Looking for Blockchain in the World’s Greatest Supply Chain
Walmart Supply Chain, Holiday Peak 2018
For those of us involved in blockchain development or cryptocurrency throughout 2018, it has been a difficult year of uncertainty and attrition. What began as irrational exuberance following last year’s Bitcoin market run-up and an explosion of ICOs, has painfully, thankfully evolved into a more nuanced enthusiasm, one focused on building solutions, with private money staking shoestring efforts. For a blockchain and tokenized economy advisory services company, it’s been a challenging but promising year.
Which isn’t all bad — tough markets tend to remove the tourists so entrepreneurs can work on creating real value, as the adage goes. But honestly, heading into the holiday with a young family, I needed to find a quick seasonal gig to keep the lights on.
Besides, there seems to be a rising trend in Venture Capitalists taking $18-an-hour jobs to understand the gig economy. In all reality, it’s difficult to find something on the spur of the moment that pays over $10/hour. With that in mind I joined Walmart Supply Chain, Peak 2018.
Challenged by rising wages at Amazon, Walmart only recently began paying $15/hour, elevating their warehouse roles to premium positions in my city. Let that sink in: the highest-paying hourly jobs in the 14th largest city in the US are in warehouses at Walmart and Amazon. (Before any Uber and Lyft drivers chime in, I ask you to consider if all that work for positive reviews is making you profitable.)
My initial thinking was that I could make some holiday cash, but also learn about how Walmart’s distribution model is evolving, and maybe even talk to executives at Walmart about IBM’s Hyperledger-based Food Trust Solution. I reasoned that if the center where worked had perishable items, I could see if blockchain was alive and growing inside the company, or still something hidden behind corporate laptops. Besides, a person can do anything for a few months they wouldn’t want to do the rest of their life, right?
Shift One
At $500 Billion in market value, Walmart is the reigning king of supply chain. As of 2017, Walmart operated 172 distribution centers in the US alone, representing 125.8 million square feet of space. Walmart is in the process of opening another 4, adding 4.2 million square feet. To put it in perspective, one analyst says Walmart US DCs put together would be the size of Manhattan.
Walmart is also the anchor to one of the largest collections of blockchain projects in the world. In mid-2017 Walmart began piloting IBM’s Food Trust solution, on the Linux-created Hyperledger blockchain. Over 100 other companies have signed on to the program including Dole, Kroger, McCormick and Tyson. In 2018 Walmart rolled out a wider program to all its perishable food facilities.
On my first shift I am trained in safety, strict absence policies, and the Walmart way — with obvious homage to its Japanese Kaizen roots. Light exercise and a collective cheer to start the day. I’m jaded so it seems a bit old-fashioned.
Kaizen, roughly translated as “change for the better”, is a business process that came out of Japan following World War II. Lead by Toyota in the 1950s, it didn’t gain popularity in the US in the late 1980s but Walmart went all in. The idea holds that small, continual improvements and the engagement of everyone from the floor worker to the CEO, can create great companies.
From my first shift I am eager to discuss blockchain with anyone who will listen. I ask the center manager. “Have you discussed blockchain software initiatives? Or have you heard about Walmart’s food safety program with IBM?”
He isn’t aware of blockchain, but has heard of Bitcoin.
Shift Three
At 4 am the highways are less congested, but in a city like Fort Worth, there’s still a steady, fast-moving trail of traffic on the highway. It’s an hour drive to the center and many associates drive 50 miles or more. When I arrive, a coyote scrambles across the road in front of me to grab a bag of fast food trash. Maybe I’m seeing things, it is early.
Inside, I’m encouraged about my plan to find blockchain by Sam Walton himself. “Listen to your associates.They are the best source for innovation.” is painted on one wall in large blue letters. I’m not discouraged by the employee suggestions bulletin board in the breakroom, unchanged since January. Maybe I can get Frank Yiannas, Walmart VP of Food Safety, to connect with me on LinkedIn.
All around me the workforce is older than I expected, on average over 25, and includes one of the most diverse groups of people I’ve seen at a job in Texas. People are speaking English, Spanish, Russian and Arabic. There are people from West Africa, Venezuela and China. In the men’s locker room, there are groups on prayer rugs during breaks while others play music and discuss money or the Cowboys. I’m not sure whether the crowd speaks to diversity or desperation in conservative Texas.
To be fair, this work isn’t for everyone and it’s physically grueling. Because this facility is one of the older DCs, there are no Roomba-like robots sorting shelves on the fly like at the newest Amazon warehouses.
Here pickers push 5-foot metal carts carrying four plastic tubs or totes, each to be filled with merchandise. They walk back and forth across 40-foot aisles labeled AQ-BB collecting items, then send totes along a conveyor for packaging and shipping.
