{"id":26237,"date":"2017-11-15T22:04:38","date_gmt":"2017-11-16T03:04:38","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/walmart-managing-food-safety-through-the-internet-of-things\/"},"modified":"2017-11-15T22:04:38","modified_gmt":"2017-11-16T03:04:38","slug":"walmart-managing-food-safety-through-the-internet-of-things","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/walmart-managing-food-safety-through-the-internet-of-things\/","title":{"rendered":"Walmart: Managing Food Safety through the Internet of Things"},"content":{"rendered":"

TOM Challenge: Digitization and Supply Chains<\/u><\/strong><\/p>\n

Walmart: Managing Food Safety through the Internet of Things (796 words)<\/strong><\/p>\n

In 2015, a food inspector in China found 100,000 tons of frozen smuggled meat, some of which was 40 years old.\u00a0 This follows the hospitalization of 300,000 children during a milk contamination scandal in 2008. [1]<\/a><\/p>\n

With 439 retail stores operating in 189 cities within China, how does the world\u2019s largest company leverage technology to improve supply chain and food safety?\u00a0 [2]<\/a>\u00a0 How does Walmart stay competitive with complex global supply chains that could negatively impact efficient delivery of fresh produce and other goods to its stores in China and globally?<\/p>\n

To answer these questions, Walmart relies on the internet of things (IoT).\u00a0 IoT aggregates data from sensors at each point in the supply chain: farm, transportation, warehousing, and marketplace (Exhibit 1) to inform decision-makers about a product\u2019s attributes: harvested and transit time, temperature, expiry, and other data points to provide more visibility. [3]<\/a><\/p>\n

Exhibit 1: IoT in the Food Supply Chain<\/em><\/p>\n

\"\"<\/a><\/p>\n

Why does Walmart care?\u00a0 IoT initiatives mitigate food safety issues by tracking inventory throughout the supply chain, providing customers a safe and consistent shopping experience.\u00a0 These are critical business priorities, as food safety issues are disruptive and lead to lost customer confidence that adversely affects brand and financial performance. [4]<\/a>\u00a0 Accordingly, Walmart has increased technology investments in response to these risks: a review of Walmart\u2019s job postings on LinkedIn confirms that the IoT division\u2019s hiring has increased, as Walmart seeks over 20 positions in San Bruno and Sunnyvale, California. [5]<\/a><\/p>\n

In the short term, Walmart has invested in IoT to improve food safety and traceability.\u00a0 In 2016, Walmart started collaborating with IBM and Tsinghua University to \u201cimprove the way food is tracked, transported, and sold\u201d in China as an alternative to paper and manual processes.\u00a0 Walmart installed IoT sensors with near field communication technology (NFC) allowing the company to track product and production attributes throughout the supply chain. [6]<\/a>\u00a0 Replicating this success, Walmart launched a similar 2017 initiative to track mangoes in the US. [7]<\/a><\/p>\n

In the medium term, Walmart plans to leverage IoT data to own the \u201clast mile\u201d of delivery: getting groceries directly into a customer\u2019s refrigerator.\u00a0 Through communication with other home sensors, Walmart can grant delivery drivers access to fill your refrigerator. [8]<\/a>\u00a0 Walmart has already identified key hurdles of grocery delivery including perishability, demand planning, expiry, product recalls, and automatic re-ordering, and filed for key patents.<\/p>\n

I believe Walmart has additional opportunities in the short term.\u00a0 Firstly, Walmart should acquire IoT companies focused on food supply chain.\u00a0 Rather than undergoing lengthy processes to build an IoT supply chain program, Walmart should leverage experience and infrastructure of existing IoT platforms to accelerate growth.\u00a0 Secondly, Walmart should implement its program to its entire operating footprint (instead of selected markets).\u00a0 From Indian sea cucumbers to American grains, Walmart should track sensor data from remote parts of its supply chain and integrate data with live store metrics for better decision-making.\u00a0 Rollout success would augment Walmart\u2019s ability to achieve \u201clast mile\u201d delivery.<\/p>\n

In the medium term, Walmart should set the standards for IoT supply chains.\u00a0 As Walmart develops, tests, and implements IoT, it can share best practices with the UN Food and Agriculture Organization (FAO).\u00a0 \u00a0This would maximize corporate social responsibility marketing efforts while confirming Walmart\u2019s status as the industry leader.\u00a0 The FAO initiatives would increase the Company\u2019s profile, contributing to a heightened ability to implement IoT initiatives in countries with restrictive telecommunications and telematics policies.<\/p>\n

Walmart needs to address several questions for the project to succeed.\u00a0 Despite relative market power, how receptive will suppliers and customers be to IoT rollout?\u00a0 Without buy-in from both, the project will likely fail.\u00a0 How will Walmart navigate regulations, given each country\u2019s different telecommunications and telematics policies?\u00a0 For instance, some countries require a costly registration process, making implementation cost-prohibitive.<\/p>\n

This is a promising area for Walmart.\u00a0 If Walmart can overcome implementation hurdles, supply chain IoT creates opportunities to improve the customer experience at every Walmart store worldwide while maintaining \u201ceveryday low prices.\u201d<\/p>\n

[1]<\/a> China Seizes Rotting 40-Year-Old Meat Destined for Dinner Tables. (n.d.). Retrieved November 12, 2017, from http:\/\/time.com\/3933411\/china-meat-40-years-food-safety-smuggled\/<\/p>\n

[2]<\/a> Wang, S. (n.d.). Walmart China Overview. Retrieved November 15, 2017, from http:\/\/www.wal-martchina.com\/english\/walmart\/<\/p>\n

[3]<\/a> Pigini, D., & Conti, M. (2017). NFC-Based Traceability in the Food Chain. Sustainability, 9(10), 4.<\/p>\n

[4]<\/sup><\/a> Walmart.\u00a0 (2017).\u00a0 2016 Annual Report of Walmart, pages 6, 17, 19.\u00a0 6, 17, 19.\u00a0 Retried from: http:\/\/d18rn0p25nwr6d.cloudfront.net\/CIK-0000104169\/c3013d40-212d-409e-bf30-5e5fd482fc2f.pdf<\/p>\n

[5]<\/a> LinkedIn 性视界 for Walmart IoT Jobs.\u00a0 Retrieved from: https:\/\/www.linkedin.com\/jobs\/search\/?keywords=walmart%20iot&locationId=us%3A0<\/p>\n

[6]<\/a> Pigini, D., & Conti, M. (2017). NFC-Based Traceability in the Food Chain. Sustainability, 9(10), 4.<\/p>\n

[7]<\/a> Marr, B. (2017, August 31). How Walmart Is Using Machine Learning AI, IoT And Big Data To Boost Retail Performance. Retrieved November 11, 2017, from https:\/\/www.forbes.com\/sites\/bernardmarr\/2017\/08\/29\/how-walmart-is-using-machine-learning-ai-iot-and-big-data-to-boost-retail-performance\/#c5f1e7d6cb10<\/p>\n

[8]<\/a> Walmart Wants to Send People Into Your House To Unpack Your Groceries Even When You’re Not Home. Retrieved from https:\/\/www.washingtonpost.com\/news\/business\/wp\/2017\/09\/22\/walmart-wants-to-send-people-into-your-house-to-unpack-your-groceries-even-when-youre-not-home\/?utm_term=.2ee7f3b3b882<\/p>\n","protected":false},"excerpt":{"rendered":"

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