Block Chain
Block Chain
The supply chain from the farm to the consumer's kitchen table is becoming in-
creasingly complex. Under the pressure of changing customer interests, increas-
ing regulatory controls and growing global competition, the food and beverage
industry is forced to create more transparency and gain more customer confi-
dence.
They are increasingly interested in their food sources and want more individual
products. These are just a few of the many factors driving the introduction of dig-
ital technologies in the industry. For example, the Internet of Things (IoT), Track-
ing & Tracing, Cloud and Edge Computing or the Blockchain.
Table of Contents
Trustworthy traceability
Siemens is currently developing modules for existing soft-
ware solutions as well as customer-specific IoT sensors that
send data directly to the blockchain. This allows to detect
"blind spots" in the supply chain and to create a complete
traceability record.
MindSphere is able to process any data source. This combi-
nation and the use of advanced analysis functions offered
on the platform can provide "trusted traceability" in the food Track & Trace solutions using the blockchain
and beverage industry. ensure complete traceability of all food and
beverage ingredients and effectively help
deliver on the promise of a trusted brand.
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Whitepaper | Blockchain in the food and beverage industry | 09.2019
Today's consumers demand more variety in their food, For manufacturers, this leads to special requirements with
tastier and healthier products. Industry trends such as low- regard to health and sustainability, and "selling trust" be-
sugar, gluten-free, lactose-free and locally grown food have comes decisive for market success.
led to new market segments in developed countries, as has
"The consumer of tomorrow demands more transparency
the desire of consumers for convenience products that
and new solutions", say the auditing and consulting firm
reflect their changing lifestyles.
PwC, the rheingold institute and the logistics standardiza-
Let's take milk as an example: around 9,000 years ago, tion experts of GS1 Germany in their joint future scenario
people domesticated cows to drink their milk. Not much has "2025: Smart Value Networks".
changed in this respect over a long period of time.
Tailor-made food, sustainably produced
Until about 50 years ago, a fat-free or chocolate-flavored
Consumers in industrialised countries will then continue to
variant was available in grocery stores in addition to normal
change their attitude to consumption and increasingly ques-
whole milk.
tion the origin of products from a health, ethical and social
Today, supermarkets have dozens of types, not including re- point of view.
gional differences. They offer numerous products with
"In addition, they increasingly expect their individual needs
different fat levels and flavors, as well as almond, oat and
to be taken into account and, for example, have high expec-
soy milk for lactose-sensitive consumers. After 9,000 years
tations of simplicity and convenience when buying food,"
of stability worldwide, milk has become a complex and dy-
the study says.
namic product category.
By 2025, products that are precisely tailored to the needs of
„Selling trust" is the key to market success individual consumers are no longer special. They are simply
This demand includes trends like low-sugar, locally grown, expected. Just like the supplier's ethically and ecologically
gluten-free, non-dairy, nut-free hypoallergenic foods, and sustainability profile, a transparent supply chain and exten-
more. Customers also choose products that offer increased sive product information.
convenience, usually via specific packaging and/or prepara-
"Companies are well advised to know their customers as
tion that fits their lifestyle.
well as possible and to communicate with them in a trans-
As with this traditional drink, the market has also developed parent way. Through intelligent networking, the Internet of
for many other foods: With special products that take into Things offers the opportunity to better understand the
account all types of intolerances and are geared to specific needs of consumers and make the desired information
consumer lifestyles. available to them in real time," the study concludes.
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Whitepaper | Blockchain in the food and beverage industry | 09.2019
At the same time, global supply chains in the food and bev- Knowledge about the origin of food becomes an important
erage industry are becoming increasingly complex. argument when shopping – especially for younger people.
Studies of human psychology have shown that 20 positive
In order to meet consumer demand for greater variety and
experiences are needed to mitigate and overcome a failure.
seasonal independence at competitive prices, manufactur-
Having a consistently positive product experience provides
ers are purchasing their raw materials around the globe.
the basis for being a trusted brand.
The aim is to effectively protect supply chains from spoil-
age, unintentional or deliberate tampering and product pi- 15 percent of all food sold is fake
racy. Experts estimate that about 15% of all food sold is now
fake5). Incorrect weight claims, the relabelling of expired
Enormous damage caused by food scandals foods or the declaration of conventional foods as organic –
Food-borne diseases, which affect one in 10 consumers given the enormous profit opportunities, the criminal en-
worldwide every year and cause the deaths of 400,000 peo- ergy in this sector is high. Especially since the risk of being
ple1), cause lasting damage to the image of manufacturers caught in this fraud is so far rather low.
and result in immense costs through recalls, legal disputes
The damage is borne by the brand producers. Not only do
and penalties.
they miss revenues of up to 13 billion € per year 6). Even
56% of all food and beverage manufacturers are affected by worse, however, is the health risk to consumers and the as-
at least one recall per year. The average direct cost is €9.5 sociated loss of confidence if damage actually occurs.
million2). Between €50 and €60 million additional costs are
Track & trace solutions with the help of block chains offer
incurred due to image damage and sales losses 3).
the necessary transparency to successfully manage supply
Increasing regulatory requirements as a result of food scan- chains. They guarantee the complete traceability of all food
dals, which have led to diseases and damage caused by and drink ingredients and effectively help to keep the prom-
food, are another challenge for the industry today. ise of a trustworthy brand.
So is the damage caused by counterfeit branded food. This
global problem is exacerbated not least by the rapid growth
Sources:
of online retailing.
1) Press release of the World Health Organization WHO on the UN World
Consumers post negative experience on social media Food Safety Day, 6/2019.
