Blockchain is not Revolutionizing the Supply Chain yet
Just four years ago, the mere mention of the word blockchain could spark a never-ending conversation. Blockchain is a distributed ledger technology where blocks (records) are added, transaction data is captured, and a timestamp remains. The timestamp is the proof that a transaction took place and marks when the block was created. In 2018 the Food Trust Group was formed, a cluster of some of the biggest food companies in the world – Walmart Inc., Nestlé SA, Dole Food Co., Golden State Foods, Kroger Co, Driscoll’s Inc., among others. The goal was to use blockchain to improve recalls, identify stubborn bottlenecks in real-time, and improve the overall customer experience.
At the time major firms across industries were using blockchain, excited by its ability to eliminate costly middle layers and its apparent inability to be manipulated or faked. IBM and Walmart collaborated most famously to track produce items via blockchain. The two decided upon leafy greens as the jumping-off point, but just four years later only one item – green bell peppers – has been added. The technology that was going to revolutionize supply chains has stalled. What’s behind the delay?
The consulting and technology research firm, Gartner Inc., has a theory, and it’s not overly complex. Namely, most firms rely on a host of partners that require a common “operating language.” Blockchain is intricate and costly and many non-Fortune 500 companies are reticent to adopt it. A.P. Moller-Maersk A/S knows this all too well. Also in conjunction with IBM, Maersk launched TradeLens in 2018 to ultimately digitize container shipping on their global tracking platform. Yet, as with any new system, the success of TradeLens depended on the collaboration of Maersk partners as well as numerous countries. This never occurred and Maersk will be scrapping the platform by the end of the first quarter of 2023.
At this point, blockchain needs to become less complex and more affordable. The learning curve is steep, especially for those firms who rely on small to medium-sized suppliers who are not necessarily tech-savvy. Coming back to Walmart, many of its partners are growers and farmers and blockchain is still out of their purview for the moment. A short-term solution could be to focus on single products. For example, the state of Jharkhand in eastern India has been using blockchain to track the distribution of seed sales to farmers. The chain is only tracking seeds that come directly from the state and the process is exceedingly simple.
Part of the incentive, however, to use the chain is the farmers want the seeds and are thus more motivated to participate. Perhaps some better incentives are needed.