Blockchain technology is helping companies like Walmart trace their entire supply chain effectively and accountably.
As the world hurtles toward “the singularity”, the effects of globalization are taking their toll on a daily basis. Large corporates are hacking their way through bureaucratic red tape regularly in their efforts to sustain their overwhelmingly large operations. Supply chains in Vietnam are delivering sneakers in corner shops of Chicago suburbs within a couple of days – and these corporations are enjoying the profit margins that come with said globalization.
But what happens when the Vietnam factory tasked with gluing the sneaker’s soles together gets shut down because they’ve been using solvents deemed illegal and dangerous by the World Health Organisation? Not only does the large corporation in our example have a major supply (and revenue) challenge, but they also have a significant PR challenge. This global village we now live in will see such news spread to households in every country on the planet within hours. No matter how big a corporation is, very few (if any at all) are equipped with PR strategies to mop up such a meandering mess.
The solution though, is not to prepare for such PR strategies, but rather prevent the need for them entirely. And how on earth does a truly global company do that?
Now before you hit the “X” at the top corner of your browser because you didn’t want a get-rich-quick-scheme propagated on a business blog like Tomorrow Today’s, consider the largest company in the world: Walmart.
The world’s largest company by revenue had far more than just a PR disaster on their hands in 2018, they had a health crisis they were directly responsible for. A few batches of Walmart’s Romaine Lettuce were carrying legions of E.Coli, and this caused a significant number of consumers to fall terribly ill. Fortunately, none of the 32 cases turned out to be fatal, but one did end in kidney failure.
Walmart are obviously the world’s largest retailer, and their supply chain in the USA alone was so complicated, it was taking their teams 3 weeks to ascertain where the infected lettuce was being sourced from. 3 weeks can be a deadly timeframe when you’re dealing with E.Coli. In those 3 weeks, lettuce sales practically dried up in the States affected – and more than halved elsewhere across the USA. Walmart knew they couldn’t continue like this.
Having already been consulted with by the world’s leading Blockchain development project “Hyperledger”, in partnership with IBM, Walmart were acutely aware of blockchain’s benefits, and after the dust had settled on 2018’s E.Coli and Lettuce disaster, they quickly got in touch with the Hyperledger team once again. It didn’t take long to have an entire system ready to roll out and prevent such a supply chain traceability delay from ever happening again. Within a month, Walmart’s food exco sent out a letter to each and every supplier of leafy green vegetables contracted to the retailer saying “they had one calendar year to register on their newly designed Blockchain database – or else lose their contract”. It was that serious.
Walmart, IBM and Hyperledger’s respective development engineers had run trials of their traceability blockchain product, and found that they could reduce the source search time from 3 weeks to 2.2 seconds. Yes, you read that correctly, 2.2 seconds. Can you imagine how much quicker lettuce could have been back on the shelves of even the affected State had Walmart traced the E.Coli-infected lettuce within 2.2 seconds? Revenue would barely have been impacted.
Why couldn’t standard databases provide such traceability search times? Two words: “Immutability” and “consensus”.
Before blockchain, there was no true digital technology to responsibly record data on a large database without incurring massive data-storage costs. Which is why the only companies that do store their own sensitive digital data are primarily banks – because they can afford to. For a company even as big as Walmart, the costs just aren’t worth the revenue savings on lost sales in such an event as we saw with 2018’s E.Coli outbreak. But Blockchain changed that.
You see, standard data storage is highly centralized, which means it is far more prone to both digital security breaches – and data tampering from just a few staff. If a tractor driver wants to put through his load of lettuce at the end of a hot day, despite having dropped his load next a spilled cow’s water trough, he can lie to the people taking delivery. But with his tractor now being equipped with an IOT device which alerts the delivery acceptors, he will have to explain the recorded irregularity (stop for a spillage), which will be noted, and placed on the blockchain. And even if he lies, the irregularity itself will be irreversibly recorded on the blockchain. This “irreversibility” is what we in the blockchain industry call “immutability”.
