{"id":24457,"date":"2017-11-15T21:55:50","date_gmt":"2017-11-16T02:55:50","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/blockchain-technology-the-holy-grail-of-food-supply-chain-management-for-walmart\/"},"modified":"2017-11-15T21:56:08","modified_gmt":"2017-11-16T02:56:08","slug":"blockchain-technology-walmarts-holy-grail-of-food-supply-chain-management","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/blockchain-technology-walmarts-holy-grail-of-food-supply-chain-management\/","title":{"rendered":"Blockchain Technology: Walmart\u2019s Holy Grail of Food Supply Chain Management?"},"content":{"rendered":"

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.<\/p>\n

Walmart\u2019s food supply chain is an evolving, complex and global system. The big American retailer currently sources food products from 29 countries in 4 continents [1], including dairy products from Bangladesh, flowers from Kenya and seafood from Chile. Walmart\u2019s need to monitor and understand its food supply chain is larger than ever. In the recent years, federal regulations have become stricter [2] 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 [3]. 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\u2019s financial statements and brand reputation. Consequently, Walmart has launched the \u201csupply chain transparency and quality program\u201d as part of its \u201cenhancing sustainability\u201d initiative [4] with the objective of \u201cpromoting transparency, food safety and animal welfare in products for customers\u201d.<\/span><\/p>\n

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.<\/span><\/p>\n

Aware of the advantages that blockchain might bring to its objective of enhancing sustainability, Walmart has already run two tests in partnership with IBM [5]. The first test consisted of tracking Chinese pork and the second involved tracking Mexican mangoes. Results are encouraging. Frank Yiannas, Walmart\u2019s Vice-president of food safety, told Fortune magazine [6] that when using the company\u2019s 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.<\/span><\/p>\n

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 22<\/span>nd<\/span>, 2017, IBM announced a major blockchain collaboration including Walmart and nine other food supply world leaders [7] to address food safety worldwide.<\/span><\/p>\n

In the future, Walmart expects to adopt blockchain technology throughout its entire food supply chain. To do so, Walmart\u2019s management should focus on two sets of objectives:<\/span><\/p>\n