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Blockchain Technology - why it matters in driving food safety and sustainability
- 1. With the population set to reach 8.5bn by 2030, food organizations worldwide are exploring new technologies and methods to ensure safe and sustainable supply chains. To meet changing client requirements, Lloyd’s Register (LR) is at the forefront of not only embracing new technologies to blend conventional assessment with digital monitoring and audit solutions that will enable the delivery of real-time assurance and insight, but also researching alternative food sources to feed the expanding population. Blockchain Technology Why it matters in driving food safety and sustainability
- 2. Vincent Doumeizel, LR’s Vice President Food & Beverage speaks about some of the new technologies and approaches that are disrupting traditional ways of thinking and operating within the food sector and bringing about positive change. What do you think are the main risks being faced by the food supply chain? The main risks are related to a lack of resilience and sustainability in the primary production; put simply, this means that there is the risk that food supply chains will not be able to provide enough food for the expanding global population. This fact alone could not only spark strong social tensions across the world, but could result in corruption and spiralling costs for the most simple of food items, meaning that only the wealthy could afford to put food in their mouths. However, there are many other risks related to food safety and – to an extent – the lack of transparency in the supply chain. To try and put this into context, we have to remember that the food supply chain is very fragmented with billions of operators meaning that the risk associated with the supply chain is traditionally high. There is a well-known phrase that we use when talking to our clients serving the food sector and that is that ‘their supply chain is only as strong as their weakest link’ and I for one believe that to be absolutely true. An organizations’ supply chain is only as strong as its weakest link says @lloydsregister #foodsafety #assurance #blockchain Through this lack of transparency, there is ultimately a strong risk to completely disconnect people from their food. So how do we mitigate these risks? Well we look at resilience as a starting point. Resilience implies flexibility and agility. Its implications extend beyond mere process redesign to fundamental decisions on sourcing and the establishment of more collaborative supply chain relationships based on a far greater transparency of information. New IT tools and platforms mean that collaborative working is becoming possible. Traditionally supply chains have been characterized by arms-length, even adversarial, relationships between the different players with a history of those serving supply chains being unwilling to share information either with suppliers or customers. However, that is all changing. Technology and data is changing the way we think and operate. In the food industry there is a significant collaboration between manufacturers and retailers in the form of Collaborative Planning, Forecasting Replenishment and other food safety initiatives, many of which are driven by the notable Consumer Goods Forum (CGF) through the Global Food Safety Initiative (GFSI) and other initiatives. click to tweet Following a degree in economics, Vincent worked for the French government in Africa on a number of agriculture projects; he also carried out humanitarian work in the Middle East and Africa. Vincent Doumeizel joined Lloyd’s Register in 2014, as Vice President for Food & Sustainability at group level over 100+ countries and tens of thousands clients. Vincent also supports actively the charitable objectives of the Lloyd’s Register Foundation (LRF), notably through the identification & funding of innovative projects to mitigate food insecurity as well as through participation to Advisory Boards in various food universities research projects across Europe. He contributed to the latest LRF Foresight Review of Resilience Engineering and is a regular speaker at some of the world’s leading events including COP and the Global Food Safety Conference. Vincent Doumeizel Vice President Food & Sustainability Lloyd’s Register 2
- 3. How can the changing face of assurance underpinned with technology help to address these food supply chain risks? The underlying principle of collaborative working in the food supply chain is that the exchange of information can reduce uncertainty. Thus a key priority for supply chain risk reduction has to be the creation of a supply chain community to enable the exchange of information. Assurance is part of that ecosystem and the aim is to create a high level of ‘supply chain intelligence’ whereby there is a greater visibility of upstream and downstream risk profiles. The Internet of Things (IoT), Machine Learning and Next Generation Sequencing (NGS) will create not only a huge amount of data related to each of every food product that cannot be addressed by a single auditor, but will also drive sustainable supply chains and the safety of our food. Let’s consider NGS as an example; with its unprecedented throughput, scalability, and speed, NGS enables researchers to study biological systems at a level never before possible. For example, thanks to NGS, food fraud and adulteration will eventually become a figment of our imaginations as testing will become far more intricate, thereby