One day you are eating a juicy pork burrito and the next you are turned over with stomach cramps and bloody diarrhea . You have E. Coli. E. Coli can kill you.
In January 2016, the Center for Disease Control reported that at least 55 people were infected with an outbreak of E. Coli caused by food at Chipotle Mexican Grill . After a thorough investigation of Chipotle’s supply chain, the U.S. Food and Drug Administration was not able to identify the origin of the outbreak . Chipotle closed 43 restaurants in Washington and Oregon  and their stock tumbled over 44% .
Food supply is no easy business and the risk of a foodborne disease outbreak weigh heavy on any food supplier. Walmart, which runs a complex network of farmers, brokers, distributors, processors, retailers, and regulators, to deliver food to over 290 million consumers per week, does not want to become the next Chipotle . Walmart’s management team is experimenting with Blockchain technology to bring transparency to the flow of the food in their supply chain and prevent a foodborne illness emergency .
Blockchain, the open source technology underpinning Bitcoin, is a distributed ledger and can be used to augment a supply chain’s database management system. Blockchain provides a supply chain with three core value propositions: decentralization, verification, and immutability .
Together these three value propositions bring reliability and transparency to the supply chain in a way that has never been available before. Blockchain creates a shared forum for all supply chain members to see the flow of inventory as soon as the inventory moves from one location in the chain to another.
In 2016, Walmart partnered with IBM to implement Blockchain in a test pilot. Before starting the pilot, Walmart executives took a box of Mangoes from a store location and asked their team to find where the mangoes came from. It took the team six days, 18 hours and 26 minutes to find the Mangoes’ origin . There was a lot of room for improvement.
Walmart implemented Blockchain by scanning each palette of Mangoes as they move through the supply chain: from farmer to processor to distributor, and eventually, to the retail location. At each checkpoint the palettes were recorded in the Blockchain. IBM built the cloud infrastructure and front end application to monitor the Mangoes as they moved through the chain.
After successfully implementing, Walmart executives took a box of Mangoes to their latest shareholder meeting. They demonstrated finding the origin of the Mangoes in two seconds .
Using Blockchain technology, Walmart management created an immediate view into the flow of their food supply. Regulators can now use this data to quickly identify the origins of food outbreaks . Without Blockchain technology it took the team over six days. With Blockchain it took two seconds.This is the difference between a Chipotle level emergency and completely containing a disease outbreak.
Using Blockchain to facilitate origin tracking is only the first in a long list of steps Walmart management should consider using in the next few years. Researchers from Kühne Logistics University identified four additional benefits of Blockchain . They surveyed supply chain professionals on the perceived benefit and their likelihood of adopting Blockchain in their supply chain systems.
The results show general optimism, but also a trend in the industry to be cautious in adopting a new technology . Walmart should buck this trend by adopting Blockchain in other areas of their supply chain, including tracking non-food products.
In the next ten years Walmart can become the industry leader in implementing Blockchain throughout the rest of their supply chain. The transparency will lead to supply chain optimizations, improved supplier relationships, and a reduction in inventory waste .
Walmart will save consumers lives by using Blockchain to monitor their food supply chain. If an outbreak occurs, management can quickly identify the origin of the outbreak and shut down that part of the chain. The technology is game changer for Walmart and as they continue to invest in other areas of the supply chain they will deliver more value to their customers.
A few open questions remain. Where should Walmart prioritize experimenting with Blockchain next? How can Walmart create a competitive advantage with their Blockchain implementation?
- Centers for Disease Control and Prevention, “General Information on E. Coli” https://www.cdc.gov/ecoli/general/index.html, accessed November 2017.
- U.S. Food and Drug Administration, “FDA Investigates Multistate Outbreak of E. coli O26 Infections Linked to Chipotle Mexican Grill Restaurants” https://www.fda.gov/food/recallsoutbreaksemergencies/outbreaks/ucm470410.htm, accessed November 2017.
- Authors of Wall Street Journal, “Chipotle Mexican Grill, Inc. CMG”, http://quotes.wsj.com/CMG, accessed November 2017.
- Hackett, Robert, “Walmart and 9 Food Giants Team up on IBM Blockchain Plans”, http://fortune.com/2017/08/22/walmart-blockchain-ibm-food-nestle-unilever-tyson-dole/, accessed 2017.
- Hackett, Robert, “Why Big Business Is Racing to Build Blockchains”, http://fortune.com/2017/08/22/bitcoin-ethereum-blockchain-cryptocurrency/, accessed November 2017.
- Hackius, Niels & Petersen, Moritz. Blockchain in Logistics and Supply Chain: Trick or Treat? In Hamburg International Conference of Logistics, At Hamburg, Germany, Volume: Digitalization in Supply Chain Management and Logistics October 2017.
- Hackett, Robert, “Walmart and IBM Are Partnering to Put Chinese Pork on a Blockchain”, http://fortune.com/2016/10/19/walmart-ibm-blockchain-china-pork/, accessed November 2017.
- Kharif, Olga, “Wal-Mart Tackles Food Safety With Trial of Blockchain”, https://www.bloomberg.com/news/articles/2016-11-18/wal-mart-tackles-food-safety-with-test-of-blockchain-technology, accessed November 2017.