Critical to the process are handheld devices strapped to picker’s arms, with a laser pointer attached at the finger. In IBM’s Food Trust Solution, vendors would be required to enter information with handhelds, too.
Hopefully Food Trust devices have been upgraded. The handheld devices used in this Walmart DC are a relic of the Symbol Technologies & Motorola merger of 2007. After Symbol was found to have committed massive fraud in 2002, Motorola came in followed by Zebra Technologies in 2014.
Having worked with Symbol Technologies while at a mobile software publisher during the heady days of Palm, Handspring and Pocket PC, I recognize these handhelds. I’d estimate the devices used in this process to be 6 to 12 years old, and likely 10 or more. Evidence: most are still branded with the Symbol logo.
The devices operate Manhattan software (a logistics industry titan). Surprisingly to their discredit, Manhattan Associates does not appear to have embraced blockchain on their website. More alarming perhaps, these devices operate on embedded Windows 7. For any IoT security professionals looking for potential threats, this is potentially one.
Shift Five
Collectively, during the 5:30am shifts, crews of 50 to 60 pickers gather 40,000 to 90,000 items over 10 hours — on average 80 items per worker, per hour. Stockers replenish merchandise at an average of 70 cases an hour. Announcers remind everyone how close they are to goal.
But it is painfully obvious that human positions like these will be eliminated soon through applications of blockchain, artificial intelligence and augmented reality. Amazon warehouses literally re-sort inventory as orders are placed, positioning items for a more efficient and centralized retrieval process (without many humans). Augmented Reality glasses could simply tell associates here where items are located for retrieval.
It’s also obvious I’ll have to look deeper for the presence of blockchain technology. No one’s heard of it here and there are no groundbreaking technological advances in this warehouse.
First Day Off
Couldn’t sleep. It’s 4am and I’m in a Walmart store for the first time since joining the DC crew. It’s a strange even surreal experience, walking into the bright, warehouse-sized store where everything is well-merchandised and surrounded by the “blue and yellow”. I wonder if other employees have the same experience. I can hear Tennessee Ernie Ford singing in my head.
This early it is busy, pre-shopper stocking time in produce and down the aisles. Floor associates are dressed in Walmart attire, happy and engaged in one another and in their tasks. It’s not nearly as dirty or loud as e-commerce fulfillment. But people are much like the people in the DC: different nationalities and races, friendly, hard-working. I consider myself lucky I can wear shorts and a t-shirt.
My feet are bruised and I’m incredibly stiff. My wife’s shopping list includes water and milk, things she hates to carry. Milk, in one of those old loss-leader grocer’s tricks is located on the far back wall. The heavy multi-packs of water are there, too.
Faced with the price of brand-names Horizon (top shelf at $4.58/half gallon!) and Prairie Farms (makes you feel more responsible, labeled “no hormones”, $3.56/gallon), I instead feel confident to chose Walmart’s Better Value brand ($3.06/gallon). I chose the house label because of blockchain. See, Frank. Food Trust is paying off.
Shift Nine
One of the benefits I see working with Walmart Supply Chain is a chance to talk to Frank Yiannas about blockchain. I connect with him through LinkedIn, expressing my interest in blockchain, and he accepts the request!
Yiannas can be seen in numerous videos explaining the benefits of Food Trust and how Walmart is leading the world in food safety technology. He uses an example of processed mangoes to show how Walmart went from identifying their origin in 2.2 seconds, compared to several days.
In the most recent example of a national food crisis, all romaine lettuce is pulled from stores across the US today, right before Thanksgiving, because of E-coli contamination. Almost 50 people in 12 states became ill. (It will take over a week before the Centers for Disease Control identify the origin of contaminated product. In the end it is limited to romaine harvested from six counties in northern and central California.)
A nationwide, comprehensive Food Trust Solution would have narrowed things down quickly and eliminated the need to pull every product from shelves before one of the biggest holiday meals of the year. Walmart is the first major retailer to commit to solving this problem.
Today Frank sends me a LinkedIn message saying he is impressed with my blockchain knowledge (I guess for a floor worker) and that he is leaving Walmart for the FDA as the Deputy Commissioner for Food Policy and Response!
“Congratulations,” I tell him, “You can help create a national blockchain food trust system for the US! You’ll make a great leader in these tumultuous times.” I also ask him to put me in touch with Walmart’s next generation of blockchain champions, and he does!
Truth is after weeks I haven’t found anyone else aware of blockchain efforts at Walmart. I’ve spoken to over a dozen people during breaks about how Walmart is using technology to make food safer.
One woman says “I know what it is, you’re here to spy on Walmart!”
