In December 2016, so the story is told, Frank Yiannas went to a local Walmart store and picked up a package of sliced mangoes. Returning to the office, Yiannas, Walmart's vice president of food safety, challenged his team to find out where the mangoes had come from, and set a timer. Six days, 18 hours and 26 minutes later, an answer came back. While nearly a week is an improvement over the multiple weeks some companies can take to trace a product; it is still far too long when customer safety is on the line, and a recall is urgently required. That lag time leaves a retailer with little choice but to exercise the extremely costly step of pulling all the suspect product from the shelf as a precautionary measure.
While Yiannas was initially skeptical about blockchain, Walmart decided to try it out, partnering with IBM for a trial run. As part of the test, shipments were tracked and digitally recorded via a blockchain. Pallet loads of mangoes were assigned numeric identifiers. At each stage of the supply chain, from farm to store, their status was logged.
A few months later, Yiannas performed the same task that had taken his team almost a week. An instant after keying the six-digit lot number on the web portal, the product’s history appeared on screen, tracing its journey from harvest and hot-water treatment to import, processing, cold storage, and finally its arrival at a Walmart store. The time taken was around 2 seconds. For a supply chain looking to find an optimal visibility solution, the result was compelling.
What is blockchain?
“Simply put,” writes Sylvain Charlebois, professor in food distribution and policy and dean of the Faculty of Management at Dalhousie University, “blockchain technology is a way of storing and sharing information across a network of users in an open virtual space. Blockchain technology allows for users to look at all transactions simultaneously and in real time. In food, for example, a retailer would know with whom his supplier has dealt. Additionally, since transactions are not stored in any single location, the information is almost impossible to hack.”
Such information allows supply chain partners to more quickly collaborate and optimize their operations. Consumers could also benefit from the instant access to visibility. By just reading a QR code with a smartphone, Charlebois notes customers could see the product's history. In the case of a piece of meat, for example, information might include the animal's birth and use of antibiotics as well as processing and supply chain information.
Visibility into product history details, such as country of origin and fair trade, may offer an advantage to smaller or mid-sized suppliers who have not developed a brand reputation.
Walmart, which has already undergone blockchain tests with mangoes in North America and pork in China, recently joined IBM, Chinese retailer JD.com, and Tsinghua University National Engineering Laboratory for E-Commerce Technologies to form the Blockchain Food Safety Alliance, dedicated to improving food tracking and safety in China. In August 2017, a U.S. collaboration was announced, including IBM, Dole, Driscoll's, Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestlé, Tyson Foods, Unilever, and Walmart.
In the UK, a blockchain collaboration between Sainsbury, packaging company Sappi and three financial services companies recently formed, along with several technology startups, to track and verify contracts with tea farmers from the country of Malawi in Africa. The group is looking to connect with up to 10,000 farmers and offer preferential pricing to those who use sustainable farming methods designed to increase yields.
While excitement around blockchain is enormous, whether or not it will become the "Holy Grail" of traceability remains to seen. Roman Kuhar of Compac advises fresh produce growers and packing houses to align themselves with partners who understand the technology and who can help you implement it. He believes that consumer demand for transparency will drive innovation and that “packhouses and growers that adopt a blockchain driven traceability will become the gold standard for innovation and food safety.”
Others tread cautiously. Harry Smit of Rabobank cautions that two prerequisites are required for companies to achieve success. "First, processes within companies, and between companies, have to become digitalized and standardized," he says. "Second, a broad participation of stakeholders along the value chain is required; otherwise the value of blockchain is lost." Nonetheless, Rabobank recommends that companies participate in more than one blockchain initiative while maintaining flexibility to switch to others.
Charlebois echoes the need for participation. “The most important challenge remains participation,” he writes. “All parties must adopt the technology in order for it to work. In food distribution, not all companies are equal, and some can exercise their power more than others. A successful integration of the blockchain requires the engagement of all participating organizations.” He states that further research is needed “before we get too excited.”