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The Blockchain-based Supply Chain Adoption Tipping Point?

Blockchain has long been touted as having transformational potential. Yet, the commercial adoption has been slow. As with any cutting-edge technology, commercial adoption usually requires some tipping point. For adoption of blockchain-based supply chain, the tipping point may just have occurred.

According to a recent article, starting in September 2019, Walmart and its Sam’s Club division will require suppliers of fresh, leafy greens to implement real-time, end-to-end traceability of products back to the farm using a digital ledger. They plan similar mandates for other fresh fruit and vegetable providers within the next year. This will apparently require more than 100 companies to use this blockchain-solution.

The use of blockchain to increase the efficiency and reduce costs in various supply chains has long been recognized. The applicability to the food supply chain has some additional advantages. The advantages include:

  • the ability to track products to their original source (traceability)
  • remove middlemen and reduce manual steps (efficiency)
  • improve food safety by tracking and recording temperature of transport and preventing substitutions or tampering (safety)
  • more quickly address contamination or other health issues  (health)
  • more efficiently order food based on user demand and supply chain availability to avoid waste or shortages (inventory management)

Additionally, blockchain-based supply chains can help comply with various legal requirements. For example, the Food Safety Modernization Act (FSMA) was implemented to transform the nation’s food safety system by shifting the focus from responding to foodborne illness to preventing it. FSMA requires various steps including supply chain risk management procedures and traceability, foreign supplier verification, ensuring and documenting appropriate temperature controls during shipment, and much more. Blockchain-based supply chain technology is ideal for managing these tasks.

The innovations in this space are rapidly increasing. Competition among startups, major food retailers and IT behemoths is also increasing. As often is the case when this market dynamic exists, we are seeing an increase in the number of patents being filed in this space. The following are a few examples of supply chain related patents relevant to the food industry.

System and methods to ensure asset and supply chain integrity PCT/US16/46446
Food-logistics supply-chain model CN 201310335802
Method and apparatus for managing and providing provenance of product using blockchain US20170262862
Method for tracing food products EP1489537
Method for monitoring origin of a liquid food, fruit juice or vegetable juice preparation US20120066098
Tamper evident point of containment, inventory and accountability system and method WO2012019201

As this competition heats up, it is likely that patent filings will continue to increase. For more information on patenting blockchain technology, see these papers on drafting Patent Strategies for Cryptocurrencies and Blockchain Technology and Drafting Effective Blockchain Patents and listen to Jim Gatto on Episode 3: “Implementing Blockchain Technology to Improve Operations,” on Sheppard Mullin’s new Nota Bene podcast.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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About this Author

James Mattinson Blockchain Technology and Digital Currency Lawyer Sheppard Mullin Washington DC
Partner

Jim Gatto is a partner in the Intellectual Property Practice Group in the firm's Washington, D.C. office. He is also Co-Team Leader of the firm's Digital Media Industry and Social Media and Games Industry Teams, Blockchain Technology and Digital Currency team, and Team Leader of the firm's Open Source Team. 

Areas of Practice

Mr. Gatto leverages his unique combination of nearly 30 years of IP experience, business insights and attention to technology trends to help companies develop IP and other legal...

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