Executive Summary
Food product labels always have mandatory government requirements, but they give little information about consumer concerns. Either, the consumer cannot verify the product details, such as their origin or days of shipment. Nonetheless, consumer groups are increasing awareness and pressure on their members to monitor food productivity channels for safety, sustainability, and unethical practices, such as child labor (Walmart, 2016). Fair trade labels should show product providence, complaints to statuary demands, and the value chain. Consumers are made to rely on this information just by looking at the Fair-Trade sticker.
Consequently, non-governmental organizations often use “antiquated techniques” (Kshetri, 2018) to validate fair trade information. The available online platforms or annual compliant audits can determine compliance. There is evidently a gap in fair trade verification claims made in food networks and chains. Walmart has made a milestone in piloting its Hyperledger Fabric with a lot of success, but with more milestones to cover regarding the blockchain effectiveness in implementation and cost.
Based on the Walmart Hyperledger Fabric pilot, blockchain technology presents companies with many business opportunities. The technology boasts modular architecture, offering plug-in components, such as custom identity management (Androulaki et al., 2018). Hyperledger Fabric promotes the building of a permissioned blockchain by restricting anonymous or pseudonymous accounts. The technology is highly scalable and offers fast performance since it does not rely on the POW algorithm or for crypto mining (Lee & Pilkington, 2017). Hyperledger Fabric offers partitioning channels to maximize higher data protection. Other advantages of blockchain technology include rich querying and hardware-based protection (Androulaki et al., 2018). Like Bitcoin, Hyperledger Fabric is a robust supply chain management tool.
Despite the opportunities presented by the technology, it still needs to improve as a management tool. Fabric is permissioned; therefore, it is not a public blockchain. This limits transparency in the chain (Androulaki et al., 2018). It is argued that the Fabric consensus is less secure than POW (Lacity & Van Hoek, 2021). On the other hand, Fabric apparently relies on crypto tokens as the incentive nodes to keep the network secure. Finally, there is only real immutability with POW in Fabric. Worth noting, Fabric will only be implemented in multi-billion multinational corporations because of the high cost involved in the infrastructural setup (Lee & Pilkington, 2017). Small businesses will find it difficult to enjoy the benefit of the technology. Walmart’s collaboration with IT giants, such as IBM through the IBM Food Trust, should address the current debates surrounding the effective implementation of the technology and make it an easy-to-adopt public chain management tool.
Introduction
Blockchain is a buzzword in the finance, technology, and academic sector; however, its integration into business processes still perplexes many people. Technology highly impact the business world, whether it is the Internet of a Thing (IoT), Artificial Intelligence, or Deep Learning (Lee & Pilkington, 2017). Blockchain nascent emerged in 2018, and it has revolutionized commercial activities. Blockchain popularity resulted from the success of Bitcoin, which became famous for its efficiency in transactions and high-security levels. As a result, blockchain has become a smart technology with many uses (Lee & Pilkington, 2017). Its Distributed Ledger Technology is considered a good fair trade tool with a high traceability and transparency of transactions. Walmart’s Hyperledger Fabric’s pilot studies have heightened the benefits and challenges of blockchain technology in the supply chain.
A supply chain is an entire process of delivering finished goods to the consumer. It is a highly complex system that involves various parties and is supported by strong communication and logistics. Because of the system’s complexity, often, the retailer needs help locating the products to the individual producer or in case of contamination to the specific product or container (Lee & Pilkington, 2017). The opaque operations are associated with many supply chain risks, including a lack of trust and problems with the traceability of the products. It also limits fair trade, linked to a sustainable, transparent, and trusted trading environment. Fair trade is becoming an essential business requirement in the 21st century as consumer awareness is heightening.
Blockchain is a Distributed Ledger Technology (DLT) that became famous with Bitcoin. The history of technology can be traced back to 1000 years of European commerce. As distributed technology, the ledgers are shared and decentralized; as a result, it reduces trust issues in commerce since one ledger is open to all parties in an immutable data trail. Blockchain technology’s prominence is associated with the high business demand for fair trade and transparency ethics (Kamath, 2018). However, with the globalization of businesses, consumers lack the means to verify the source and credibility of their products. Sometimes the product labels are altered several times before they reach the consumers. The consumer, therefore, is at the mercy of the traders (Androulaki et al., 2018). The Distributed Ledger Technology in the supply chain is an open ledger that promotes an immutable data trail. Consumers can therefore verify the product traits. On the other hand, manufacturers and retailers can monitor best production practices and eliminate production malpractices. The Distributed Ledger Technology under permissioned blockchain can bring end-to-end traceability and transparency to products and allow consumers to verify product traits and provenance (Miraz & Ali, 2018). The ledger can promote supply chain sustainability by minimizing shutdowns observed during the Corona Virus outbreak. Cases of food contamination often result in an entire supply chain shutdown, even for weeks; however, with improved traceability, the source of contamination can be quickly established (WHO, 2017). This research documents the contribution of Distributed Ledger Technology in Walmart’s supply chain, constraints, opportunities, and possible threats. Despite blockchain technology implementation’s complexity and high cost, Walmart enjoys a sustainable and efficient supply chain.
