Ruediger Hagedorn
Director, End-to-End Value Chain, The Consumer Goods Forum
Blockchain is a technology receiving increasing media attention. Understandably, commentators are discussing its potential for the consumer goods sector. There are arguments that it could help tackle food fraud, boost trust in business transactions and accelerate operational processes. Of course, it is just one technology available to business leaders as they look to address efficiency, sustainability and general supply chain issues.
Additional transparency
Traditional supply chain methods, reliant on paper contracts, are a burden on food and drink businesses. As blockchain works through a shared ledger system, where every transaction is visible to all stakeholders and cannot be manipulated retrospectively, the technology brings added trust to transactions between businesses. Overall, the added immutability of a distributed ledger means that inter-enterprise processes become easier and more reliable, allowing fast-moving consumer good (FMCG) giants to enhance management of suppliers, ensuring conformity to operational and regulatory standards.
Embracing blockchain could also provide a solution to food fraud, which can lead to consumers being misled about product quality. The enhanced immutability of the data and trust a distributed ledger provides means corporate leaders can quickly identify discrepancies in supply chains and act to stamp out any abuses.
Pros and cons
It’s important to remember, however, that blockchain doesn’t provide a complete solution to the challenges facing the food sector. For instance, while much is made of blockchain’s ability to store data in an unbreakable chain, the technology doesn’t protect against fraudulent data being used in the first place. These systems only secure data against retrospective manipulation.
What is also important to consider is that blockchain rarely offers itself as an “all-in-one” bargain package: companies need to review the return on investment. Instead, it’s most likely to provide value when used in a targeted way for a specific service or product categories. A better approach would be to incorporate blockchain systems as part of a value network, with other technologies being deployed elsewhere.