Revolutionizing the Food Service Industry with Blockchain Technology

by Sysco LABS Articles 12 November 2018

The blockchain is a distributed ledger than assures security through storing data in a decentralized fashion across nodes. One of the ways the technology can achieve this heightened level of security is with the use of cryptographic hashes which are used to encrypt data which further ensures security and reliability. Further, the blockchain ensures another level of security with the use of consensus algorithms or protocols which validate the data that is stored within the displaced nodes across the system. These algorithms are a must when it comes to determining the validity of the information entered in each node and ensuring that this information is correct. The algorithms use variants such as dedicated proof of stake, proof of work and proof of authority to come to an agreement on the validity of the data. This dispersion of data ensures that even if information within one node is compromised due to any fraudulent activity, the correct information can still be retrieved from another node within the blockchain. This type of security assured by the digital cooperation of multiple parties has many applications in the foodservice industry where food safety and traceability are key concerns.

Blockchain and Supply Chain

The technology has seen some traction within the industry with retail giant Walmart who set a goal to create transparency within the food sourcing chain to ensure food safety. The problem faced by the retailer at present is that there are many manual processes which undermine the efficiency of its supply chain. This process also means that a lot of time and money needs to be spent to trace the origin of contaminated produce in a situation like the E. coli virus that appeared in Romaine lettuce in early 2018. Walmart has since partnered with IBM to launch a solution which requires its suppliers to enter sourcing information onto a blockchain based ledger which would make it extremely easy to run traces. The solution is replacing a manual tracing process that took 7 days with one that takes 2.2 seconds. This will enable the retailer to substantially reduce the likelihood that contaminated produce will reach customers.

Similar technology has been seen in use by companies like OwlTing, Cargill, Fairchain Coffee and Olivacoin with the uses varying from platform to platform.

Blockchain and Contracts

Another potential application of blockchain in foodservice is replacing the hundreds of thousands of vendor and customer agreements that a foodservice provider like Sysco holds with smart contracts built and assured by Blockchain technology. A problem faced by many providers is that vendor and customer contracts are not freely accessible for perusal when either of the parties desire it. Building smart contracts on the Blockchain between these parties ensures that the contracts are digitally signed and self-executable. This means that they are completely automated, transparent, trustworthy and accessible. The use of smart contracts would also ensure cost savings due to increased efficiency and easy storage.

Blockchain and Billbacks

In the course of a foodservice provider carrying out business with a restaurant over a long period of time, several problems could emerge. For example, there could be a discrepancy in the price at which goods are traded and the restaurant may need to billback the foodservice provider in order to cover the difference or be reimbursed. This may be due to a disagreement in the seasonal variance of prices, or a discrepancy in the original price at which the goods were offered by the vendor. By using blockchain to assure the prices across these different transactions, complete transparency can be assured, and the restaurant can be sure that their agreements are being honored when they billback.

Though there are these and many more possible uses of Blockchain in foodservice, the technology itself is still in its infancy, and as it evolves its capabilities will expand along with its applications in the industry. It is likely that we will see great changes in the foodservice industry with the use of Blockchain in the next few years.

About the Team:

This article is based on an innovation session conducted by the Pricing team consisting of Lohitha Chiranjeewa, Amoda Dissanayake, Chamin Wickramarathna, Indunil Asanka, Nipuni Gunatilake and Gayan Herath.

Their innovation session ‘Revolutionizing the Food Service Industry using Blockchain Technology’ addresses the common misconception that Blockchain only has applications in cryptocurrency by outlining some of its tremendous scope within the foodservice industry.









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