Blockchain in operations for food service distribution: steps before implementation

• DOI: https://doi.org/10.1108/IJLM-07-2020-0299
• Published date: 24 February 2021
• Date: 24 February 2021
• Pages: 995-1029
• Subject Matter: Management science & operations,Logistics
• Author: Mauro Vivaldini

Blockchain in operations for

food service distribution:

steps before implementation

Mauro Vivaldini

PPGA, Universidade Paulista, S~

ao Paulo, Brazil

Abstract

Purpose –Considering the importance of a safe food chain for consumers and the advent of blockchain

technology (BT), this research studies a food service (FS) distributor. The research aims to understand the

implications related to the functional processes of distribution in FS in which it would be possible to use

blockchain to achieve agility, transparency of information and improvements in food safety.

Design/methodology/approach –Firstly, theory regarding blockchain technology in the supply chain (BT-

SC) and FS was analyzed to contextualize the theme conceptually. A single case study including 11 supply

chain companies was applied in a BT implementation study in an FS distributor.

Findings –Investment in infrastructure is often identified as a barrier to adoption of BT-SC. This was,

however, not found in this case. Furthermore, the validation of users was only necessary for those parties

directly participating in the process or information input. Finally, findings differentiate between qualifying

criteria and operational processes when considering BT projects in FS.

Research limitations/implications –The findings are restricted to this single case that provided an in-

depth understanding of the topic. Statistical generalization is not possible at this stage of the research.

Practical implications –The study is a practical example and can provide several insights to anyone

looking to implement BT in their SC.

Social implications –The social importance of the study lies in the importance of FS in the food sector, and

by presenting ways that contribute to mitigating risks to consumers.

Originality/value –Real-lifecases of applicationof BT-SC illustrate its functionalitiesin operationalprocesses.

Keywords Food safety, Distribution, Food service, Blockchain, Digital supply chain, Disruptive technology

Paper type Case study

Introduction

New disruptive technologies in the market, such as the Internet of things (IoT) and blockchain

technology (BT), can contribute to solutions for the supply chain (SC) and different logistical

processes, allowing for efficiency and transparency. It is already possible to track the location

and temperature of products in real-time, providing transparency for the entire SC

(Pournader et al., 2020;Zelbst et al., 2019). BT, according to Bumblauskas et al. (2020), usually

connects to other technologies, such as remote sensing and artificial intelligence (AI), to

collect and analyze data. In this specific case, customized sensor networks can track the

location, time, temperature and humidity levels by sending the data to BT. Within BT,

information is digitally linked to each product, creating a record to prove provenance,

conformity, authenticity and quality.

BT is still evolving, but it is already possible to state that applications related to the SC can

contribute to the extended visibility and traceability of products, and it can also act as a tool

applicable to the different inherent steps and processes of this area (Calatayud et al., 2019;

Gligor et al., 2019;Morkunas et al., 2019;Nimmy et al., 2019). Traceability has strong potential

for the food area (Dobrovnik et al., 2018;Francisco and Swanson, 2018;George et al., 2019;

Leon, 2017;Morkunas et al., 2019), probably because it requires a reliable means of

monitoring and product provenance.

Blockchain for

food service

distribution

995

Funding: This study was funded by Conselho Nacional de Desenvolvimento Cient

ıfico e Tecnol

ogico -

CNPq, Brazil (n. 420464/2018-2).

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0957-4093.htm

Received 5 July 2020

Revised 18 December 2020

5 February 2021

8 February 2021

Accepted 10 February 2021

International Journal of Logistics

Management, The

Vol. 32 No. 3, 2021

pp. 995-1029

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-07-2020-0299

Considering the importance of a safe food chain for consumers and the advent of BT as an

instrument capable of contributing to improving this relationship, this research analyzes the

possibilities of applying this technology in a company that acts as a distributor agent and

supplies to a group of food service (FS) companies. The intention is to evaluate the possible

applications of BT to improve operations in generating reliability in the relationship with

suppliers and customers, providing agility and transparency in information and contributing

to the food safety of the SC. From this perspective, the central focus of research is to

understand the implications that involve functional processes and where it would be possible

to use this technology. Therefore, the research questions that this paper addresses are:

RQ1. In which operational processes in FS distribution can BT be applied?

RQ2. What would be the effects of this application on reliability and food safety?

Analyzing, organizing and abstracting knowledge about blockchain technology in the

supply chain (BT-SC) through a practical case creates the opportunity to better understand

the theme, providing insights both for managers and researchers. The need to expand studies

on the possible applications of BT-SC through the presentation of real cases has been

expressed in many BT studies (Calatayud et al., 2019;Colicchia et al., 2019;Dobrovnick et al.,

2018;Francisco and Swanson, 2018;George et al., 2019,Hoek, 2019;Montecchi et al., 2019;

Morkunas et al., 2019;Nimmy et al., 2019;Prasad et al., 2018;Wong et al., 2020).

