U.S. retail giant, Walmart, is about to start a major test of blockchain technology for supply chain management, The Wall Street Journal reports. A pilot project, which will start in the first quarter of 2017 and run for four months, plans to leverage distributed ledger technology to track and trace pork in China and produce in the U.S. — two high-volume product categories with large markets.
This will be one of the first major tests of blockchain distributed ledgers outside the financial services industry. According to the WSJ, blockchain technology can help in overcoming delays and errors, resulting in more streamlined and efficient supply chain management. In fact, the supply chain management sector is a prime target for advanced applications of blockchain technology. Among companies in consumer goods and manufacturing, 42 percent plan to spend at least $5 million on blockchain technology in the next year, according to a Deloitte survey.
As explained in a recent Distributed article titled “How Blockchain Technology Is Reinventing Global Trade Efficiency,” the supply chain sector represents billions of dollars in enterprise revenue, but is fraught with losses and inefficiencies resulting from risk, fraud or anachronistic manual paperwork delays.
According to Frank Yiannas, Vice President of Food Safety at Walmart and leader of the blockchain effort, the pilot project will give Walmart a sense of how blockchain technology works and how well it scales. The main challenge, Yiannas explained, is setting up technology for farmers, field workers and others to collect data and insert it onto a blockchain. Innovative data entry tools running on ubiquitous smartphones, with backends in the cloud, are expected to allow field workers to input relevant data to a blockchain ledger that tracks all data, making it accessible “in minutes, rather than days,” Yiannas said, thereby improving Walmart’s supply chain efficiency, identifying bottlenecks and reducing food waste.
The project — a collaboration between Walmart, IBM and Tsinghua University in Beijing — was first unveiled in October, when the project partners claimed they were creating a new model for food traceability, supply chain transparency and auditability. “By harnessing the power of blockchain technology designed to generate transparency and efficiency in supply chain record keeping, this work aims to help enhance the safety of food on the tables of Chinese consumers,” noted an IBM press release. In fact, the pilot project was initially planned to track and trace Chinese pork; U.S. produce was added later.
The technical platform that Walmart will use is based on IBM’s blockchain technology developed for the Linux Foundation, Hyperledger fabric. An open source blockchain technology intended as a foundation for developing blockchain applications, the platform has modular architecture that allows for plug-and-play components, such as smart contract, consensus and membership services. In September, IBM unveiled a collaboration with Bank of Tokyo-Mitsubishi UFJ (BTMU), which leverages the same technology to automate and streamline business transactions.
“As advocates of promoting greater transparency in the food system for our customers, we look forward to working with IBM and Tsinghua University to explore how this technology might be used as a more effective food traceability solution,” said Yiannas.
“Advanced technology has reached into so many aspects of modern life but it has lagged in food traceability, and in particular in creating more secure food supply chains. Our collaboration with Walmart and Tsinghua University is a step of global significance to change that,” added Bridget van Kralingen, Senior Vice President, Industry Platforms, IBM. “Food touches all of us, everywhere, so we are experimenting in China with Walmart and Tsinghua, given the size and scale of food consumption in this country.”
The Walmart pilot project will use transaction security and authentication technology developed by Tsinghua University, “China’s rapid economic growth has led to massive opportunities for innovation, but it has also presented quality of life challenges, including helping to assure that food sold in the country is safe to eat,” said Tsinghua professor Chai Yueting from the National Engineering Laboratory for E-Commerce Technologies.
Chai added that Tsinghua University is also committed to in-depth research of food safety — one of the most important areas that the world is focusing on. “We believe the work with IBM and Walmart can serve as a global model for others to follow and replicate,” he said.