With blockchain asset tracking, Walmart pushes supplier tech adoption

Walmart Inc.’s recent mandate that suppliers of leafy, green vegetables use blockchain by September 2019 faces two important hurdles that other companies should consider: the adoption rate of a nascent technology and possible pushback from partners.

Walmart hopes that blockchain asset tracking will help it more accurately and quickly pinpoint issues in the food supply chain to better protect customers against foodborne illnesses. The retail giant worked with IBM and 11 food companies to develop a blockchain-enabled food traceability network built on open source technology.

“The way this will work is by digitizing what is referred to as traceability events and capturing those events in the blockchain network,” said Frank Yiannas, the former vice president of food safety at Walmart. “And some of the pilots and studies that we’ve done showed that we can do that in seconds, and not days or weeks.”

Yiannas — who has since joined the U.S. Food and Drug Administration (FDA) as deputy commissioner for food policy and response — said blockchain will enable companies to track food-related problems, identify implicated products, potentially remove them from the market quicker and protect people from getting ill.

“By being able to do that trace-back that rapidly, you can do better root cause analysis to figure out what happened and try to prevent future similar occurrences,” he said before his FDA appointment.

Important food industry goals include product safety, fair trade and the creation of a more responsible food supply chain. Blockchain asset tracking can help achieve those goals, said Csilla Zsigri, an analyst at New York-based 451 Research.

“In the event of food contamination, blockchain can assist retailers with quickly identifying the problem source and removing only affected items from shelves rather than having to remove all stock of that type,” she said. “Blockchain technology can also make just-in-time delivery more reliable, allowing optimization of the cold chain for fresher production.”

Although blockchain, in theory, can improve tracking and tracing, it is still early days for the technology, said Rajesh Kandaswamy, an analyst at Gartner. In the event of food contamination, blockchain can assist retailers with quickly identifying the problem source. Generally, across industries, the adoption rate for blockchain asset tracking is low, with 42% of organizations stating that they are only in the discovery phase when it comes to implementing blockchain. Meanwhile, 30% percent are considering possible blockchain vendors, according to Globant’s “2018 Digital Transformation Report.” “Do we really need only blockchain?” Kandaswamy asked. Food chain tracking problems “could be solved with other technologies because, basically, we’re talking about tracking data end to end. But, at the same time, blockchain comes with the ability to trace things well.” Walmart’s move in some ways bypasses arguments about adoption, as it is, in essence, forcing adoption on suppliers that want to work with the retailer.

Debate ensues on whether suppliers will push back Walmart is a leader in the supply chain world, and as it adopts a technology, such as blockchain asset tracking, other retailers are likely to follow, said Andy Borchers, professor of management and associate dean at the College of Business at Lipscomb University in Nashville, Tenn.