“Not true,” I say, “I’m a Walmart Associate now. I’m here to learn and contribute — to help people spend less and live better lives.”
Shift Eleven — Thanksgiving
The warehouse is at full staff, hundreds of people gathered. The system is down for the first hour, but the rest of the day is steady and uneventful. Everyone is trained and focused. Managers handle the chaos and diversity exceptionally well. But the wave is coming. There are no windows, like a Las Vegas casino, and I can’t tell if it’s day or night.
Above all I’m thankful to make some money and that my family is safe. I’m also a little depressed I’m not with them on a holiday for the first time, and wondering what the hell I got myself into. My feet are killing me, despite two pairs of socks and gel insoles. I feel as if I’ve aged a decade in a month.
Shift Twelve
For Black Friday everyone is asked to wear black in spirit. I wear a black t-shirt that says “Bitcoin to the Moon” even as markets recently hit their lowest point all year, and Bitcoin tests $3,000. Still I want to show some support. More than a few people ask me about Bitcoin.
“Do you have any?”
(Sure, but never tell anyone you do, makes you a target.)
“I hear Bitcoin is for buying drugs.”
(Well, in the early days. People use Monero or Dash now.)
“What alt coins should I look at?”
(Be a Bitcoin maximalist, you’ll fair better.)
“Question cryptocurrencies if you like,” I add each time, “but blockchain, the technology Bitcoin introduced, is here to stay. Look at how Walmart has started a revolution with food safety.”
Frankly only Walmart could have started the blockchain revolution. Suffice to say that without the weight of Walmart, IBM would have had a much harder time getting companies to participate. Since Walmart is notorious for strong-arming vendors into accepting terms, it’s no surprise they’d carry clout in asking food vendors to join Food Trust.
Walmart vendors who produce perishable foods first need to agree to new processes and technology in which a bar or QR code is affixed and referenced at various stages of production. While that seems simple enough, a high degree of engagement and participation is necessary. I can only hope the handhelds vendors are required to use weren’t purchased from Handspring.
Black Friday is chaotic but 10 hours go by quickly. There are computer glitches and conveyor issues that come up, but it’s manageable. It seems there are fewer workers than the day before. Shouldn’t Cyber Monday be the worst?
Shift Thirteen — Cyber Monday
Cyber Monday is the worst. The crowd of Walmart Associates has dwindled, though reports predict online shopping to increase 18–24% this year. The day is organized chaos and by the end, everyone is punchy. I overhear the shift before mine is behind almost 20,000 units. We never catch up entirely.
According to CNBC, it is again a record-breaking year for online holiday orders. Combined US online sales for Thanksgiving Day ($3.7 Billion), Black Friday ($6.22 Billion), and Cyber Monday ($7.9 Billion), reach $17.8 Billion.
That’s impressive but still nothing like China and the Alibaba-created Singles Day, 11/11 which this year raked in over $30 Billion in one day from more than 500,000 customers. I can only hope Chinese distribution centers have Roomba-like robots.
If this Walmart DC wanted to increase productivity, they’d do well to look again at the human user experience. For example, pickers and stockers often change zones to pick up slack. Each change takes 11 keystrokes on the handheld device, mostly of unintuitive command strokes. It takes 12 keystrokes to start a new task.
One command for checking if a missing item is located elsewhere is considered a measurable metric but never works. A more intuitive device, with half the functionality, could increase production 30% or more. Finally, batteries on devices last only 2/3 of a 12-hour shift. Associates have to check out batteries in another process that takes time and effort.
Key Learning
Ok, so I didn’t exactly get up close and personal with Walmart blockchain efforts like I wanted to, but I was able to eventually connect with blockchain leaders at both Walmart and IBM. I also learned a great deal including:
- Walmart DC work is difficult and inefficient for humans; the current process is destined to be replaced by blockchain, AR and AI.
- Walmart’s participation in Food Trust is virtually unknown to Walmart associates. (Don’t worry, few know blockchain, either.)
- Continuing a trend, many people have heard of Bitcoin, but few understand what it is (or how the technology will change things).
- IBM Food Trust handheld devices in the wild should be easy and intuitive to use (and preferably made this decade).
- Frank Yiannas, new FDA Commissioner for Food Policy & Response, could help create a national blockchain-based food safety program for the country (our food’s in good hands).
If you’re in blockchain software development or cryptocurrencies, I encourage you to take a personal look inside the industries you hope to impact. Whether supply chain, finance, transportation, insurance or many others — understand how those industries work to better understand blockchain applications or tokenized economies.
To learn more about Food Trust and Hyperledger, visit the IBM Food Trust website.
Michael Mayes is the Chief Evangelist for MPGResearch.io, a blockchain and tokenized economies advisory service in Fort Worth, Texas.