delivering accurate results to manufacturers that their food products are safe to eat; good news for their brand reputation and more importantly, good news for the consumer. Assurance will need to reinvent its own concept to operate in this new world. Assurance will be key to secure systems and billions of billions of online transactions as well as the related products and all related data from these new technologies and platform ecosystems. In the digital economy, platform ecosystems are nothing less than the foundation for new value creation. They offer unrivalled potential for connectability, scalability and interoperability of existing databases, schemes and systems and also for the future development and enhancement of assurance services across all industry sectors – not just food. This changing face of assurance means that as we move forward, we will see the blending of conventional assessment with digital monitoring and audit solutions that will enable the delivery of real-time assurance and insight, moving from a retrospective focus to predictive insight, from what went wrong to what could go wrong. This is expected to have a disruptive effect on traditional testing, inspection and certification business models, which in turn also presents opportunities – hence LR’s decision to take an early adopter position. We will see the blending of traditional assessment with digital monitoring and auditing says @lloydsregister #foodsafety #technology Further, snapshot verification based on sampling will no longer be sufficient in a world where everything will be much faster and bigger. We will need to leverage this tsunami of online data to enable real time compliance monitoring of the supply chain so that any deviation at any stage can be immediately identified and corrected. We must leverage the tsunami of online data to enable real-time supply chain compliance says @lloydsregister #foodsafety #innovation The concept of ‘Smart Contract in Distributed Ledgers’ is an interesting concept that we at LR are looking at in more detail. A distributed ledger is a database that is consensually shared and synchronized across networks spread across multiple sites, institutions or geographies. Underlying the distributed ledger technology is the blockchain. In contrast to today’s networks, distributed ledgers eliminate the need for central authorities to certify ownership and clear transactions. They can be open, verifying anonymous actors in the network, or they can be closed and require actors in the network to be already identified. The best known existing use for the distributed ledger is the cryptocurrency Bitcoin. FT graphic. Source: Santander InnoVentures, Oliver Wyman & Anthemis Partners Embedding distributed ledger technology A distributed ledger is a network that records ownership through a shared registry Clearing house Centralized ledger Distributed ledger click to tweet click to tweet 3
- 4. Brigid McDermott, VP of IBM’s Blockchain business development has recently said that Blockchain technology provides a permanent record of transactions that are grouped in digital “blocks” and cannot be altered. Applied to food safety, it could serve as an alternative to traditional paper records and manual inspection systems that Walmart’s Yiannas said could leave supply chains vulnerable to inaccuracy or fraud. How is the assurance sector embedding Blockchain into their service offering to meet the needs of organizations like Wal-Mart? A new technology is redefining the way we transact. If that sounds incredibly far-reaching, that’s because it is. As Goldman Sachs recently said, Blockchain has the potential to change the way we buy and sell, interact with government and verify the authenticity of everything from property titles to organic vegetables. It combines the openness of the internet with the security of cryptography to give everyone a faster, safer way to verify key information and establish trust. Blockchain is clearly part of the solution in terms of driving food safety and sustainability as it already demonstrated its efficiency with regard to traceability of the product through this new way of recording transactions. #Blockchain is part of the solution in driving #foodsafety says @lloydsregister #technology A Blockchain by nature does not belong to anyone; it is decentralized, free, secured and public. No one can control a Blockchain and the data does not belong to anyone but is accessible to everyone. In that aspect, it provides an agnostic platform which is a key element for such a sensible topic of ensuring safe and sustainable food supply chains. So far Blockchain is known mainly for cryptocurrencies – like Bitcoin – and hold records for financial transaction. But applying it to the assurance sector means that it will be a very efficient way to track the transaction of certificates and the related products and follow these with ease along the complex food supply chains. In addition, Blockchain can enable smart contracts. Though in its infancy, this system will address the scalability issue of the controls operated by generating direct action based on various factors. Typically, the data is aggregated and that triggers an action automatically in the supply chain based on various conditions or determining factors. So back to the likes of Wal-Mart, as reported in Bloomberg Technology a few months ago, if you shop at Wal-Mart, you might be buying packaged produce unlike any ever sold in a US store. The sliced apples or cut broccoli – the merchant won’t say