Wal-Mart, IBM team on food-safety track­ing

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - ROB­BIE NEISWANGER

Spinach was pulled off gro­cery stores shelves and dis­ap­peared from restau­rants in the fall of 2006, when an E. coli out­break re­sulted in 205 con­firmed ill­nesses and three deaths across 26 states.

Frank Yian­nas, vice pres­i­dent of food safety at Wal­Mart Stores Inc., de­scribed it as a “worse-case ex­am­ple” for food safety. It took time for of­fi­cials to iden­tify the ex­act source of the con­tam­i­na­tion in the sup­ply chain; mean­while con­sumers stopped eat­ing spinach, and stores stopped sell­ing it.

“If you had trace­abil­ity sys­tems you could do it re­ally quick and know if it was the im­pli­cated lot or not,” Yian­nas said. “By do­ing it quickly, you could pro­tect con­sumers. You could cer­tainly pro­tect un­af­fected prod­ucts and al­low the sale of prod­ucts that were un­af­fected.”

Wal- Mart and IBM are de­vel­op­ing a bet­ter so­lu­tion through the use of blockchain tech­nol­ogy. The com­pa­nies are work­ing to­gether on a pi­lot pro­gram they be­lieve has the po­ten­tial to rein­vent the way food is tracked world­wide as it moves through the sup­ply chain – from pro­duc­ers, dis­trib­u­tors and gro­cers — be­fore reach­ing con­sumers.

A blockchain is a dig­i­tal, dis­trib­uted ledger used to record trans­ac­tions se­curely. To this point, the tech­nol­ogy has been linked closely to the fi­nan­cial ser­vices in­dus­try. But Wal-Mart an­nounced last year it was part­ner­ing with IBM to de­velop blockchain ledgers to use in the food sys­tem, track­ing pork in China and an un­spec­i­fied pro­duce item in the U.S.

“We’ve been, what I call, pur­su­ing this holy grail of trace­abil­ity for over a decade,” Yian­nas said. “When we came across this blockchain tech­nol­ogy we thought, ‘This has the po­ten­tial to re­ally be a dis­rup­tive tech­nol­ogy and be a so­lu­tion to fa­cil­i­tate trace­abil­ity and trans­parency.’”

Food-borne ill­nesses af­fect about 48 mil­lion Amer­i­cans — or 1 in 6 — each year, ac­cord­ing to es­ti­mates from the Cen­ter for Dis­ease Con­trol and Pre­ven­tion. In ad­di­tion, 128,000 peo­ple are hos­pi­tal­ized and 3,000 die an­nu­ally.

While prob­lems like the spinach out­break threaten con­sumers, they also present chal­lenges for re­tail­ers,

dis­trib­u­tors and pro­duc­ers who race to track the source of re­called items in the sup­ply chain. Cur­rently, Yian­nas said, records re­gard­ing food are gen­er­ally kept on pa­per, leav­ing a com­plete view of the distri­bu­tion net­work dif­fi­cult to at­tain. The Food and Drug Ad­min­is­tra­tion re­quires com­pa­nies to track one step ahead of them and one step be­hind in the sup­ply chain. FROM DAYS TO MIN­UTES With blockchain, the time to find the ex­act source of the is­sue — like in the case of the spinach out­break — can be trimmed from days to min­utes. An­ni­bal Sodero, an as­sis­tant pro­fes­sor of sup­ply chain man­age­ment at the Univer­sity of Ar­kan­sas Sam M. Wal­ton Col­lege of Busi­ness, said the im­pli­ca­tions for food safety are huge.

“You know at what point con­tam­i­na­tion hap­pened,” Sodero said. “You know which pal­lets, which cases were in­volved. You will know at which stores and distri­bu­tion cen­ters. So for trace­abil­ity it will be a snap, re­ally, to find the source. It’s a huge cost to have to pull every­thing from the stores in­stead of just pulling that batch that got con­tam­i­nated.”

The ben­e­fits of a dig­i­tized food sys­tem also have

po­ten­tial to reach fur­ther than trace­abil­ity, ac­cord­ing to Wal-Mart and IBM. De­tailed in­for­ma­tion col­lected as part of the dig­i­tal ledger could help im­prove ef­fi­ciency — and lower costs — in get­ting prod­ucts from the farm to con­sumers. A more ef­fi­cient sys­tem of track­ing food could also help re­duce food waste.