Theoretical background

Regarding what should be examined in field research and the information collected, the

following theoretical discussion aims to support the study. In this context, this section on BT-

SC emphasizes the role of platforms that support implementation in this area (George et al.,

2019;Treiblmaier, 2018;Vivaldini, 2020;Wang et al., 2019). It also discusses smart contracts

as an instrument of agreement between parties and validates their application (De Giovanni,

2020;Dolgui et al., 2020). Finally, it addresses economic viability in terms of the necessary

investments (Longo et al., 2020;Stranieri et al., 2021;Wong et al., 2020b). Specifically, BT in

the food industry is addressed, based on the fact that the factors capable of justifying its

adoption are directly related to the SC’s ability to ensure traceability, and in terms of to what

extent this will be reflected in food safety (Duan et al., 2020;Hao et al., 2020;Ling and

Wahab, 2020).

Blockchain technology in the supply chain (BT-SC)

Most of the time, participants in the SC cannot reliably verify and validate the origin of

products and services, research is often tricky and any faulty or even illicit activities that

have occurred throughout the SC are often not addressed. Such cases that may have occurred

compromise the reputation of organizations, and perhaps, therefore, the primary aim of BT

adoption relates to traceability (Calatayud et al., 2019;Francisco and Swanson, 2018;Wang

et al., 2019). Through an integrated BT-SC system sharing information, the agents involved

can obtain full tracking of items and proof of authenticity of products, processes and

documents (George et al., 2019;Tribis et al., 2018;Yoo and Won, 2018).

In logistics operations, the combination of the IoT and BT has generated many

opportunities (Bucovetchi, 2018;George et al., 2019;Treiblmaier, 2018), such as enabling

vehicles or containers to automatically communicate their current status and apply smart

locks, allowing, among other things, the temperatures of the products transported to be

viewed (Rajamanickam, 2019).

BT requires data communication both in the downstream and upstream flow, and in this

case, interoperability between agents is limited, with few interfaces built for enterprise

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resource planning (ERP) systems and other applications usually used in SC (e.g. warehouse

management systems [WMSs] and transportation management systems (TMSs)]. The

solution to these issues requires agreement between technical standards agents and software

vendors to create interfaces (Zalan, 2018).

Blockchain platforms. The SC will not have a single blockchain-based system, but multiple

private blockchains supported by solutions on interactive platforms (George et al., 2019;

Risius and Spohrer, 2017;Treiblmaier, 2018;Vivaldini, 2020;Wang et al., 2019). Despite high

expectations regarding the benefits of this technology, there is still little information about

where and how it is applicable and where it can provide favorable results (Calatayud et al.,

2019;Dobrovnik et al., 2018;Francisco and Swanson, 2018), as well as which applications may

be integrated into its platforms (Kshetri, 2019;Liao and Wang, 2018;Min, 2019). The solutions

proposed by BT platforms, according to Insolar (https://insolar.io/) and Oracle (www.oracle.

com/cloud/blockchain/) (both accessed November 20, 2020), integrate with the different

applications and ERPs that companies have, in a scalable and economical way, and can be

used to build a fast, easy and effective solution for exchanging data between companies with

security, integrity and total control over information, products and assets.

The use of BT-based platforms has been addressed in several studies (Gonczol et al., 2020;

Hew et al., 2020;Helo and Shamsuzzoha, 2020;Vivaldini, 2020), with some addressing the

advantages (i.e. finding a ready-made solution) and disadvantages (i.e. restrictions related to

specific needs). These platforms can be accessed via mobile applications or a computer

connected to an ERP to points of sale and suppliers, creating a standard interface with

permissions and targeted access. In addition to offering modularity whereby the customer

can choose the relevant applications, SC actors can record harvest or production and

marketing information, transfer product ownership, update data and link existing software

and applications to BT (Keohler and Pizzol, 2020).

Considering the importance of auditing and the integrity of BT food chains, the platforms’

functionalities must be compared and questioned according to the different characteristics of

each one (Shahid et al., 2020), as well as assessing the main applications needed for

transparency, such as data-acquisition technologies, IoT, data management and Big Data

analysis solutions, smart contracts, tokens and mobile applications capable of guaranteeing

and certifying the origin of food ingredients (Tsolakis et al., 2020). According to the

company’s configuration and modulation, SC actors can access information about each

product in seconds, register or search for information, transfer ownership of assets, update

assets and integrate existing software with the BT platform. The platform’s versatility can be

a success factor in BT implementation in food supply (Keohler and Pizzol, 2020).

Smart contracts. In logistics operations, smart contracts control the flow of transactions at

each stage. Warehouses can optimize capacity and shipments in real time, and carriers can

provide cargo status and visibility to participants (Dolgui et al., 2020;Zhang, 2019). The

application of a smart contract, converted into codes, stored and replicated in the computer

system and supervised by the blockchain network, becomes an essential ally in risk

mitigation (Min, 2019). It can automate quality control criteria (Kayikci et al., 2020) and

prevent the recording of errors.

The smart contract in the food context should be based on the requirements of the

operation. It authorizes the movement of products in the SC and rejects any activities that do

not meet the defined criteria. This functionality can prevent food quality requirements from

being compromised and improve efficiency in validating information in the SC (Sternberg

et al., 2020;Tan et al., 2020). Studies have proposed different smart contracts depending on the

type of activity (Casino et al., 2020;Shahid et al., 2020). Casino et al. (2020) suggested

applications related to raw materials and the history in the production process, distribution

and location; the ownership of the product and its interactions; and the enabling of tasks and

accesses. Some business rules are implemented via BT, allowing participants to track the

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food service

distribution

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