Immutable means “unchangeable”, and when linked to IOT (internet of things) devices, becomes one of the most powerful tools in accountable business practices. While that lettuce could very well be safe to consume, and the IOT device may have flagged an irregularity because the farmer was fixing a flat tyre – the fact is, if there was an E.Coli outbreak, the irregularity (which doesn’t align with standard delivery times etc.) will be raised, and cause that batch of lettuce to be pulled from the shelves as a precaution – along with the select other irregularities. These flagged irregularities would mean only certain batches of produce would get pulled, instead of entire stockpiles – meaning at least some produce remains in the market, minimizing industry impact. Not only that, but the source of the infection can then be traced within these flagged irregularities.
Now, back to that word “immutable”. You see, a blockchain is, among many other things, immutable. Meaning, it is absolutely unchangeable. You cannot tamper with the record. Invented as a means to ensure accounting books balance perfectly on an automated algorithm, blockchains cannot be tampered with (unless an immense amount of computing power is employed to do this – which is an entirely different conversation – and becomes absolutely unfeasible for even the largest farmer in the network).
Am I saying this database is “unhackable”? Exactly. Now you’re getting it.
A farmer can’t ask his IT friend at the warehouse to register a different entry – once the data has been recorded (in this case with integrated IOT devices), it’s unchangeable. Especially for even the most expert IT friend at the warehouse.
And how is this possible? Even my “supposedly secure” cloud-based Google Doc I am writing this article on is hackable by friends within my very circle. Surely a blockchain database is hackable as well? No. This is what makes blockchain so impressive. The database has to be in “consensus” with every computer on the network, or “node”. Each computer on the network needs to see a mirror of its database on every other computer connected to it (node) in order to enter a new piece of data. Each new piece of data is entered onto the network of nodes at exactly the same time, and once the data is entered, registered, and confirmed, it is entrenched into the database forever.
This constant network “consensus” of nodes (or computers) means that a hacker would have to hack into every single node distributed around Walmart’s entire supply chain at exactly the same time. And even if they were successful, failsafes can shut off even a single node from the network, making it the “original copy”, and able to be used to restore the original data to the entire network once it is secure again. You see, this consensus-based distributed form of databasing means there is no single point of failure for such important supply-chain information like a leafy green retailer.
Not only is this form of immutable and accountable databasing much cheaper than centralized alternatives, it is also far more secure. This is what Blockchain technology is making possible for the company of the future. And while the technology is still only 10 years old (at time of writing), it already has been developed to a point where it can be implemented by the world’s largest company. And Walmart aren’t the only ones: Alibaba, Facebook, Disney, Ford, Amazon, and Starbucks are among the world’s many progressive companies to have entire divisions devoted to creating a blockchain solution to secure and streamline their global operation.
I personally have worked with Standard Bank, ABSA, RMB and even the Western Cape Government right here in South Africa in researching blockchain solutions for their respective operations. Despite my passion for the world-altering opportunities of blockchain, I am also keenly aware of the challenges the technology still faces, primarily in efficiency – but the benefits the solutions can offer make the efficiency challenges worth dealing with. For now, it behooves companies taking a global outlook on their business to explore blockchain solutions for their operation, and the sooner we see the world’s commerce done on the blockchain, the sooner we will see corruption eradicated and fair trade flourish.
The flourishing of fair trade and the eradication of corruption? Now that’s a solution I’d like to work on! Fortunately, it’s one that I already am.
Think of your business’s operation. How do you think blockchain could assist in streamlining it?
James is the Project Lead at SA Crypto, South Africa’s first news website for the blockchain industry. He has been writing and speaking about innovative tech and how it can make our world a better place since 2006, and has since won five SA Blog Awards. His work has been featured on East Coast Radio, BBC Africa, and BizNews.com among others. His work in socio-economic philosophy caused him to stumble across the Bitcoin project in early 2013, where he began researching how true digital money and its underlying blockchain technology could impact society.
His talks on innovative tech like Blockchain are highly engaging, very informative, and deeply inspiring. You can contact him on firstname.lastname@example.org – or on his LinkedIn profile here.