Blockchain is not yet revolutionizing the supply chain

Just four years ago, the mere mention of the word blockchain could spark endless conversation. Blockchain is a distributed ledger technology where blocks (records) are added, transaction data is captured and a time stamp 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 largest 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, large firms across industries were using blockchain, excited by its ability to eliminate costly middlemen and its apparent inability to be manipulated or counterfeited. IBM and Walmart most famously collaborated to track goods via blockchain. The two decided on leafy greens as a starting point, but just four years later, only one element – ​​green peppers – has been added. The technology that was supposed to revolutionize supply chains has stalled. What is behind the delay?

Consulting and technology research firm Gartner Inc. has a theory, and it’s not overly complex. Most companies are dependent on a number of partners who require a common “operating language”. Blockchain is complex and expensive, and many non-Fortune 500 companies are reluctant to adopt it. AP Møller-Mærsk A/S knows this all too well. Also in partnership with IBM, Maersk launched TradeLens in 2018 to finally digitize container shipping on their global tracking platform. However, as with any new system, the success of TradeLens depended on the cooperation of Maersk partners as well as a number of countries. This never happened, and Maersk will scrap the platform by the end of the first quarter of 2023.

At this point, blockchain needs to become less complex and less expensive. The learning curve is steep, especially for those companies that depend on small to medium-sized suppliers who are not necessarily technologically savvy. Coming back to Walmart, many of their partners are growers and farmers, and blockchain is still out of their realm at the moment. A short-term solution may be to focus on individual products. For example, the state of Jharkhand in eastern India has used blockchain to track the distribution of seed sales to farmers. The chain only tracks seeds that come directly from the state, and the process is very simple.

However, part of the incentive to use the chain is that the farmers want the seeds and are thus more motivated to participate. Maybe some better incentives are needed.