Companies

How Walmart is applying blockchain tech to increase sourcing from India

Varun Aggarwal Mumbai | Updated on October 04, 2019 Published on October 04, 2019

A view of Walmart India’s newly launched store in Karimnagar, Telangana, on March 13, 2019. (file photo)

 

Food safety is one of the biggest issues that Indian food exports have faced in the recent past, be it recent ban of Indian seafood exports by the US or mango exports ban by the EU in 2015.

Walmart is now piloting the use of blockchain technology, popularly known for being the backbone of cryptocurrency blockchain, to improve food safety by bringing in traceability.

"We started piloting the use of blockchain for sourcing Mangoes in the US in 2017. We realised that in order to track where a particular mango came from, took us at least seven days. After using blockchain, we could track it to the farm in just 2 seconds," Paul Dyck, Vice President of Corporate Affairs, Walmart Inc, told BusinessLine.

India is among the top five sourcing markets for Walmart's global supply chain and in order to grow, trust needs to be established in food sourced from India and this is where Walmart is testing out the use of Blockchain.

Pilot study using blockchain

Walmart is piloting blockchain technology for end-to-end traceability of shrimp sourced from Andhra Pradesh and shipped to select Sam’s Club locations in the US. The pilot project is the first known use of blockchain to track shrimp exports from a farmer in India to an overseas retailer and also the first such blockchain project for Walmart in India.

According to Dyck, the pilot will help seafood farmers in the region to strengthen the shrimp supply chain and reinforce customer trust in the product, helping promote India as a preferred source of seafood, while also enhancing food traceability and transparency for consumers in the US.

The new technology will allow Walmart and its consumers to track the exact geo-location of a food product by just scanning the barcode.

If any problems are detected with shrimps, blockchain can exactly find out the location from where the shrimp has been sourced. .

"India is at the top of our priority list. One area we are growing significantly in is sourcing out of India. When we make investments in a market, we really want to find that perfect spot where we can invest in something that is good for our business. In this case, obviously, having a good quality supply, having visibility into that supply is good for the business," Dyck said.

Tie-up for shrimp exports

For this pilot, Walmart worked closely with Andhra Pradesh-based seafood processor Sandhya Aqua and US.-based supplier Stanley Pearlman Enterprises to add the shrimp supply chain to the blockchain-enabled IBM Food Trust and create shared value for the entire shrimp farm-to-table continuum.

Walmart has collaborated with IBM on the use of blockchain technology to enhance global food traceability since 2017. The two partners have already launched several initiatives to strengthen food safety in the fresh produce supply chain.

"Through things like this, way we can bring Walmart scale, work with our partners, and bring these technologies to the supply chain, and can really establish that trust and build up suppliers and increase exports from India," he added.

Shrimp is India’s largest agricultural export, with the US, taking a 46 per cent share of India’s shrimp exports by value in 2018. In Andhra Pradesh, the heartland of shrimp farming in India, the state government is encouraging farmers to improve quality standards and comply with stringent US monitoring programs to win the trust of US retailers and consumers and strengthen shrimp cultivation as a sustainable long-term growth industry. Blockchain technology supports this effort in the shrimp supply chain.

Support for small farmers in AP

To support small farmers in Andhra Pradesh, Walmart provided funding for the BAP certification training, helping themto access market opportunities.

According to Paul, Walmart will continually invest in training farmers in India through partners and bring in international farm technologies and best practices to improve their yields. Walmart intends to cut the middlemen and source directly from farmers and improve its margins. While Andhra Pradesh may be a pilot, Walmart is actively looking at new products and new regions within India to export from.

"Sourcing out of India is growing and it is particularly an areas where we are growing. There's a lot opportunity to grow that. Part of growing those numbers include working with our existing suppliers in India or suppliers who don't yet supply to Walmart's global supply chain, and get themto export to our supply chain that may include identifying new products and geographies. Right now, 97 per cent of products that we sell at our cash and carry B2B stores in India, are sourced from India. On the food side, we are increasingly sourcing directly from farmers," Paul said.

Published on October 04, 2019
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