Finding and Discussion
The critical nature of an effective supply chain became evident during Covid-19. During the pandemic, the lockdowns created an unexpected bottleneck in supply chains, with only a few companies surviving the pandemic. Based on such experiences, companies like Walmart opted to implement blockchain technology in their supply chain. In collaboration with IBM, Walmart has successfully piloted its Distributed Ledger Technology, Hyperledger Fabric (Walmart, 2016). Through technology, Walmart hopes to create a sustainable, transparent, and fair-trade environment.
Food Supply Chain Scandals
Many supply chain failures have promoted the need for a robust and traceable supply chain, Covid-19 being the most recent and worldwide scenario. The Centers for Disease Control and Prevention estimates that over 48 million people contract foodborne diseases annually, while the World Health Organization estimates that one in ten people suffer food poisoning annually (WHO, 2017). In 2006, E.coli attacked the North American food chain affecting the entire distribution system and the clients. As a result, Restaurants and stores stopped stocking spinach while consumers could not buy the product. The supply chain was broken for two weeks as health officials tracked the supply of contaminated spinach (Yiannas, 2017). A fast-tracking mechanism to the one supply resulted in significant losses to farmers and retailers. Consumer trust was also lost for a significant period.
In 2011, China experienced a massive mislabeling debacle. During the incident, donkey meat products included fox meat. The products also contained trench oil, melamine, clenbuterol, Sudan red, Sanlu toxic milk powder, which is against the Chinese Government’s legal provisions (Hatton, 2015). The Office of Economic Cooperation and Development tracked the menace of misinformation along the food chain, waste in restaurants, decentralized storage of food, and coordination challenges in the health system. Other food supply chain crises worldwide include replacing beef and lamb horsemeat in the EU. This affected over 1000 tons of food and over 4.5 million people (Ruitenberg, 2013). In the year 2017, CDC linked 173 Salmonellosis to papayas contamination, resulting in 21 fatalities and 58 people being hospitalized (Yiannas, 2017). The entire papaya supply chain was affected for weeks.
The delays and inability to root out the source of food contamination in time are caused by the opaque nature of stock management. The one-up, one-down (OUOD) model is becoming obsolete. Based on this structure, a retailer only knows their immediate supplier and customer. Because of the supply chain’s opaqueness, there are investigation delays in case of food contamination (Walmart, 2016). Also, multi-ingredient food products might be difficult to trace because of the diverse parties involved. Blockchain technology offers high-level transparency and fast-tracking of ingredients, saving the entire supply chain by traceability in minutes (Hodge, 2017). Users have a shared truth, control of information, and ownership, adding to the credibility of the data. Blockchain data include audits, identification numbers, agricultural treatments, manufacturers, device updates, granted permissions, identified security issues, and safety protocols (McDermott, 2017). The information is collected in real-time and permanently stored in e-certificates.
Farm-to-Fork Pilot Study
Farm to fork pork pilot study was motivated by the Chinese Government’s outcry for modernization of the supply chain. The process starts at the pens where pigs are smart-tagged with bar codes (Walmart. (2016). The pig is then tracked across the activity line until it is packed. The technology employs radio frequencies and cameras across the entire production process. During transportation, the trucks are fixed with temperature and humidity sensors to monitor and report any deviation (Gale, 2017). Once generated, corrective mechanisms are initiated in a timely manner.
Blockchain allows fast, efficient and effective tracking of stores and distribution centers. The technology allows procurement managers to track stock by collecting data from humidity, and temperature, to expiry dates (Gale, 2017). According to Murphy (2016), store managers can employ QR codes to collect such data as farm origination, processing data, batch numbers, soil quality and fertilizers, shipping details, and storage information on the e-certificate. Walmart employs Global Trade Identification Number with batch numbers at high speed and level of accuracy (National Mango Board, 2017). Traceability improves confidence among buyers by ensuring food safety and reducing challenges associated with delays in tracing contaminations. The approach also cuts costs linked to recalls, involves all stakeholders, minimizes inefficient chain processes, and acts as a trigger in case of deviations (National Mango Board, 2017).
Mango Chain Pilot Study
In collaboration with IBM, Walmart conducted a Hyperledger-based blockchain technology to track sliced mangoes from Central and South America to North America. The tracking was prompted by the high susceptibility of mangoes and mango products to Salmonella and Listeria contamination (McDermott, (2017). Traceability would minimize recalls and time wastages while locating the source of contamination. At the pre-seeding, mangoes can be exposed so surface injuries, internal injuries, ripening disorders, and heat and cold injuries (National Mango Board, 2017). At the production level, farmers can pay slave wages, involve child labor, and undertake improper farm practices while applying fertilizers and pesticides. Blockchain technology can collect such data in real-time and precautionary measures can be taken against such producers.
