As food supply chains become more fragmented and critical to retailers, Walmart, in collaboration with IBM, is testing the effectiveness of blockchain on enhancing the trackability and safety of its products. Even if first results are promising, the company still needs to prove at a larger scale the benefits of a technology initially developed to create Bitcoin, the first digital currency.
Walmart’s food supply chain is an evolving, complex and global system. The big American retailer currently sources food products from 29 countries in 4 continents , including dairy products from Bangladesh, flowers from Kenya and seafood from Chile. Walmart’s need to monitor and understand its food supply chain is larger than ever. In the recent years, federal regulations have become stricter  and customer demands for supply chain transparency are on the rise. The World Health Organization estimates that 1 in 10 people fall ill every year in the world and 420,000 die from eating contaminated food . In a highly competitive sector such as consumer retail, food supply chain risk mitigation is key to avoiding safety issues that could result in irreparable damage to customers, and therefore to Walmart’s financial statements and brand reputation. Consequently, Walmart has launched the “supply chain transparency and quality program” as part of its “enhancing sustainability” initiative  with the objective of “promoting transparency, food safety and animal welfare in products for customers”.
Blockchain technology, if successfully applied, offers Walmart the opportunity to be more sustainable by improving product trackability and information sharing along its food supply chain. Potential information to be stored on the blocks includes data related to product origin, factory details, expiration dates, customer and border controls, shipping, etc. Another important benefit of blockchain is that fraud and errors become much less likely to occur because information stored in the blocks cannot be modified without associated modifications to all subsequent blocks, which would require the approval of the rest of the network.
Aware of the advantages that blockchain might bring to its objective of enhancing sustainability, Walmart has already run two tests in partnership with IBM . The first test consisted of tracking Chinese pork and the second involved tracking Mexican mangoes. Results are encouraging. Frank Yiannas, Walmart’s Vice-president of food safety, told Fortune magazine  that when using the company’s traditional tracking system, it took his team almost seven days to find out the origin of a box of mangoes he had picked up from a shop, as compared to two seconds when the team used blockchain technology.
Given the success of these first trials, Walmart and IBM have encouraged other companies to join them in testing further the applicability of blockchain in food supply management. In August 22nd, 2017, IBM announced a major blockchain collaboration including Walmart and nine other food supply world leaders  to address food safety worldwide.
In the future, Walmart expects to adopt blockchain technology throughout its entire food supply chain. To do so, Walmart’s management should focus on two sets of objectives:
- In the short term, the company needs to demonstrate the applicability of blockchain in the consumer retail industry, and identify and asses all potential risks associated with this technology.
- In the medium term, Walmart should build internal capabilities to control the blockchain technology without depending on external companies such as IBM. The risk of being dependent on technology providers is too big for Walmart, especially considering that one of its main prospective competitors in the retail landscape is Amazon, a technological company. To develop internal capabilities means to build the necessary infrastructure and to attract and train tech-savvy human talent. Another key aspect Walmart should focus on in the medium term, and probably the most challenging, is to convince key supply chain stakeholders (i.e. farmers, distributors, importers, third-party logistics, restaurants, etc.) to adopt this technology. These stakeholders should be approached with a clear value proposition because their buy-in is critical to successfully deploying blockchain at a system-wide level.
To conclude, blockchain technology has the potential to completely disrupt Walmart’s food supply by increasing product trackability and information sharing safety. However, the company is still at very early stage of blockchain implementation and many challenges lie before a full roll out. How the management approaches the next two years will determine if blockchain will have the expected impact in Walmart’s supply chain transparency and quality. In this sense, two main questions arise in the medium term: 1) Is blockchain technology mature enough to be applied to a process as sensitive as the food supply chain? 2) How are all the stakeholders along Walmart’s supply chain going to react to the introduction of this new technology?
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