SAP, a leader in enterprise-level software solutions, is looking to expand into the supply chain industry by applying blockchain technology to agricultural supply chains. Its farm-to-consumer program is working alongside companies such as Johnsonville, Naturipe Farms and Maple Leaf. SAP has also partnered up with the Swiss supply chain startup modum.io.
Issues and needs around the evolving global market
Currently, there is a global push towards improving the transportation of foods and goods around the world. As much as one-third of global fresh fruits and vegetables go to waste because their quality has diminished and is deemed no longer sale-worthy. Food can often be stuck in limbo in the supply chain due to documents being delayed or even lost. With a rapidly growing population and a push for a greener future, this has become simply unacceptable for the industry.
Alongside increasing profits by reducing waste, there is also a growing need for product details among consumers. Consumers are more conscious of products and are wanting to buy in confidence knowing that the item is part of fair-trade and has been ethically sourced. Almost 75% of respondents in a Nielsen global survey said that a brand’s country of origin was one of the most important factors compared with selection or choice, price, function, and quality. When it comes to food and beverages, local brands take precedence as spoilage is a primary factor, whereas for long-life products or other goods, consumers prefer global brands.
“For many categories, a global brand name is an indicator of quality, safety, and trustworthiness in emerging markets,” noted the report.
SAP among many in a movement towards blockchain logistics
SAP isn’t the first to explore blockchain logistics solutions. Mastercard is currently working on its Blockchain and Authorization Network which sets out to provide proof of provenance for goods with the ability to track items as they are created, transferred, purchased and resold, to prevent fraud. Recently, an Ethereum-based supply chain was used to track a Yellowfin tuna from the waters off Fiji to a conference where it was served as sushi. Samsung and IBM are already investing in blockchain solutions to manage shipping to streamline imports and exports.
SAP’s project lead, Torsten Zube, believes blockchain has the ability to update current food industry production models to a more streamlined, profitable iteration.
“If enterprises can access the complete version of product history,” he explained, “this could result in a shift from a central unilateral supplier-led production to a consumer demand-led supply organized by a consortium of peers.”
Image source: Flicker – William Murphy – Farmers’ Market Meeting House Square
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