According to Ontario AgriFood Technologies (2016), Walmart monitors every step in the supply chain. It checks fruit quality, at harvest, in the sheds, and at the wholesale and retail outlets. Through such observation, Walmart sort out mangoes that have injuries and which can be exposed to germs. Similar monitoring is conducted in the shed stage before shipments, during shipment, in trucks and in supermarkets (Simon, 2016). The approaches not only promote food quality but also ensure fast tracking to the farm in case of infection. The data is also shared with the households through stickers to promote safety and boost consumer trust.
Opportunities in SCM
Blockchain has hastened shipping processes and increased the level of accuracy by automating and digitizing the documentation processes. Many data can be captured within a significantly short time. It offers real-time traceability of products and provides the most accurate and reliable data. As a result, it reduces time wastage in case of contamination and disease tracking. Traditionally, it would take weeks to trace the source of contamination; however, with blockchain technology, the same can be done in minutes. Walmart, for example, can trace mangoes to a specific farm in up to 2.2 seconds (Kshetri, 2018). Economically, these reduce delays while tracking the source of contamination. It also boosts customers’ trust through proof of origin and compliance. The consumer can also verify the source and credibility of their products. In the opaque supply chain, the product labels could be altered several times before reaching the consumer market (Lacity & Van Hoek, 2021). The end user, therefore, was at the mercy of the traders. Therefore, blockchain contributes to the traceability of products and enhances supply chain sustainability. Most importantly, the technology promotes fair trade, an essential sustainable goal for most market players.
Analysis of the structural makeup of blockchain technology demonstrates many advantages to the stakeholders. It is a modular architecture with plug-in components, which makes it easier to build and manage than those used in Bitcoin (Miraz & Ali, 2018). The distributed technology is highly scalable and offers fast performance; as a result, it can accommodate any scale of the supply chain. Consequently, Hyperledger Fabric is partitioned to minimize the higher data protection market (Lacity & Van Hoek, 2021). Finally, the query system used in other technologies, such as bitcoin, is more secure and offers high data protection during sharing.
POCs have been linked to faster information sharing, a high level of security, and cutting middlemen, which lead to business optimization and lower costs. In collaboration with Maersk, Walmart has demonstrated the benefits of permissioned blockchain technology (Walmart, 2016). Cases of mislabeling or fraudulent activities are highlighted in the advanced stages of the supply chain with cryptography. Since the ledgers are decentralized, an immutable data trail promotes trust along the supply chain (Miraz & Ali, 2018). On the other hand, manufacturers can monitor all the activities on the farm, identify the best suppliers, and even promotes best practices. Manufacturers and retailers will enjoy the end-of-end traceability and transparency of products to promote provenance.
Threats and Challenges
The technical aspect of blockchain technology seems easy to implement and operate; however, it demands full cooperation and dedication from every stakeholder. According to Lee and Pilkington (2017), it is a challenge for everyone to cooperate in implementing technological demands. The cost of IoT and RFID is high, and only big companies can manage them; hence, the technology limits some people from operating in the market (Lacity & Van Hoek, 2021). Again, 24hrs functioning and security of the devices are critical. Petersen et al. (2017) consider The Distributed Ledger Technology to be in its earlier stages; hence its full impact is unknown, and a lot of research is needed to establish the real impact of the technology. More so, there is no evidence to quantify the use of technology. Like any other new technology, the lack of regulations paints an unclear picture of the future of its use. The technology is prone to harm; such as when the fright is attacked or exposed to bad weather. In such cases, they cannot continue to operate in normalcy. Walmart Fabric is permission; hence it locks down only members in the blockchain (Petersen et al., 2017). The transparency, therefore, is not made to the public. Worth noting is that Fabric will rely on crypto tokens as the incentive nodes to keep the network secure; this exposes it to the volatility of the crypto market.
Conclusion
Walmart pilot studies have shown that blockchain is more veracious, scalable, trusted, and transparent in the food industry. Traceability has been considered an important modern trend; it reduces delays associated with food chain examination to establish the source of contamination. The Fabric is solving Walmart’s supply chain and being piloted for global use to spur economic and social growth by limiting supply chain bottlenecks. The Fabric is a business-driven technology-enabled with a focus on smooth supply chain management, long-term goodwill, cost-reduction, and revenue generation. For its success, it should ensure value for the entire stakeholders: the farmers, manufacturers, and consumers with its robust traceability, transparency, and trust. Fabric is expected to contribute towards fair trade and sustainable supply chain management. However, it still suffers from cost and implementation challenges. The technology is also relatively new, and its success cannot be guaranteed.
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