Blockchain technology might currently be the most discussed technology in business. On this platform alone, more than 10 articles have already been posted about blockchain. This technology is not only gaining traction because of the exponential growth of the bitcoin stock price, multinationals are also seeing the future possibilities of the technology in various industries. In this blogpost, I’d like to discuss the use of blockchain in the global food business as announced by IBM in August this year (Browne, 2017).
IBM announced that it will partner with global food corporations like Nestle, Unilever and Walmart to optimise their supply chain by using a blockchain network developed by IBM (Browne, 2017). The purpose of the network is to improve transparency and traceability throughout the supply chain. Walmart has already run successful pilots in collaboration with IBM to reduce the time it takes to trace a given product in their supply chain from 7 days to 2.2 seconds (Aitken, 2017). This can be done by digitally entering product information about food items at every step in the blockchain. The information is subsequently stored and immediately accessible by the entire network. More importantly, the entered information can’t be altered which should reduce fraud.
What is interesting about this implementation of blockchain is that is developed by a consortium consisting of multinationals, IBM and universities. This might be a logical step as one of the prerequisites of blockchain technology is having a widely distributed network but in such a competitive market companies tend to have an internally focussed information strategy. Could the use of blockchain push businesses towards more collaboration?
Walmart claims that their main reason for adopting this new network and work with competitors is “to ensure that the global food system remains safe for all.” This is a noble objective which is actually feasible using blockchain technology. As global food supply chains tend to be complex and intertwined between businesses, it is a necessity that companies like Unilever, Nestle and Walmart collaborate to be able to trace products accurately. Whether this is purely done to ensure food safety for all remains to be seen. Supply chain traceability also increases the influence and bargaining power of these multinationals over local farmers. However, it is safe to say that blockchain will increasingly be used by organisations in various industries. Giving the transparency and traceability advantages of blockchain, this will ultimately benefit the customer.
References:
- Aitken, R. (2017, August 22). IBM Forges Blockchain Collaboration With Nestlé & Walmart In Global Food Safety. Forbes. Retrieved from: https://www.forbes.com/sites/rogeraitken/2017/08/22/ibm-forges-blockchain-collaboration-with-nestle-walmart-for-global-food-safety/#7c7946a33d36
- Browne, R. (2017, August 22). IBM partners with Nestle, Unilever and other food giants to trace food contamination with blockchain. CNBC. Retrieved from: https://www.cnbc.com/2017/08/22/ibm-nestle-unilever-walmart-blockchain-food-contamination.html
Interesting post Rutger. I agree that blockchain will revolutionise supply chains in numerous sectors. Do you see supply chains being able to use public blockchains such as Ethereum, or do you think they will need to work with private blockchains such as IBMs Hyperledger? The public blockchains have the benefit of being decentrally mined and updated, however there are some scaling and data privacy issues, which may be roadblocks on the road to using public blockchains in business. It will be interesting to see how businesses incorporate blockchain going forward.
Hi Rutger, first of all, thanks for writing this nice blog about Blockchain. This subject is definitely interesting to read about. I agree with you last sentence that it will ultimately benefit the customer. This because you are able to trace back all the information about the product, by an independent verification system. In addition, for food that is being bought with caution such as babyfood, it will be easy to trace back the quality of the food. Again benefiting the customer. However, I wonder how the blockchain will effect the demand forecasting of the total supplychain chain? I think it is interesting to look at, because more transparency means better forecasting of demand and so it will ultimately benefit the total supplychain. What are your thoughts about this?
Great blog Rutger, however you yourself already seem to have some concerns about why
companies such as Walmart are deploying this network. As these corporations are profit
driven, it cannot be the case they do this to “ensure safety for the global food system” alone.
Also, you stress that the bargaining power over local farmers increases with this technology.
What do you think are the more commercial incentives for corporations when using block
chain technology in the supply chain?