Last year, consumer research firm Mintel predicted the UK would spend £419 million on Halloween, up by 5% from the year before, on sweets/chocolate, costumes and accessories. This year it predicts a cool £474 million. While 25% of the UK population will celebrate this millennials-fuelled phenomenon, the really scary thing (apart from the huge amount of money) is the provenance particularly behind the spooky snacks. How do we know the big chocolate-producing firms that dominate the market are doing the right thing in terms of sustainability and ethical supply chain practices? Have they stopped using palm oil from plantations in de-forested Indonesian jungles that are not just home to the animals but which support the communities around them? Are they using traceable and acceptable sources instead? (Ethical Consumer lists the retailers that produce or sell palm-oil-free chocolate – like M&S and Waitrose. But what about all the other supermarkets?)
Carlton Hopper, Blockchain European Lead at IBM, gave one of the standout sessions at SAP Ariba/SAP Fieldglass at ValueX yesterday. He began by asking how many of the audience believe or don’t believe in the power of blockchain. The split was almost even, coming down slightly on the side of ‘believe.’
To dispel any confusion, he gave a superb explanation of what blockchain means:
If you give a £20 noted to one person, but blindfold them, and you told them to hand it to another person who hands it to another person and so on for 20 times, it’s probable along the way that someone might pocket the £20, that someone might lose it, that someone might counterfeit it, until at the end, you have no idea where your £20 is. It would be impossible to know. And even if you could trace what you think is your note, it might not be yours at all. Now – if you ask those 20 people to stand up and hold hands, you know your £20 is being passed from one person to the other along the line, there’s no way of losing it. So this is how we apply blockchain in a business context.
This was in reality an excellent way of illustrating the importance of openness and transparency.
So what’s that got to do with chocolate? Provenance, is the answer.
Apart from the many use cases for blockchain: digital ID; financial services for reducing costs and transferral of payments; wholesale banking and the big area of settlements/claims; asset management and moving things of value between parties, and more, it has huge significance in the area of data provenance and the supply chain.
Accountability is a priority for firms, especially those with multiple supply chains, where real-time tracking is essential, especially considering the amount of moving parts. IBM is working with Walmart, for example, to track food staples from the supplier to the shelf. IBM Food Trust, using blockchain technology running on the IBM Cloud, “connects growers, processors, distributors and retailers through a permissioned, permanent and shared record of food-system data that can drastically cut the time needed to trace produce from farm to store.”
Supply chain managers need accurate provenance data to track progress and ensure products and raw materials move smoothly through each stage of distribution. At Carrefour, apparently, you can take a picture of the chicken you’ve bought into the store and it will tell you its provenance. Think also cobalt in mining (for mobile phones and the horror stories around child labour). So blockchain-based provenance systems, a digital fingerprint if you like, are a benefit to both buyers and brands in proving provenance of a product.
But – he does say – blockchain by itself does not equal value. Blockchain technology has to integrate with external influences, like trading environments, interest rates, and so on. But business is changing, and trust and transparency are essential.
The agnostics, he tells us, say blockchain is too expensive, isn’t secure, comes with too many protocols and doesn’t scale – well, we all said that about the internet in the ‘90s, was his retort. The difference is that blockchain is maturing much faster than the internet did. And he believes that the challenges mentioned are being addressed and will be met. So we can all enjoy our gummy eyeballs and chocolate bats without guilt.