The vast numbers of parties involved in the production and shipment of consumer goods make the retail industry especially open to the benefits of blockchain, according to a new study from Deloitte.
Products are often sourced offshore, passing through the hands of multiple raw material suppliers, warehouses, factories, shipping companies and others parties. That can make it difficult to track the entire process, especially since intermediary "middlemen" that facilitate communications and transactions between parties are also involved. Blockchain could alleviate some costs by allowing parties to communicate directly and securely.
According to "Digital, On-Demand and Always-On,” Deloitte’s 2017 report on next-generation supply chains, 31% of retailers believe that blockchain is a competitive advantage while 28% believe it has little to no impact.
Current key areas of focus for retailers and consumer goods manufacturers are high-ticket merchandise, pharmaceuticals, perishable food and apparel.
In pharmaceuticals, luxury goods and electronics, blockchain can certify products that are frequently stolen or counterfeited. In apparel manufacturing, it can trace and verify long lists of vendors, including fiber suppliers, fabric mills, factories, button/notion suppliers, shipping companies and the various "middlemen."
Blockchain can also track food “from farm to plate,” a key goal of joint research being conducted by IBM, Walmart, Dole, Unilever and Nestlé. The companies hope to maintain secure digital records and improve traceability of foods such as chicken, chocolate and bananas so that food-borne illnesses can be traced within seconds rather than weeks. The technology has the potential to revamp data management across a vast network of farmers, brokers, distributors, processors and regulators.
Efforts follow experiments launched in 2016 involving Chinese pork and Mexican mangos. Working with IBM and Tsinghua University in Beijing, Walmart began using blockchain to create an indelible transaction list showing how meat flows through the network, from producers to processors, distributors and grocers.
For example, with sliced mangos, tracking information is entered into the software from a packaging label. Within 2.2 seconds, information regarding the product origin from two farms in Mexico and various stops along the way is revealed. In the past, it would take almost seven days to collect that data.
Walmart’s hope is that food recalls can be undertaken faster to prevent food-borne illnesses and even deaths, along with avoiding unnecessary and detrimental consumer panic (and the subsequent costs involved).
Frank Yiannas, Walmart’s vice president of food safety, has pointed to the E. coli spinach outbreak of the early 2000s as an example. “Consumers stopped eating spinach. Restaurants pulled it off menus. If you could pinpoint where that came from faster, you could alleviate that and ensure confidence.”
Walmart has also formed an industry group to further discuss blockchain. Members include Kroger, McCormick & Co., McLane, Driscoll’s, Tyson Foods and Golden State Foods. Howard Popoola, Kroger’s vice president of corporate food technology and regulatory compliance, said Walmart’s efforts have given blockchain legitimacy. “The food industry is ripe for a solution like that.”