For the first time, Walmart (WMT) is turning to blockchain.
The retail giant, which opened a new “food safety collaboration center” in Beijing today, will partner up with IBM (IBM) and Tsinghua University to track the pork supply chain in China using blockchain, the decentralized, open ledger technology that originated with the digital currency bitcoin. (For more, see the below video explainer.) The technology has since been embraced by consumer tech giants and financial institutions alike, sans digital currency, as a more efficient form of record-keeping.
A blockchain is “immutable,” says Ramesh Gopinath, IBM’s VP of blockchain solutions. “Transactions are there forever. It makes it impossible for people to deny things that happened in the past. It makes it nearly impossible for businesses to cheat.”
That’s the pitch IBM made to Walmart, which has prioritized food safety in China recently and was open to any idea that might help it track food step by step. “Things came together at the right time” for this partnership, says Walmart VP of food safety Frank Yiannas. “We thought the time to act is now.”
China has the biggest pork market in the world, and it’s growing: the Wall Street Journal reported that China’s pork imports were up 76% in February of this year. Of course, the ultimate goal of this blockchain project is bigger than pork. “We plan on piloting the technology with pork suppliers,” Yiannas explains, “and based on its success we will identify additional commodities [to track].”
It will all happen on an IBM blockchain built through the Hyperledger Project, an open-source group created by the non-profit Linux Foundation in which IBM was a founding member along with big corporations like Accenture, Intel, JPMorgan and Wells Fargo.
As IBM’s Jerry Cuomo told Yahoo Finance last month, the year began with “blockchain tourism running rampant.” That is: many companies were expressing public interest in experimenting with blockchain, but not necessarily doing anything real. IBM’s Gopinath says blockchain tourism is still happening, “but there has clearly been a transition from experiments to real deployments.”
This project is an example. And while much of the talk around blockchain for business has been in financial services, food supply is a compelling use case. In China, Walmart says, too many steps of the food supply chain have not been easy to track and record. “Everyone is very focused on traceability right now,” says Gopinath. “Think about meat: all the way from the carcass level, the slaughterhouse, to the packaging, if every step is labeled with a serial number, and all the handoffs are recorded, then you can trace things much better. Consumers want to know their food is safe.”
Gopinath adds that he and the blockchain team at IBM were impressed with the level of understanding Walmart had about blockchain, even though the company hadn’t yet done anything with the technology before. “They knew what it was before we approached them, and getting the idea across clearly, I anticipated that would be a much longer journey than it was,” he says.
Blockchain buy-in from a giant like Walmart is big news for the burgeoning concept of blockchain as a service (BaaS), but this move also has an optics benefit for Walmart China. Walmart, which has global annual revenue of $482 billion, does not break out revenue numbers for China, but a Reuters report from last year suggested that its business in China, where it has more than 400 stores, was slipping.
The project begins right away, with IBM providing the technology, Tsinghua University conducting academic research through its national engineering lab for e-commerce tech, and Walmart providing access to its pork suppliers to record every step as the meat moves from supplier to Walmart shelves.
Such a project requires buy-in from every participant in the process, which means that somewhere along the way, there are farmers and butchers in China who have agreed to have their work digitally recorded on a blockchain—a new concept indeed.
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.