The Value Of Blockchain Technology For The F&B Industry In Asia
Thursday, August 15th, 2019 | 1054 Views
Jimmy Ong, EY Asia-Pacific Blockchain Leader, comments on the impact of blockchain solutions for Asian F&B manufacturers.
Q What is the rate of uptake of blockchain tech in Asia as compared to the West?
The adoption of blockchain technology by companies in Asia-Pacific remains slow. According to an EY poll of over 500 Asia-Pacific attendees of an EY webcast in June 2019, 68 percent of participants expressed that a lack of understanding and education on blockchain application was the greatest barrier for boards and executives. Additionally, 66 percent of participants believed they require a better understanding of possibilities, risks and benefits before thinking about applying blockchain to their organisations.
Just like any other emerging technology, the key is to find the right business use case. The potential value of blockchain technology lies in what it will do for entire networks of enterprises and business ecosystems.
For example, in supply chains and networks within the food and beverage industry, there is growing recognition that supply chain traceability is a strong use case for blockchain technology. By leveraging blockchain technology, companies along the food supply chain can trace each step in processing, sourcing and storing the product. Successful implementation would require the systems of all players in the value chain to be interoperable, which means that all data must be collected and tokenised to be facilitate the free exchange of information across the supply chain. As the data on the blockchain platform would be unchangeable (or the technical term, immutable), tamper-proof, time-stamped, and linked to the owner of each step, this greatly increases the visibility and transparency of the food supply chain.
To help clients use blockchain technology for the traceability of their food and agriculture products, EY teams developed the EY OpsChain Solution that allows enterprises to represent their operations on a blockchain using digital tokens and smart contracts. This solution is increasingly being adopted by farmers, producers, food retailers and other players in the food and beverage manufacturing ecosystem globally and in Asia. The uses cases include the partnership with Blockchain Wine Pte. Ltd. to determine the provenance and reduce counterfeits for European wines being sold in China, Japan, South Korea, Thailand, and Singapore, as well as improve traceability of sake brewing in Japan. The solution is also being deployed to verify that the sustainability practices of palm oil plantations are No Deforestation, No Peat, No Exploitation (NDPE) compliant, as well as by food retailers to provide assurance to their shoppers on the safety and traceability of fresh produce sold at the premises.
Beyond the applications of EY blockchain technology solutions, other innovative use cases seen across Asia-Pacific include the durian traceability solution in Thailand3, the halal blockchain traceability solution in Indonesia, and the beef traceability solution in South Korea, which further establishes the strong presence of blockchain technology in the supply chain ecosystem.
Q Why should SMEs invest in such technology?
Small and medium enterprises (SMEs) should do a benefits analysis to identify the value blockchain can bring to their systems. While the potential of the technology is high, the value it brings to different enterprises varies and it is important SMEs define the objective they want to achieve (or problem they want to solve) through blockchain.
As blockchain is applied in the context of enterprise ecosystems, SMEs should also explore participating in an existing blockchain network that is applicable to them, instead of setting up a new blockchain network from scratch (which requires a lot more effort and resources). SMEs form an important part of the food value chain and their participation in the blockchain networks will bring greater value to the overall ecosystem.
When deciding to participate in a blockchain network, SMEs should seek to understand how the network works. Blockchain networks work differently depending on the platform used and how the network is designed. Some private blockchain networks have administrators with special assess privileges that make them not so different from centralised systems. Finding out about the rights to your own data and the network’s data is important. So is understanding if the blockchain software is open sourced and free for all to use.
Q How does the software impact consumers?
As a foundational technology, blockchain’s impact to consumers are mostly indirect and invisible. It is, in essence, a back-end database and batch processing system.
Implemented with other technologies, blockchain can deliver an enhanced user experience and value to the consumer, allowing them to view a product’s end-to-end journey—from the source to the point that it reaches the store shelves. This is especially valuable as consumers are increasingly demanding to be informed of the overall impact of their buying decisions.
Moving further upstream of the supply chain, blockchain can provide an avenue for other players along the value chain to showcase their adoption of sustainable best practices to consumers. From farmers who want to showcase organic, non-GMO ingredients and raw materials and to highlight sustainable farming practices; to manufacturers to enable recall and root out counterfeit and fake goods; to retailers for marketing and better product outreach with improved analytics, these players can be incentivised to adopt these practices on an open and transparent platform enabled by blockchain technology.
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