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Lettuce on the blockchain: Walmart's push lends legitimacy to much-hyped technology

After an E.coli outbreak in romaine lettuce sickened more than 200 people in April, Walmart pushed suppliers to use IBM's blockchain-based tracking software.
Image: Labourers harvest tomatoes on a farm that supplies fresh produce to Wal-Mart in Narayangaon
Labourers harvest tomatoes on a farm that supplies fresh produce to Wal-Mart in Narayangaon, about 180 km (112 miles) east of Mumbai, on September 28, 2012.Vivek Prakash / Reuters file

After an E.coli outbreak in romaine lettuce sickened more than 200 people in April, Walmart laid out a strict new policy to its suppliers of salad products.

“All fresh leafy greens suppliers are expected to be able to trace their products back to farm(s) (by production lot) in seconds – not days,” the company said in a letter last week.

To do this, Walmart introduced a new system for its suppliers that is fueled by a much-hyped technology — blockchain.

“Today, Walmart and Sam’s Club sent a letter to suppliers of fresh, leafy greens asking them to trace their products all the way back to the farm using blockchain technology.” Walmart said in a press release. “Suppliers are expected to have all these systems in place by this time next year.”

Blockchain is a technology in which computers each contribute to a shared public ledger, allowing for automated systems to work without a central authority. Blockchain technology is best known for being the basis of bitcoin, the cryptocurrency that has endured wild swings in value.

While bitcoin has become the best-known application of blockchain technology, businesses have been experimenting with alternative uses — one of those being IBM’s “Food Trust Solution,” which employs blockchain technology to create a transparent and secure tracking system for the food industry. Walmart’s system uses the IBM technology.

Handling the flow of goods and services around the world, known as “supply chain management,” has been seen as a major opportunity for blockchain technology. Supply chains often require many companies to coordinate across long distances, creating complex systems that can be difficult to follow.

“Blockchain right now turned out to be one of the real hot buzzwords in supply chain management.” said Richard Young, professor of supply chain management at Penn State Harrisburg. “One of the things about blockchain is that all of the participants are really owners of a piece of this thing, so when you talk about Walmart and produce you have to be thinking about a large number of suppliers. From a tracking standpoint, it makes sense in my mind.”

Tobias Schoenherr, a professor of supply chain management at Michigan State University, said that while it is still early for blockchain technology in the industry, early experiments have shown promise.

“We are still in the exploration stages,” Schoenherr stated. “I think a lot of learning still has to take place to make it more mainstream, but I think overall it is here to stay.”

A variety of other industries are also testing the ability of blockchain to aid in areas like ethical manufacturing, sustainability and banking. JPMorgan recently implemented blockchain technology in upward of 75 banks with the intention of quickly resolving issues that would typically hold up payments across banks. A recent survey by the accountant firm PricewaterhouseCoopers found that 84 percent of companies are “actively involved” in blockchain technology.

William Mougayar, chief investment officer of the blockchain investment firm JM3 Capital, cautioned that corporate interest in blockchain was “not a fad, but slightly overhyped today in terms of potential.”

“The promoters’ voices are rising while the engineers are quietly working on the tough problems that need to be solved,” Mougayar said. “If the promoters and business segment rush the technology’s promise, accidents will happen."

Mayank Pratap Singh, co-founder of the information technology services company EngineerBabu, echoed Mougayar, noting that blockchain technology will need to time to mature.

“We are in the early days, like 1995 for the internet.” Pratap said “I think understanding the core fundamental of blockchain is important before implementing them for solutions.”

CORRECTION (Oct. 5, 2018, 7:34 p.m. ET): An earlier version of the photo caption in this article incorrectly described the location of Narayangaon. It is about 112 miles east of Mumbai, not west.