Tech innovations play a tremendous role in helping the food system get ahead of (or overcome) changing consumer demands, developing regulatory tensions and environmental challenges. In fact, the biggest environmental concerns refer to air and water pollution. Unfortunately, one of the causes of pollution is food waste. In the Netherlands, the amount of good food that is wasted adds up to billions of euros per year. In this article, we will show how blockchain can be the savior of our food system by looking at three causes food waste.
Blockchain technology started to gain worldwide popularity because of its implications in cryptocurrencies. As well of its promises to bring more efficiency, traceability and security to businesses. You can understand that these promises can also work for our food system.
Let’s dive into some issues that impact our global food waste.
Problem #1: inaccurate forecasting
It’s a difficult task for retailers: determine the ‘right’ product levels for each product category in their store. When forecasting, they must consider numerous factors, like consumer demands, fluctuations in seasonal demands, storage conditions and weather conditions. Inaccuracies in environmental data, lacking real-time data about changes in consumer demands as well as errors during delivery, often result in overoptimistic inventory forecasts. At the same time, retailers want their shelves to be full in order to prevent their consumers to go to the competitor. This leads to over-forecasting, and as a result, food is thrown away.
Blockchain technology can provide manufacturers, retailers and everyone else in the supply chain a secure digital ‘register’. All participants can input data which is visible to everyone in the chain – in real-time. For example, a store manager can inform the manufacturer a construction near the store can result in a decrease of customers. By sharing this information with block chain, inventory forecasting can be adjusted immediately.
Problem #2: improper storage conditions
Inadequate packaging and bad storage conditions have a big impact on food waste. Up to 25 percent of residential food waste is due to improper packaging, for example, food spoiling due to lack of packaging or products sticking to it. This mainly effects fresh products like meat and dairy, because they need to meet strict temperature and packaging requirements. Global sourcing adds a lot of complexity to logistics and transporting food products to the whole supply chain.
Not only blockchain has the potential to alleviate this issue. It’s possible to attach IoT devices on transport vehicles, in storage rooms and loads to track the product conditions along the way. In addition, blockchain technology can provide a safe digital platform on which these sensors can communicate and share information directly.
Problem #3: lack of communication in supply chain
The journey a product takes from farm to fork is complex one, with many parties involved in the supply chain – from sourcing, to processing and from storing to delivering. These parties need to communicate with each other in order to deliver a good product. When an integrated real-time communication platform is missing, these parties cannot share up-to-date information. The result: they receive outdated or inaccurate data. In the end, stores may end up with too much or too little inventory. In that case, retailers might overestimate their forecast (see problem #1) and food has to be thrown away.
Blockchain can provide a digital and secure communication platform where all parties in the supply chain can contribute information regarding a product. This communication-sharing can even be automated by integrating AI and IoT.