what’s involved exactly – are being used to test Blockchain. If successful, the trial could change how Wal-Mart Stores Inc., which serves some 260 million customers a week, monitors food and takes action when something goes wrong. That could spur big leaps in food safety, cut costs and save lives. Like most merchants, the world’s largest retailer struggles to identify and remove food that’s been recalled. When a customer becomes ill, it can take days to identify the product, shipment and vendor. With the Blockchain, Wal-Mart will be able to obtain crucial data from a single receipt, including suppliers, details on how and where food was grown and who inspected it. The database extends information from the pallet to the individual package. While the issue of the scalability and the costs of Blockchain solutions remains a cause for concern, we are on the verge of transforming the way in which we operate; exciting times lie before us. An option contact between parties is written as code into the blockchain. The individuals involved are anonymous, but the contact is the public ledger. A triggering event like an expiration date and strike price is hit and the contract executes itself according to the coded items. Regulators can use the blockchain to understand the activity in the market while maintaining the privacy of individual positions. 1 2 3 click to tweet 4
- 5. Vincent, there is a lot of talk about big data and analytics; what is it and how can it help to drive food safety and sustainability? While assurance providers like LR are developing new technologies, how is the market reacting to these new services? Is it only the largest organizations serving the food supply chain that are embracing technology or can the smallest suppliers benefit too from these new technologies? Big Data is just the immense amount of data generated by each product and each operator of the associated food supply chain that are somehow connected to internet. It goes from the DNA of the product to the related HACCP plan through cold chain measures, weather reports, labs analysis and GPS location. All this data can be aggregated and properly analyzed through very complex algorithms to enable real predictive analytics mechanisms. Hence we could provide traceability, transparency and an improved level of safety for the product. But this analysis cannot be systematic, we will have to use trends in order to identify and anticipate any issues before they happen; I refer back to my earlier comment about predictive insight. Based on existing data and the proper algorithms, it is possible to define a model that will clearly indicate when and where the next issue – whether it is food safety, social or environmental – is likely to happen and how to address it in advance. Big data will drive #predictiveanalytics and #foodsafety says @lloydsregister #technology #bigdata This process is currently extensively used by large brands and authorities to prevent food crisis and recalls and is proved to be very efficient and ties back to general ledgers, Blockchain and digital ecosystems. Together, these approaches represent a far better way to monitor sourcing and production. You’ve spoken about real-time assurance and insight moving from what went wrong to what could go wrong. Can you explain what this means in more detail and share with us some of the services that LR is offering within this arena? To explain this, it is easiest to think of moving from a snapshot and sampling exercise with an on-site auditor, physically verifying limited records over a couple of days, to a fully connected system encompassing the entire supply chain and any online device operating in this supply chain. Any deviation will be automatically identified and corrective action advised or acted upon directly. This entire system will be able to learn systematically from any issue that has happened and always apply the right correction. This is what we call the machine learning and is clearly the first step toward Artificial Intelligence, or AI as it is known. The level of risk is scaling down tremendously. Obviously, you will need some brains and the right expertise at some point to take the best out of it. But most of this monitoring will be remote and online. On site actions will be limited to cases where real risks are anticipated and there will be core objectives to address these risks. We are seeing interest from both sides as all parties will gain efficiency, which is key in a supply chain often characterized by low margins and severe economic issues of the operators within in. But ultimately I believe the solution will be pushed by the large brands through their supply chain. This is mainly because a limited number of manufacturers deliver some of the world’s best known brands and they have the ability to use forums or associations to create and enforce these types of solutions across their supply chain. The solution then becomes a “license to operate” and has a viral effect all along the chain. In the meantime, we have seen from some recent experience in Africa or South America that small farmers are very often the one that benefit the most from these innovations when properly done. As a consequence, many of the world’s smallest suppliers are now enjoying levels of profitability that had never been seen before; the commitment to sustainability goes beyond the food product, sustainability touches everything, most of all humans. Disruptive #technology can deliver profitability to smallest #supplychain suppliers says @lloydsregister #foodsafety click to tweet click to tweet