Im­proved trans­parency through­out the sup­ply chain should be pos­si­ble as well be­cause of the amount of in­for­ma­tion avail­able. With blockchain, the risk for fraud or tam­per­ing would be re­duced be­cause of the dig­i­tal data­base.

“Blockchain isn’t magic fairy dust,” said Brigid McDer­mott, IBM’s vice pres­i­dent of blockchain busi­ness de­vel­op­ment. “But what blockchain does that is truly unique is to cre­ate this trusted sys­tem of record. You’ve never be­fore had the abil­ity for an en­tire ecosys­tem to look at data and be con­fi­dent that ev­ery­body else is look­ing at the same data and that ev­ery­body else trusted the same set of data.”

Yian­nas said trans­parency and trace­abil­ity are not new con­cepts in food safety, but re­cent tech­no­log­i­cal ad­vance­ments have made the de­vel­op­ment of a shared dig­i­tal data­base more of a re­al­ity. It’s more likely now for farm­ers and pro­duc­ers – even in re­mote places

around the world — to have ac­cess to a smart de­vice and in­sert data into a blockchain.

McDer­mott pre­dicted it will take some time, but the re­cep­tion from dif­fer­ent play­ers has been good so far.

THE BIG­GER VIEW Ul­ti­mately, Wal-Mart and IBM hope to ex­tend their work across the en­tire food sys­tem.

“This isn’t IBM and Wal­Mart,” McDer­mott said. “This needs to be some­thing that the larger ecosys­tem uses. … Each re­tailer has a huge num­ber of farms. Each farm has a huge num­ber of re­tail­ers. So you want to make sure that peo­ple don’t have to use 50, 100 dif­fer­ent sys­tems. At the end of the day, this is most use­ful if ev­ery­body is us­ing it.”

In­vest­ments in blockchain tech­nol­ogy are ex­pected to in­crease this year, ac­cord­ing to a study con­ducted by Deloitte.

The re­search firm polled 308 ex­ec­u­tives at com­pa­nies with $500 mil­lion or more in an­nual rev­enue and 55 per­cent said their or­ga­ni­za­tions would be at a com­pet­i­tive dis­ad­van­tage if they failed to adopt the tech­nol­ogy. Even more, 42 per­cent of re­spon­dents in the con­sumer prod­ucts and man­u­fac­tur­ing in­dus­try plan to in­vest $5 mil­lion or more this year.

Sodero said it makes sense for Wal- Mart to in­vest in

blockchain for its food busi­ness be­cause of the re­tailer’s size and scale. But he be­lieves that the global com­pany will face com­pe­ti­tion in the race to adopt a stan­dard oth­ers will even­tu­ally fol­low.

“We al­ready know for a fact that when there’s a new tech­nol­ogy out there there will be this in­ter­play of power,” Sodero said. “So they bet­ter get this right and they bet­ter get adop­tion. They need peo­ple to adopt their own tech­nol­ogy so that they can be sure that this be­comes the stan­dard.”

Wal- Mart’s blockchain tests could be wrapped up in April, ac­cord­ing to Yian­nas. The com­pa­nies will eval­u­ate re­sults and de­ter­mine the next step, in­clud­ing the pos­si­bil­ity of rolling blockchain out on a larger scale.

Yian­nas said the tech­nol­ogy looks “very promis­ing” and has value to all stake­hold­ers, in­clud­ing con­sumers. He imag­ined a day when cus­tomers can pick up a food item, scan it with a smart de­vice and re­trace its route through the sup­ply chain.

“Ev­ery­body is do­ing a lot more on­line shop­ping,” Yian­nas said. “When you buy some­thing on­line you have the abil­ity to track where it’s at and where it’s go­ing. It’s an idea that should be avail­able to the food sys­tem in the 21st cen­tury. So we’re go­ing to work re­ally hard to make the idea re­al­ity.”

AP file photo

A worker re­moves bags of spinach from the shelves of a San Fran­cisco gro­cery store af­ter an E. coli out­break in 2006. Wal-Mart and IBM have teamed up on distri­bu­tion tech­nol­ogy called blockchain they say can help trace food-borne ill­nesses to their source more quickly.

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