The implications of Walmart's blockchain mandate for food suppliers
Walmart’s new food traceability initiative is motivated by concerns over safety, but it sows the seeds for big changes for sustainability teams across the food and agriculture sector.
After almost two years of pilot projects in the United States and China conducted in collaboration with IBM and others, in late September, the world’s largest company put "fresh leafy greens" suppliers on notice that they have until early next 2019 to start getting on board with its burgeoning blockchain-based data platform.
That edict is part of the new Walmart Food Traceability Initiative, announced with a letter sent by four senior executives (PDF). Direct suppliers, those who sell various leaf vegetables directly to Walmart’s or Sam’s Club stores in the United States from farms and fields under their direct supervision, must start collecting information (such as field locations and harvest times) and uploading it to the IBM Food Trust Network by Jan. 31. Suppliers that source the produce from third parties have until the end of September 2019 to draw those partners into the initiative.
"Walmart believes the current one-step forward and one-step back of food traceability is outdated for the 21st Century, and that by working together, we can do better," the executives wrote.
"There is no question that there is a strong public-health and business-case for enhanced food traceability. By quickly tracing leafy greens back to source during an outbreak using recent advances in new and emerging technologies, impacts to human health can be minimized, health officials can conduct rapid and more thorough root cause analysis to inform future prevention efforts, and the implication and associated losses of unaffected products that are inaccurately like to an outbreak can be avoided."
The retailer was motivated to focus its first "substantive, not symbolic" declaration as a result of several highly publicized E. coli outbreaks in the United States over the past year — including five deaths — that were related to tainted romaine lettuce, according to Frank Yiannis, vice president of food safety and health for Walmart.
The imperative to gather source data far more quickly was underscored during those situations, not just to keep problematic produce off store shelves, but also to help reassure consumers that other items were safe for consumption, Yiannis told me. With at least 50,000 SKUs to manage, this is not an easy category to manage.
"We could have picked a product that was simple," he said. "This was a good category and generally safe, when you consider the per-capita consumption … It was a logical place to start."
While Yiannis declined to disclose exactly how many suppliers the new policy will affect, he acknowledged that it will touch "hundreds" of food producers including "dozens and dozens and dozens" that deal directly with Walmart.
What sorts of technology investments will this require on the part of Walmart’s supply chain?
Yiannis suggested that many of them are already installing systems, such as barcode scanners, that can be used to collect the requisite data and submit it to IBM’s service. The basic requirement for those in far-flung rural areas includes a mobile device with geolocation features, so that other information such as date of harvest and size of the crop can be associated with specific coordinates. In cases where a farm might not be covered by wireless access, the information can be uploaded when there is coverage.
"We have designed it in a way that is fairly low-tech," he said.
Learn more about the blockchain-food nexus during VERGE 18, in mid-October in Oakland, California.
Support for blockchain is building in the food industry because it allows for collection from a web of locations, which "mirrors" the complex network of relationships that defines how business is conducted across the food industry, Yiannis said.
One supplier affected by the new initiative is also using its barcoding system to collect information about which workers have been involved in a harvest, which is helping automate its accounting and payroll processes in a way that wasn’t previously possible, he observed.
Walmart anticipates adopting this same approach for other food items, starting with other produce categories and using safety as the lever for forcing action. But it’s easy to see how this data collection network could be used in the future for collecting information about soil health, irrigation practices and other agricultural sustainability metrics.
Other food companies investing in blockchain-based initiatives for improving traceability across the food supply chain include Unilever, Nestle and Tyson Foods. For example, Unilever is collaborating with the British supermarket chain Sainsbury and packaging company Sappi to track and verify the source of tea shipments from Malawi. The idea is to help provide preferential pricing for those who use sustainable farming practices.