{"id":21180,"date":"2017-11-10T14:34:25","date_gmt":"2017-11-10T19:34:25","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/walmart-from-supply-chain-to-blockchain\/"},"modified":"2017-11-10T14:34:25","modified_gmt":"2017-11-10T19:34:25","slug":"walmart-from-supply-chain-to-blockchain","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/walmart-from-supply-chain-to-blockchain\/","title":{"rendered":"Walmart: From Supply Chain to Blockchain"},"content":{"rendered":"

If you wanted to find out where a package of sliced mangoes in a grocery store came from, how long would it take? Frank Yiannas, vice president of food safety at Walmart, asked this very question. Despite Walmart\u2019s reputation for supply chain excellence, it took seven days for Yiannas to get an answer. [1] With incidents such as the E. coli outbreak at Chipotle or the salmonella outbreak in Maradol-brand papayas, companies cannot afford to wait a week to find out the root cause of an issue. [2][3] Reacting in hours versus days can save not only lives, but millions of dollars for the affected company. Unfortunately, the examples above are not isolated incidents \u2013 every year 600 million people fall ill due to eating contaminated food, and foodborne illnesses cost the US an estimated $55 – $93 billion in medical costs and lost productivity. [4]<\/p>\n

Enter blockchain. Companies are realizing that blockchain can be applied much more broadly than just to cryptocurrencies. Blockchain functions through a distributed ledger where independently owned entities follow a cryptographic protocol to push updates to a shared ledger that are validated in real-time. [5] Since the common ledger functions as a single source of truth, it can serve as an audit trail across a product\u2019s lifecycle and establish trust between parties in the chain. Further, the centralized ledger breaks down barriers in the traditional, siloed model of data exchange, enabling more dynamic chains that require lower inventory levels and have higher service levels. [6]<\/p>\n

Walmart has partnered with IBM and Tsinghua University to run pilots using blockchain and IoT sensors that trace pork in China and Mexican mangoes shipped to the United States. [7] In the tests, shipments are tagged with numeric identifiers at the beginning of their journey, and signed and logged at each checkpoint. Across a shipment\u2019s journey, this pilot allows Walmart to track farm origin, batch number, factory and processing data, expiration dates, storage temperatures, and shipping details. [8] By entering a shipment\u2019s six-digit \u201clot\u201d number in a web portal, an employee at Walmart can pull all this information within two seconds. [1] For Walmart\u2019s supply chain, this technology provides not only traceability \u2013 where the product is from and what path it followed, but also transparency \u2013 how the food was produced. [8]<\/p>\n

\"\"<\/a>
Blockchain enables tracking food across the supply chain [8]<\/figcaption><\/figure>While Walmart has been able to prove that blockchain technology can work for two pilots, its challenge in the longer term is to scale the platform. In the meantime, Walmart is focusing on enhancing existing compliance processes to provide incremental safeguards. For example, Walmart launched the Supply Chain Transparency project to monitor which products come from which suppliers, as well as whether these suppliers are abiding by required regulatory and company requirements. [9]<\/p>\n

Given Walmart\u2019s important position in the global food supply chain, I would recommend that management pursue blockchain implementation more aggressively. For example, Walmart may offer financial incentives for suppliers such as preferential payment terms to adopt these changes to their own production processes. Additionally, Walmart could complement this program with a marketing push where these \u201cpreferred suppliers\u201d that enroll in the program are highlighted, both through in-store displays and paid advertising. Besides improving supplier relationships, this would attract additional consumers who find appeal in Walmart\u2019s sustainability and transparency.<\/p>\n

While early results from Walmart\u2019s pilot are promising, questions about implementation and feasibility of a broader rollout remain:<\/p>\n

    \n
  1. Given the inherent design of blockchain where a single centralized ledger is distributed across all players in a supply chain, how can Walmart ensure that privacy is maintained among competitors?<\/li>\n
  2. What burden does a broader blockchain implementation place on stakeholders across the supply chain, and how can this barrier be overcome by end retailers such as Walmart?<\/li>\n<\/ol>\n

    (Word Count: 788)<\/p>\n

    [1]\u00a0Robert Hackett, \u201cWhy Big Business Is Racing to Build Blockchains\u201d, Fortune, http:\/\/fortune.com\/2017\/08\/22\/bitcoin-ethereum-blockchain-cryptocurrency\/<\/a>, accessed November 2017.<\/p>\n

    [2]\u00a0\u201cFDA Investigates Multistate Outbreak of E. coli O26 Infections Linked to Chipotle Mexican Grill Restaurants\u201d, U.S. Food and Drug Administration, https:\/\/www.fda.gov\/food\/recallsoutbreaksemergencies\/outbreaks\/ucm470410.htm<\/a>, accessed November 2017.<\/p>\n

    [3]\u00a0\u201cMultistate Outbreak of Salmonella<\/em> Infections Linked to Imported Maradol Papayas\u201d, Centers for Disease Control and Prevention, https:\/\/www.cdc.gov\/salmonella\/kiambu-07-17\/index.html<\/a>, accessed November 2017.<\/p>\n

    [4]\u00a0David Galvin, \u201cIBM and Walmart: Blockchain for Food Safety\u201d, https:\/\/www-01.ibm.com\/events\/wwe\/grp\/grp308.nsf\/vLookupPDFs\/6%20Using%20Blockchain%20for%20Food%20Safe%202\/$file\/6%20Using%20Blockchain%20for%20Food%20Safe%202.pdf<\/a>, accessed November 2017.<\/p>\n

    [5]\u00a0Michael J. Casey and Pindar Wong, \u201cGlobal Supply Chains Are About to Get Better, Thanks to Blockchain\u201d, 性视界 Business Review, https:\/\/hbr.org\/2017\/03\/global-supply-chains-are-about-to-get-better-thanks-to-blockchain<\/a>, accessed November 2017.<\/p>\n

    [6]\u00a0Ranjit Norani, \u201cHow Blockchains Can Revolutionize the Supply Chain\u201d, Information Management, https:\/\/www.information-management.com\/opinion\/how-blockchains-can-revolutionize-the-supply-chain<\/a>, accessed November 2017.<\/p>\n

    [7]\u00a0Olga Kharif, \u201cWal-Mart Tackles Food Safety with Trial of Blockchain\u201d, Bloomberg, https:\/\/www.bloomberg.com\/news\/articles\/2016-11-18\/wal-mart-tackles-food-safety-with-test-of-blockchain-technology<\/a>, accessed November 2017.<\/p>\n

    [8]\u00a0Carlo Gutierrez, \u201cBlockchain at Walmart: Tracking Food from Farm to Fork\u201d, Altoros, https:\/\/www.altoros.com\/blog\/blockchain-at-walmart-tracking-food-from-farm-to-fork\/<\/a>, accessed November 2017.<\/p>\n

    [9]\u00a0Walmart 2017 Global Responsibility Report<\/em>.<\/p>\n","protected":false},"excerpt":{"rendered":"

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