Company Testing Technology in US and China to Improve Product Recall Process in Food

Several weeks ago, SCDigest published an article on how a growing number of companies are testing so-called blockchain technology to increase visibility across an extended supply chain. (See Can Blockchains bring Transparency and Validation to Complex Extended Supply Chains?)

Part of those efforts were focused around racing sources of tuna across the globe in the hopes of reducing the level of slave labor used by some tuna sources, as well as unsustainable fishing practices.

Supply Chain Digest Says... The blockchain data may not only improve recall processes, it may allow analysis of when there are delays in the flow of goods across the supply chain to the store shelf What do you say? Click here to send us your comments Click here to see reader feedback

Now, news this week that Walmart is testing the technology to improve the process for product recalls in its food business.

What is a blockchain?

A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of users. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central managing authority, even across say disparate companies.

Once a block of data is recorded on the blockchain ledger, it's extremely difficult to change or remove. When someone wants to add to it, participants in the network - all of which have copies of the existing blockchain - run special algorithms to evaluate and verify the proposed transaction. If a majority of nodes agree that the transaction looks valid - for example, that identifying information matches the blockchain's history - then the new transaction will be approved and a new block added to the chain.

This setup means the entire network, rather than a central authority, is responsible for ensuring the validity of each transaction.

Each computer or node in a particular network generally maintains a copy of the entire ledger, and works with other nodes to maintain the ledger's consistency. That creates fault tolerance, so if one node disappears or goes down, all is not lost. The network protocol governs how those nodes communicate with one another.

After a transaction is executed on a node, the result is a proposed modification of the ledger's data. Before committing the answers to a node's ledger, the answer is validated locally with other nodes in the network. Approved transactions are packaged into a block and re-distributed to all the nodes in the network, which re-validate to ensure their records match. Typical transactions can execute in milliseconds.

Walmart is said by Bloomberg to be testing blockchain-based tracking of two products: a packaged produce item in the US, and pork in China. The tests have involved thousands of packages shipped to multiple stores.

Of course, recalls are a big problem in the food and grocery sector, a challenge made even greater by the increasingly global nature of the food supply chain. Because of uncertainty around what products in what batches really came from where, manufacturers and retailers commonly take all of a given SKU - say a bag of lettuce - off the shelves when really only a portion of the total inventory needed to be recalled. That adds enormously to the total cost of the recall, both in financial terms as well in some cases relative to brand equity.

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With the blockchain, Walmart may be able to obtain crucial data rolled up to a single source, including all the suppliers involved, details on how and where food was grown and who inspected it, with information relative to a pallet (which generally has a "license plate" bar code on it) down to the individual package.

"It gives them an ability to have an accounting from origin to completion," Marshal Cohen, an analyst at researcher NPD Group, told Bloomberg. "If there's an issue with an outbreak of E. coli, this gives them an ability to immediately find where it came from. That's the difference between days and minutes."

Frank Yiannas, vice president of food safety at Walmart, added that "With blockchain, you can do strategic removals, and let consumers and companies have confidence. We believe that enhanced traceability is good for other aspects of the food systems. We hope you could capture other important attributes that would inform decisions around food flows, and even get more efficient at it."

In other words, the blockchain data may not only improve recall processes, it may allow analysis of when there are delays in the flow of goods across the supply chain to the store shelf that can be reduced or eliminated.

If the tests are successful, Walmart will expand the use of a blockchain to multiple food items in both the US and China, Yiannis said.

"So far things are flowing smoothly and as expected," he told Bloomberg.

Walmart is using blockchain technology co-developed with IBM. In October, the company opened the Walmart Food Safety Collaboration Center in Beijing. It also announced, with IBM and Tsinghua University, a collaboration using the blockchain to improve the way food is tracked, transported and sold to Chinese consumers.

If Walmart adopts the blockchain to track food worldwide, it could become of the largest deployments of the technology to date.

Do you see much promise for this blockchain technology to provide visibility across extended supply chains? What do you think of Walmart's blockchain pilot? Let us know your thoughts at the Feedback section below.

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