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CHAPTER II

REVIEW OF RELATED LITERATURE

Introduction

This chapter covers the related literature regarding “Impact of Blockchain for

Supply Chain Management on Food Manufacturing Industry”. Pertinent documents

published on print and online were all gathered and presented in this section in order to

provide a theoretical background and complete presentation of significant thoughts on the

present study.

Specific Objectives

1. Present previous and current articles about the chosen topic of the study.

2. Identify the advantages of blockchain when applied to food manufacturing

industry.

3. Cite the challenges which companies might encounter when applied to food

manufacturing industry.

Body

2.1 Food Supply Chain

Food ecosystem is very multifaceted resulting to numerous segments that changes

from time – to – time in relation to the actual need of the consumer (Wognum, 2017).

Today, since people have various needs and they already have wide knowledge about the
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kind and type of food they eat, the demand for food quality, safety, and nutrition is

greatly increasing. However, in spite of the increasing demand for food, it is still

considered that food crisis is one of the problems of the society and it ranked seventh in

the recent survey on issues arising in the community in the 21 st century (WEF, 2018).

Furthermore, it is very evident that the global arena experiences intricacy of food

ecosystem due to various companies identified as suppliers of food (Christopher, 2018).

Reports have shown that part of the food crisis is the fast growing rate of

consumers anguishing from foodborne diseases and this health issue became an

international outbreak in various countries (WHO, 2019). Dispute between the producer

and consumer occur due to problems on food manufacturing, distribution and

consumption. This dispute mainly affects the food supply giving a negative implication to

various segments of food ecosystem.

According to Folkerts (2017), food supply pertains to network of groups working

together starting from food production down to food distribution and consumption. These

networks share common goals to set a minimum standard in choosing the right quality of

food, how the food will be given a corresponding price and how these goods will be

reached out to its specific consumer. However, food manufacturers are weak enough and

require a more constant and firm concentration over management process to produce the

right kind and quality of food for the market. These manufacturers find difficulty and

encountering several issues in food production and food storage. Because of these

problems, food supply chain is greatly affected (Chang, 2018).

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Moreover, food varies its normal attribute in value all the time and ensuring the

safety and food security is a great challenge. The external environment such as the

weather and the process of transportation affect the value and freshness of the food

product. Food manufacturers address this issue by offering processed food with a longer

life. For this instance, the issue now is no longer the external environment but the

nutritional value of the food due to its artificial way of preparation (WHO, 2020).

Food products malfunction also affects the food supply chain. This includes

different foodborne diseases, food poison, poor quality and poor class of food, fake

products, ingredients and mislabeling. Thus, food supply chain requires competent and

competitive process to combat this product malfunction.

2.2 Blockchain
The idea on blockchain when it relates to the food supply chain gives a beneficial

effect in resolving issues on food malfunction and food supply. As food companies apply

the use of blockchain in their respective processes and procedures, they found out that

this practice is very productive and advantageous. Blockchain technology provides

accurate and precise recordings of business transactions from manufacturing down to

distribution and consumption of the food product. Blockchain creates loyalty and trust

between the food producer and food consumer (Kamble, 2019). The idea behind

blockchain covers core features namely security, immutability, smart contract,

decentralization.

The first beneficial feature of blockchain is called decentralization.

Decentralization pertains to the clear transaction between the manufacturer and consumer
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in a comprehensible and precise transaction. In this feature, every user of the system is

given standard authority to access the system. Each user assists each other in

authenticating their transactions. With decentralization, the recordos are maintained intact

and all the users are enable to view the history of every transaction transparently even the

very old one. It will be very easy for the company to review all the transactions because

every access has corresponding footprints to show (Quieroz, 2019). Document keepers of

companies using this feature can easily retrieve data entries anytime as needed (Yiannas,

2018).

The second beneficial feature of blockchain is immutability. With this feature,

companies are confident that all information about their products or services most

especially the processes and procedures are kept safely and securely. Immutability

enables other users to check each outputs and data entry being stored in the system

(Reyna, 2019). Every user hasto describe their data entry to endorse a business

communication before storing and keeping the record on file. Immutability ensures that

the system is strong enough to handle the information in a protected manner resulting to

diminish the possibility of hacking. Hacking and stealing of information will be avoided

since every single data entry will be treated of high confidentiality of each users and it

will pass through several evaluations and assessments before accessing each information.

The third beneficial effect is security. Security pertains to the evaluation of each

data entry to ensure that every information to be stored in the system is unique and

genuine. With security, old information cannot be easily accessed and changed w ithout

prior authorization of other users. This feature will avoid any human intrusion on record
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access and keeping (Zhao, 2017). Companies can be easily trace their food supply

process and procedure in a clear and precise manner from manufacturing down to food

distribution and consumption (Verhoeven, 2018). The main goal of security feature of

blockchain is to protect not only the food producer but also the food consumer in a

manner that consumers are given the right assurance about the appropriate kind and

quality of the food that they will consume regardless of their perception and status of

living (Petersen, 2018).

Smart contract is one more significant feature of blockchain. It is a modern and

high-tech feature that gives a company a clear view of what a product or service is all

about, how the product will be produced, how the product will be useful both to the

producer and to the consumer and what will be the implication upon production and

consumption of this product (Reyna, 2019). Moreover, smart contact makes the food

transaction fast and reliable (Pournader, 2019). Because of this feature, both the

manufacturer and consumer can save time and effort in selling, purchasing and handling

of the food product (Zhao, 2019).

Traceability pertains to tracking and tracing of all company’s pertinent records of

its processes and procedures (Tian, 2017), which is presented into four kinds: develop

food manufacturing and distribution effectively; meeting the right expectation of all

stakeholders; meeting all the company requirements; and, conserving assets. Good

traceability provides appropriate information to the company and prevents any probable

quality risks (Tian, 2017). The ability to trace products back and onward helps the

company to organize and manage its system securely and safely (Golan, 2018). If
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consumers know that companies are reliable enough about the products and services that

they are offering, it builds trust and loyalty therefore promotes business success (Tian,

2017). Thus traceability system is very beneficial and it will always offer affirmative

impact to all networks of the business venture regardless of its nature and kind (Dabbene,

2018).

Summary

Blockchain has various advantages that greatly help the company and the food

ecosystem as a whole. Blockchain is found to be advantageous since it give precision and

transparency to both to the food manufacturer and consumer, develop information

authenticity and makes all the products and services legitimate and authentic.

Furthermore, companies will find their process and procedure more efficient and

effective because they have the ability to create and store data entry appropriately, safely

and securely. It will be very easy for them to access, assess and evaluate every

information and transaction whether it is old or new because blockchain will give them

the ability to trace all the data entry back and onward. For digital and information

technology experts, complicated software application is an issue, which can root a

business communication problem and might affect the process flow of the business.

References
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Chang, Y.S. (2018). Traceability in a food supply chain: Safety and quality perspective.
Food Control. 39, 172–184

Christopher, M. (2018). Approaches to managing global sourcing risk. Supply Chain

Management. Int. J., 16, 67–81

Dabbene, F. (2018). Traceability issues in food supply chain management: A review.

Biosyst. Eng., 120, 65–80

Folkerts, H. (2017). Challenges in international food supply chains: Vertical co-

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Golan, E.(2018). Food traceability: one ingredient in a safe and efficient food supply.
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Queiroz, M.(2019). Blockchain and supply chain management integration a systematic

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World Economic Forum (WEF). (2018). Global Risks 2018: Ninth Edition. 2018.
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