Nestle is piloting a blockchain solution to track the supply chain of its coffee products from harvest to consumer sale. The multinational says the technology helps to improve coffee taste and accessibility as well as reassure consumers about the provenance of their purchase.
The pilot, which has been running for three months on the Amazon Web Services’ Hyperledger Fabric product, uses a blockchain record system that Nestle says is proving more valuable than the closed databases of traditional ERP systems.
Gartner predicts that by 2025, 20 per cent of the top 10 global grocers will be using blockchain for food safety and traceability, while Juniper says the technology could create $31 billion in food fraud savings globally by 2024.
Nestle claims its new system allows for and encourages the use of real time data in addition to the immutable records blockchain is best known for. The company, which typically sits in the middle of the coffee supply chain, says blockchain has benefits for all parties involved.
Armin Nehzat, Nestle’s digital technology manager, says the project is being driven by consumer demands for taste and sustainability, while for Nestle, as one of the world’s largest buyers and roasters, the blockchain system also helps guarantee coffee accessibility.
At the AWS re:invent conference in Las Vegas, Nehzat told media data in the coffee supply chain can generally be split into real time or “lag” data, the latter coming from partners like suppliers and manufacturers whose data is typically held in closed systems.
“What we can do [with a blockchain system] is we can onboard partners. By onboarding those partners we can get information faster, more accurate, whether it’s on the demand side or on the supply side,” Nehzat said.
“But ultimately, what it means is we can deliver a return a premium coffee to the consumer.”
The immutable nature of blockchain is valuable for ensuring the provenance of food products and the conditions in which they were harvested, an issue Nestle has been heavily criticised for several of its products’ supply chains.
Nehzat said Nestle’s application, which requires partners to verify each others’ inputs to the database, improves transparency and accountability in Nestle’s supply chain.
For example, farmers are often certified to produce a certain amount of coffee beans per year based on their plantation size.
“We know what that farm certified for, we work with the industry body to know what that certification is, as they release the stock we know what’s being used,” Nehzat said.
“And it’s not just we as Nestle but everybody in the supply chain can see that…So you know that that coffee is transitioning all the way through [the supply chain].”
According to Nehzat, the system only requires slight changes in administration tasks and does not place significant extra burden on coffee estates and their farmers which also now have the opportunity to better showcase their produce and position their products as premium ones.
“This is highlighting and amplifying their reach,” Nehzat told Which-50.
“But it’s also saying … if you want to be a chain of origin farmer these are the things that [Nestle] want. And these are the things that consumers also appreciate.”
The author traveled to AWS re:Invent as a guest of Amazon.