume of product passing through, she adds. At the same time, PTI finds that costs can be offset somewhat by using the new data to improve order accuracy and efficiency.

“We’re well into the 21st century here. When you look at just what my daughter does on her phone­—all those things that you can quickly figure out at the touch of a button—and you can’t figure out where food moved, it’s just not acceptable,” she says.

The food industry is responsible for protecting people from preventable problems, McEntire says, and she advocates for aggressive tracking modernization with no regulatory pressure needed. Congress might not press for such laws, and if the FDA is granted authority to regulate this area, she suspects any traceability mandate would be inadequate or fail to take full advantage of the benefits technology can bring to track-and-trace.

“People have to eat, and they deserve to eat something that’s not going to make them sick.”

Marc Simony, vice president of TraceGains Network, the company’s food and beverage collaboration platform, applauds the industry for keeping the number of illnesses and deaths from contaminated food relatively low. He notes that many companies have operated for decades or centuries and know their safety operations well, forming deep relationships with suppliers to ensure they’re doing business with quality partners. 

Supplier relationship management like that offered by TraceGains has long helped companies detect possible incoming hazards by providing in-depth information about partners and risk-scoring that’s updated continuously, Simony explains.

Food safety improvements should be pursued, he says, but “if you’re looking for large returns­—What’s the next silver bullet to cut this number (of deaths and illnesses) in half?— I’m not sure there’s one out there.”

He likes the idea of investing in a public education campaign about food safety at home to cut into the number of illnesses caused by consumer mishandling. “That seems to be low-hanging fruit to be addressing.”

“The argument will be made that anything that can be done, should be done, because that’s somebody’s responsibility, and nobody disagrees with the high-level assessment, but it’s difficult to implement, afford and report on correctly.”

Customers polled about blockchain possibilities with TraceGains rejected them as unnecessary because they trust the company’s data and it already makes records unalterable with full audit trails, he says. 

In IBM’s blockchain initiative, the company is collaborating with giants including Walmart, Kroger, Nestlé, Tyson Foods, Unilever and Dole. With Walmart, a six-day trace for a pack of mangoes from South America took two seconds with blockchain.

Simony expects the industry will make good use of blockchain eventually, but he wonders whether the expense to thoroughly track the movements of all pieces of a complex product with numerous ingredients will be cost effective for businesses that operate on tiny profit margins and already have stellar safety records.

“I think it’s absolutely fantastic that Walmart can now do that traceability on mangoes in 2.2 seconds instead of 6.75 days,” Simony says. “But it’s a very limited use case. You wouldn’t be able do that with cornflakes. Yet.”

“You can design the perfect system for tracing high-risk ingredients back to their origin, but nobody would be able to afford the cornflakes.”

Blockchain: Possibilities and challenges

What is blockchain?

Think of it as a shared digital record book. The platform is most commonly known for logging bitcoin transactions. Similar to a shared database, blockchain has key differences: mainly that users can’t alter or delete records.

How would it work?

All supply chain partners for a product or ingredient would add key information about movement of items into the shared blockchain network. University of Florida Professor Bruce Welt, coordinator of the Packaging Engineering Program, suggests adopting an established system of recording critical tracking events to capture “what, where, when”: Where and when did an item pass through a key point along its journey, such as a delivery or pesticide application? Who (which worker or business) had possession at those points?

How would it help the supply chain?

Blockchain doesn’t help on its own, Welt and other experts say. The blockchain only holds data. Before businesses could adopt blockchain, they would have to upgrade their tracking to collect the rich, digitized data needed to make it useful. That would be a big change for many companies.

What are some advantages? 

A central data location should allow inspectors and epidemiologists to narrow in on the path and origin point of some recalled food much more quickly. The average company could join a blockchain without deep IT expertise. No company up or down the chain would control the data, and individual businesses’ data remain private.

Welt is among observers who expect that the new information collected could provide savings to help balance implementation cost. For example, companies might be able to make faster decisions to divert delayed produce to a closer location before it goes bad.

“There’s some real-time savings and intelligence that could come out of a system like that,” he says.

What are some possible challenges?

Welt, while supportive of blockchain as one possible recording method, says improved tracking data still would be helpful in distributed databases, often managed now by individual companies or cloud providers. He’s unsure whether an unalterable, possibly permanent record is efficient to record movements of perishable products, many that zip through the supply chain before spoiling. 

“There are many ways of handling the distributed data,” he says. “Blockchain is just one of them, and it may be a good one, it may not be a good one. We don’t know yet.”

A closer look at SAP’s blockchain development

SAP didn’t intend to put out its own blockchain offering but changed course after a customer survey earlier this year found strong demand, says Gil Perez, SAP’s senior vice president of products and innovations and head of digital consumer initiatives. About 92 percent of respondents indicated they would join a consortium led by the company that serializes many products and gives them digital birth certificates. 

SAP is focusing on blockchain for specific industries, in response to customers’ misgivings about joining a large consortium, Perez says.

Some other SAP survey findings:

• Early stages: 3 percent use blockchain in production, but 84 percent are involved in blockchain-related activities
• Usefulness: Respondents expect the most promising use to be in the supply chain and IoT
• Help with regulation: 96 percent expect blockchain to improve compliance
• Perez describes how he sees traceability evolving:
• Clusters of partner businesses could start using blockchain and add others in their supply chain as they’re ready to join.
• He expects DNA serialization to become reality someday, with samples of food genetic markers used to track items with potential problems later in the supply chain.
• While data can’t be removed in a blockchain, SAP is experimenting with networks that could be eliminated after years when old information isn’t wanted.
• Starting with groups of companies using separate blockchains will work well, and technology developments will find a way to consolidate them later, if needed.

“We are definitely very much invested in this area. We think it’s going forward very quickly,” he says.