After a bad experience, brands are shunned by consumers
2) Joint study by Food Marketing Institute, Association of Food, Beverage
for an average of two years and, according to studies, they
and Consumer Product Companies (GMA) and Deloitte, 1/2016.
now post in 45% of cases their negative experience on so-
cial media. 3) Capturing Recall Costs, GMA White Paper, 2/2011.
At the same time, 61% of all consumers worldwide 4) say 4) The Harris Poll, 2/2014.
that they are more likely to buy products from brands that
5) UK Food Standards Agency (FSA), 2016.
act responsibly – even if this means spending more money
on food and drink. 6) Geo, "These foods are particularly frequently counterfeited", 5/2016.
© Siemens 2019. 4
Whitepaper | Blockchain in the food and beverage industry | 09.2019
© Siemens 2019. 5
Whitepaper | Blockchain in the food and beverage industry | 09.2019
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Whitepaper | Blockchain in the food and beverage industry | 09.2019
At the end of the day, the consumer is provided with a complete information chain that can be viewed at any time
and guarantees that his chips consist of, for example, 100 percent organically grown potatoes and that they have
been processed under optimal conditions.
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Whitepaper | Blockchain in the food and beverage industry | 09.2019
© Siemens 2019. 8
Whitepaper | Blockchain in the food and beverage industry | 09.2019
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Whitepaper | Blockchain in the food and beverage industry | 09.2019
Digitization of supply chains in the food sector The product will be sold internationally through supermar-
The "Digital Twin Management" project focuses on the digit- kets, retail stores, hotels, restaurants and canteens and will
ization and automation of supply chains in the food sector – have a barcode on each package which can be scanned with
to which Siemens solutions for plant management, plant a smartphone and which will provide comprehensive infor-
engineering and product lifecycle management (PLM) or the mation about the flavourings processed.
open IoT operating system MindSphere contribute. This involves extracting data from factory automation and
This will also make it possible to create a digital twin for enterprise systems, creating digital product and production
food and beverages that can be used to read what a product twins, and transferring the data to MindSphere. The aim is
is, where it comes from, how it was produced and what in- to share selected information – such as recipes, suppliers,
gredients it contains. quality, times and transport routes – with customers, suppli-
ers and the regulatory authority.
Among other things, it is planned to make pallets of fruit or
meat traceable using blockchain technology. In this way, a The manufacturer himself is now better informed as well
tamper-proof control chain will restore consumer confi- But the food manufacturer itself is also better informed
dence in their food, while strictly respecting data protec- about the ingredients of its products, for example by
tion. making certified analysis results of the aromas available
Just as in medicine, where patient-specific treatments are online.
the latest research trend, personalised nutrition also plays In addition, the system provides the current status of the
an important role at EIT Food. production of a flavouring substance at any time, thus
The goal: Thanks to automation, people with special needs improving the planning process and product optimization.
– such as in nursing homes – or special preferences and And in the event of a recall, the causes can be pinpointed
food intolerances can in the future receive healthy food tai- faster and better, which also leads to cost savings. "The best
lored to their needs, which is produced individually in batch way to prepare for the future is to shape it," is Givaudan's
size 1 for them in fully automatic factories. motto.
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Whitepaper | Blockchain in the food and beverage industry | 09.2019
© Siemens 2019. 11
Whitepaper | Blockchain in the food and beverage industry | 09.2019
Blockchain Although blockchain or distributed ledger Tracking & Tracking and tracing of products. Nowa-
technology (DLT) is already celebrating its Tracing days, it is common for products to be avail-
tenth birthday in 2019, there is still no uni- able on the Internet in real time. GS1
form definition of the term. One possible (Global Standards One) differentiates be-
description refers to "forgery-proof, distrib- tween the tracking of the raw material to
uted data structures in which transactions the end product and the tracing of the end
are logged in chronological order, tracea- product to the raw material. Both terms to-
ble, unalterable and depicted without a gether result in traceability as a special
central instance". Typical characteristics – transparency at all levels of the supply
whether with a private or a public block- chain.
chain – are in any case decentralization,
QR-Code Quick Response Code. A two-dimensional
unchangeability, transparency and privacy.
code that has a square format and consists
Digital Twin Digital twins are virtual images of the prod- of black and white dots in which the infor-
uct, production or performance along the mation is stored. The data is protected by
entire value chain and enable seamless an error-correcting code so that it can still
linking of the individual process steps. In be decoded with a scanner or smartphone
this way, efficiency can be consistently in- app even if it is lost by up to 30 percent.
creased, the error rate minimized, develop- Therefore, the QR code is now also used for
ment cycles shortened, and new business many consumer-oriented applications, for
opportunities opened up. example to provide customers with addi-
tional information on products.
GS1-Standards Global Standards One. Worldwide valid,
overlap-free numbering and coding sys-
tems for the unambiguous identification of
goods and services. With the GS1 stand-
ards, specific logistical information, such as
article descriptions, addresses or shipping
unit features, is numerically encrypted and
made machine readable.
Internet of The Internet of Things (IoT) makes it possi-
Things ble to intelligently network physical things
and applications via the Internet. With the
help of their sensors, the networked de-
vices collect data that they can exchange
and make available among themselves and Photos: Siemens AG, Downstream Beer,
via the Internet. With MindSphere, Siemens EIT Food, Shutterstock, WWF
provides companies and software develop-
ers with a complete operating system for
the Internet of Things. The cloud-based, Siemens AG
open platform connects products, plants, Siemens Germany
systems and machines and thus makes it Vertical Sales Food & Beverage
possible to transform masses of IoT data Lindenplatz 2
with comprehensive analyses into insights 20099 Hamburg
– and thus into added value.
siemens.com
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