ibm and walmart: blockchain for food safety · pdf filewalmart & ibm are envisioning a...

IBM and Walmart: Blockchain for Food Safety

David Galvin

© 2017 IBM Corporation2 #IBMBlockchain

Blockchain will fundamentally change business processes

You can access any information about what is in the food and its

origins… from the farm to the table...in seconds

You can better prevent counterfeiting issues around goods such

as pharmaceuticals, luxury goods, electronics and diamonds…

You can have end to end visibility across your supply chain allowing

you to meet your customers demands for accuracy, transparency

and agility.

And more…

Blockchain, the next Consumer Industry and Supply Chain revolution


600 million - almost 1 in 10 people in the world - fall ill after eating

contaminated food every year, 420,000 of them die

$55.5B - $93.2B a year - The total cost caused by foodborne illness (loss of economic

productivity because inability to work and/ or death, medical costs) in the U.S. alone

• 20% increase in the last four years

$14B by 2019 – Global Food

traceability market9.5% CAGR between 2014-2019

• Emerging markets will have much higher CAGRs i.e. China - 18.9%

Food Incidents are not stopping but increasing:

$10B-$15B Annually - The cost of Food fraud incidents

Why is Food Supply Chain Provenance Critical Today?


Spinach Outbreak (2006)

E. coli

199 Cases, 31 HUS,

3 Deaths, 26 States

SOURCE: Frank Yiannas and Walmart are the source for this slide content.


Peanut Corporation America (2008)



Global Food Supply

Mascarpone

Cheese and

Ladyfingers-

Italy

Cocoa

Powder-

Switzerland

Cream-

United States

Kahlua-

MexicoRoasted

Espresso

Beans-

Columbia

Chocolate-

Belgium

Vanilla Beans-

Madagascar

Mint Leaf –

United States

Cinnamon

Powder –

India

40,990 Food Miles SOURCE: Frank Yiannas and Walmart are the source for this slide content.


Benefits

1. Improved track & trace capabilities

for the consumer & industry result

in decreased response time to

product recalls

2. Enhanced food flow has material impact

on shelf life management

3. Lower compliance costs

What Providing consumers, suppliers, manufacturers carriers, retailers, and regulators greater transparency on their goods

Increasing ability for key participants to meet new regulatory pressures

How Digitize the existing food safety process and product information on blockchain creating a single historical record

Vendors create new levels of trust through information sharing

Food Safety Provenance


Walmart’s Compelling Business Issue - China

More than three quarters of the Chinese citizens surveyed believe that food

safety is one of the most important quality-of-life indicators.1

95% of 133,225 participants have encountered food safety problems

• 50% expressed worries about China’s food safety

• More than 60% did not have enough confidence in government’s new

actions against food safety issues2

2001 2013

> 49,500 food safety incidents in food production and circulation sections were detected in China

2002 2011

68.2% of food safety events happened in China were caused by illegal activities


Walmart & IBM are working on 2 pilots around food traceability & transparency

Mango Pork


Walmart & IBM are envisioning a fully transparent 21st century digitized food system

In case of a food safety issue, how to do traceabilityin minutes/ seconds instead of weeks ?



Life of a mango … from tree to shelf

5 to 8 years for a mango tree to mature

and bear fruits

Mangoes grown by small farmers

in Central or South America

Shipped to a packing house to get

washed and boxed

Shipped to the US by air, sea or land

(custom border)

Washed, peeled, sliced and put into

containers in a facility center

Shipped to Walmart distribution center

to get refrigerated

Transported to store, refrigerated

and put on shelves



In a nutshell, Blockchain can be a game changer…

Saves

time

Removes

cost

Reduces

risk

Increases

trust

Transaction time

from days to near

instantaneous

Overheads and

cost intermediaries

Tampering, fraud

& cyber crime

Through shared processes

and recordkeeping


Increase trust & transparency to

Walmart’s end consumerImprove shelf-life management

and waste of expired products

Minimize fraudulent products that

either hurt a consumer or result in a

PR disaster (true or rumored)

Meet the requirements of

demanding governments

Increased monetization from specific

segments by validated organic beef vs.

in-organic OR wild vs. farm raised

salmon

Create a global view of the

provenance across Wal-Mart’s

supply chain

Build a more sustainable food

system by detecting food fraud,

increase food safety, reduce

spoilage & waste with analytics

FSMA

FSIS

HACCP

Walmart’s Expectation of Value


Themes in Blockchain in the Consumer Industry

Examples:

Product recalls

Manufacturing collaboration

Government compliance

Examples:

Food & Product safety

Organic food verification

Authenticity

Examples:

Order management

Examples:

Dispute Resolution

Trade promotions

Order fulfillment

Fraud & Provenance

Transparency

Customers and watchdogs

want to know where goods

come from. Safety is key.

Fraud and Counterfeit cost

and reputation

High Friction Enterprise

Integration

Transactions volume and

speed of the business lead

to a highly disputed

environment and eroding

trust and exposing cash

Redundant & Incomplete

Data

Existing data systems are

based on messages between

silos, with different

organizations having different

or incomplete data

Traceability and Visibility

across the value chain

Increasing speed & flexibility

of supply chain drives

demand for real time tracking

across partners

ibm and walmart: blockchain for food safety · pdf filewalmart & ibm are envisioning a...

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