The take-away

• A food recall costs an average of €1.3 million. The industry has a major interest in making supply chains more transparent.
• IBM has developed a solution based on blockchain technology. It is already used by 12 of the industry’s leaders.

According to a recent study, 70% of Europeans say origin is an important factor in their decision to buy food. They want to know where the items on their plate were grown or produced, and more importantly, how. But some supply chains are so complex that it can be a challenge to trace them. A basic item like meat passes through four phases – production, processing, transport and sale – that can occur in different countries, thousands of kilometres apart.

The chain becomes even more complex when the food is manufactured with multiple ingredients. Take frozen pizza, for example, whose sales are rising by more than 6% a year. Each ingredient – crust, cheese, tomatoes, etc. – may come from a different producer, who in turn may rely on several of its own suppliers. As a result, tracing the origin of each ingredient becomes a daunting task.

Unifying practices

The food industry understands the importance of monitoring supply chains. Not only so that consumers can know where their food comes from, but so that producers can react quickly if a product contains toxic contaminants. In such cases, it is important to know where the contamination comes from as quickly as possible to determine which products are affected. Brands also need to limit financial damage – a food recall costs an average of €1.3 million – not to mention reputational damage.

“Every organisation in the supply chain manages its documentation separately, some with electronic systems, others on paper,” explains Martin Grunow, professor of Supply Chain Management at the Technical University of Munich. “The challenge is to unify everyone’s data along the chain.”

Digital twins

This challenge is at the heart of a project that the German industrial manufacturing giant Siemens is currently leading at the European Institute of Innovation and Technology, along with several other universities. Siemens hopes to create a digital platform on which all members of a supply chain can share information about products to provide an overview of all the processes involved.

To do that, project leader Rudolf Sollacher is compiling a “digital twin” for each ingredient, containing all the data about its origin, processing and destination. “We could eventually imagine personalised food being produced for small groups of consumers with specific needs or preferences,” he says. “But for now, processes in the food industry are geared more towards the mass market.”

The latest technological improvement involves the blockchain, which creates a shared, decentralised ledger to which all members have permanent access. The advantage of the blockchain is that data cannot be deleted. IBM recently announced that it was working with 12 industry leaders, including Walmart and Nestlé, on a blockchain-based model.

Detecting fraud

Yet even this approach cannot guarantee accuracy. “The product might say that it’s halal or vegan, but we can’t really know if that’s true,” says Grunow. “Nor can the technology detect contamination.”

To address that risk, London-based Tellspec has developed a scanner that can analyse the contents of food in real time. The device emits light at food and analyses the photons reflected back, sorting them into spectra. “This method can, for instance, tell olive producers the fat content of their olives, which helps them determine when to pick their fruit,” says Isabel Hoffman, the company’s CEO. “The device can also be used by fish importers to analyse goods from other countries to know whether too much water was used in the freezing process to increase the weight of the product.”

Grunow sees such technologies as the path towards greater transparency, which will eventually improve food quality. He is, however, concerned about one obstacle specific to the food industry. “Some large groups don’t have stable supply chains,” he says. “They change providers often to get the best prices. The new documentation systems will have to be able to react to these fluctuations.”

 

Fighting food waste

Every year, 30% of all food is thrown away before it is eaten. This waste occurs at both ends of the supply chain, according to the U.N. Food and Agriculture Organization. In developing countries problems arise in the production phase, often due to the lack of adequate storage facilities like refrigerators. In developed countries, on the other hand, consumers are mostly responsible. “While we need to improve production infrastructure in developing countries, here we need to educate consumers to change their behaviour,” Grunow says.

This might include information campaigns to explain that certain foods can still be eaten after the sell-by date. The large portion sizes available in supermarkets are also a factor. Portions better suited to the needs of different kinds of consumers –single people, couples, families – lead to less waste.