Has Blockchain Reached its RFID Moment?
In 2003 Walmart told suppliers they were required to affix radio frequency identification (RFID) tags to pallets and cases within three years. This month Walmart announced that it has asked suppliers of leafy greens to have systems in place within a year that can trace their product all the way back to the farm using blockchain technology.
Back in 2003, many within the supply chain community interpreted Walmart’s edict as the trigger point for the rapid takeoff of RFID solutions. Today, we know that the story didn’t quite work out that way. Various issues slowed the progress of RFID, and it took longer to gain traction than anticipated.
Is history about to be repeated? Will blockchain’s evolution in supply chain management follow a similar path?
Both technologies have attracted considerable hype; blockchain continues to be hyped even though there are relatively few live and proven applications. And in both cases, the technologies are not new.
But there are some important differences too. For example, blockchain’s potential applications are much broader and cross many industries. Also, while the mechanics of RFID were fairly easy to grasp, practitioners find blockchain more difficult to fathom.
Questions remain about Walmart’s leafy greens application. How will product data be recorded at production points and along this complex supply chain? The retailer has revealed that handheld devices will be used, but it’s uncertain how lettuce and spinach crops will be tagged, especially given that these are low-margin products. Who will pay for the training and technology to scale this application?
Also, having committed to using the Walmart system — which is being developed in collaboration with IBM — will suppliers have to comply with other systems down the road, as more blockchain-based traceability solutions emerge? Familiar concerns over large players imposing their own technological solutions on industries are bound to surface.
On the other hand, there is a compelling case for Walmart’s latest blockchain venture.
The rise in the number of food poisoning outbreaks — including the recent outbreak in the US of E. coli in romaine lettuce — has exposed the vulnerability of food supply chains that span multiple growers and intermediaries scattered across different geographies.
Detecting the cause of outbreaks has become a major challenge. Product from many growers is co-mingled and labels contain scant information on origins. Companies still rely on paper-based records to trace food products. In some cases, it has taken weeks or even months to pinpoint the exact source(s) of an outbreak.
Another problem is that existing track and trace regulations based on “one-step up and one-step back” requirements are woefully inadequate. The European Union has introduced more stringent requirements for the meat industry, in response to scandals such as the discovery of horse meat in beef products in 2013. National regulations in the UK and in some EU countries require traceability back to the slaughterhouse.
Perhaps blockchain-based solutions such as Walmart’s will prompt changes in the regulations and improve food safety. The data generated — IBM is helping Walmart to digitize data on leafy green product flows — might enable companies to improve the efficiency and sustainability of food supply chains. And the retailer’s market clout could be the catalyst needed to bring blockchain to reality.
That’s assuming the technology does indeed fulfill its potential — the challenge RFID faced in 2003.
Hopefully, the picture will become clearer over the next year or so as blockchain development projects — including Walmart’s — deliver or fail to deliver viable live applications.
This post was written by Dr. Alexis Bateman (hickmana@mit.edu) and Ken Cottrill (kencott@mit.edu), who are members of the MIT CTL Blockchain Research Group. Dr. Bateman also is Director, Sustainable Supply Chains.