- 6. For many of our clients, it’s not just about food safety. Organizations like Cargill are proactively promoting their commitment to sustainability – their announcement that they have partnered with CARE in 110 cocoa farming communities in Ghana to promote more prosperous, sustainable, and resilient livelihoods is a prime example. How can we help organizations worldwide meet their sustainability objectives? The 17 Sustainable Development Goals from the United Nations (UN) are now an undisputed roadmap and everyone agrees. Based on them, large organizations have defined associated action plans to better control and support their supply chains in order to reach these objectives. If we consider that 160 countries have voted at the UN so say that food is a human right; they have defined the access required in terms of quantity and quality to decent and culturally acceptable food - this encapsulates what people are after. Digitalization, transparency & traceability are key prerequisites to making it all possible. You cannot address a sustainability issue if you don’t know it is there and have no way to identify it. On the other hand, once again, primary production is very often hampered by trifling logistical problems such as a low level of transaction records, poor communication between the operators, lack of capacity to transport and store the food where appropriated and lack of training/information by the farmers. All these issues can easily be overcome by efficient IT solutions which will then bring resilience and sustainability in a healthier supply chain. Most of the large food brands are engaged in this process all along their supply chain as they all know it is key to enable resilience for their company but also for our entire human eco-system. To do all of this, these food large companies need proven tools and trusted organizations – like LR – to track and demonstrate their progress in order to play their part in making this world more sustainable. We need third parties to identify measure and reward the best practices in order to establish them as a standard for the rest of the chain. Sustainability is a bit different to food safety as it is much more a competitive topic for them. So here we need more need fair measures and independent statements to define what is best for the food ecosystem, which the major manufacturers are fully engaged with. Today’s consumers are savvy; they know what they want to eat and what is good for them. What they choose to buy, their decisions have a direct impact on their health, their society, the planet, local communities, forest, farming, water and our climate – both tomorrow and in the future. 5
- 7. For more information about how LRQA can help with your food safety and sustainability requirements, visit www.lrqausa.com or email [email protected] Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates. Lloyd’s Register Quality Assurance, Inc. is a Delaware USA corporation. Care is taken to ensure that all information provided is accurate and up to date. However, Lloyd’s Register accepts no responsibility for inaccuracies in, or changes to, information. Copyright © Lloyd’s Register Quality Assurance, Inc. 2017. A member of the Lloyd’s Register group. www.lrqausa .com Follow us: At the heart of LR sits a charity, the LR Foundation. Most organizations do something to make money but at LR, we make money to do something. Can you share with us any of the projects that we are involved in to help drive safe and sustainable food supply chains for the world’s population? As diets around the world become richer and demand for protein increases, natural resources will be increasingly stretched. To ensure sustainable access to nutritious food, we can expect a fundamental change to what is on the menu – including insects, laboratory-grown meat, and functional foods designed to provide optimal nutrition for specific segments of the population. The Lloyd’s Register Foundation is funding a project with Wageningen University and Research (WUR) to develop a safety assessment and controls for multiple simultaneous uses of maritime space to enable the safe creation of energy sources and food at sea in the form of aquatic algae (mostly seaweeds). Although seaweed has been used as food and animal feed for centuries, logistics and safety issues have limited large scale production. Seaweed farming presents significant opportunities: as a sustainable and efficient source of protein; as a natural desalination process; it absorbs carbon dioxide and its residue can create energy through biomass. Also worthy of note is that recent articles have highlighted the research showing that algae has proved to be a very efficient and biodegradable, and even sometimes edible, substitute to the plastic bags, bottles or glasses that are damaging so much of our ecosystem today. Seaweed delivers #food, #desalination, mitigates #climatechange and delivers #energy thru #biomass says @lloydsregister As an organization with a social purpose, we will continue to investigate and bring to market new ways to provide insight and assurance to the global food supply chain. Because altogether, we are the first generation that really knows the risks and the possibilities of this food system. With the access to incredibly disruptive technologies and based on our collective intelligence, we can now produce sustainable and safe food for every human being on this planet – and I truly believe that we will! click to tweet