For my lads, ragazzi, chum, khoya and family Contents Introduction ................................................................................ 2 Chapter 1: Traceability and transparency in the Food Supply Chain ........................................................................................... 5 1.1 Traceability and transparency definition .................................... 5 1.2 Motivation and benefits of traceability in Food Supply Chain ........ 7 1.3 Challenges of Supply Chain and Food Traceability .................... 12 Chapter 2: Blockchain integrated food Supply Chain ................. 13 2.1 Blockchain overview ............................................................. 13 2.2 Functional characteristics of blockchain-based traceability ......... 15 2.3 A blockchain integrated food Supply Chain .............................. 17 2.4 Benefits of Blockchain traceability systems versus Traditional ones ............................................................................................... 21 2.5 Research limitation: still a new technology .............................. 24 Chapter 3: Blockchain traceability systems designs and strategic value for agri-businesses .......................................................... 26 3.1 Blockchain design to support Strategic Value Creation for Companies ................................................................................ 26 3.2 IBM and Hyperledger Fabric blockchain solution for food traceability and transparency ...................................................... 27 3.3 Blockchain-As-A-Service for traceability in food Supply Chain .... 32 Chapter 4: Case Study: Walmart usage of blockchain to improve traceability and transparency in its Supply Chain ...................... 35 4.1 Walmart presentation ........................................................... 35 4.2 Blockchain traceability impact on Walmart Value Chain ............. 36 4.3 IBM-Walmart Partnership ...................................................... 39 4.4 Traceability of the fresh cut pork product in China .................... 42 4.5 Traceability of mango product sold in the U.S. ......................... 49 4.6 Walmart learnings and the future of blockchain in food Supply Chain ....................................................................................... 55 Chapter 5: Discussion and limitations ....................................... 57 Conclusion ................................................................................. 60 Bibliography .............................................................................. 63 1 Introduction Food traceability and transparency are very important aspects of food production and food Supply Chains. They allow the agri-food actors to ensure the safety and quality of their products. Additionally, they can provide information to consumers concerning the origin, lifecycle, and environmental aspects of certain food production. Customer are becoming increasingly concerned by not only the product quality, but also its origin, production methods and impacts. Food safety has long been a major concern around the world. Food poisoning kills roughly 420,000 people each year (WHO, 2015). The 2006 E-Coli outbreak showed the weakness of food Supply Chain with an estimated economic loss of $350 million in the US (Hussain and Dawson, 2013), with 199 person contaminated and 102 hospitalized (CDC, 2006). In 2013, the Horse Meat scandal reduced customer trust in a widespread case of global food fraud (BBC, 2013). Consumers expect more information and ways to verify the authenticity of the products they buy from the producers. According to IBM (2020), consumers embrace social causes, and seek products and brands that align with their values (sustainability, fair trade). 71% of people indicate that traceability is very important are willing to pay a premium for brands that provide it, 57% of consumers consider environmental impact when purchasing a product and 55% of people claim they would switch brands following a recall (IBM, 2019). Bateman and Bonanni (2019) shared that consumers willingness to pay more for products increased by 2% to 2 10% when companies provide greater Supply Chain transparency. Moreover, the cost of food-related concern represents a large impact on agrobusiness. The brand reputation cost is very high after scandals and it takes years to build back the market share and trust lost (Independent, 2013). The entire cost of food-related concerns in the United States ranges from $55.5 billion to $93.2 billion per year, including medical bills to economic losses from decreased production, destroyed food and reputation loss affecting sales (Scharff, 2015). According to IBM (2020), this cost has risen by 20% in the last four years. Currently, there are many different systems available for food traceability, but many are inefficient in complexes Supply Chain which involve a lot of paperwork and do not guarantee trustworthy information. Recently, with the creation of Bitcoin in 2008, blockchain technologies have emerged and their applications to many sector has been theorized. Although still in a nascent stage, some say 2022 should see a strong demand for blockchain chain technologies (Forbes, 2022). Supply Chain blockchain has received a lot of attention with the potential to increase efficiency, productivity or reducing costs. Transparency and traceability in food industries are a good example and these are following an increasing demand for supply-chainrelated data on ingredients quality, food fraud, animal welfare, and labor conditions (IBM, 2020). However, it is important to acknowledge that the technologies are immature and still in their hype phase (Carson et al., 2018). 3 With these benefits in mind, the first chapter will discuss the literature review on traceability and transparency of the Supply Chain. The second one will explain the functioning of blockchain technologies and blockchain integrated Supply Chain, while the third will present the most famous adopted blockchain framework for Supply Chain value creation. The fourth will present the analysis of Walmart blockchain integrated Supply Chain of its mango and pork products. Finally, the fifth chapter will discuss and explain the key findings and limitations of the analysis. 4 Chapter 1: Traceability and transparency in the Food Supply Chain 1.1 Traceability and transparency definition This thesis will aim to address the benefits and impact of traceability and transparency in food Supply Chain. To begin with it is important to define these key words. Academically, although the terms are often used interchangeably, most definitions of traceability define it as the ability to follow the movement of food products throughout the Supply Chain, whereas transparency as how this information is shared to other actors. (Opara, 2003) definition “[Traceability] refers to the collection, documentation, maintenance, and application of information related to all processes in the Supply Chain in a manner that provides guarantees to the consumer and other stakeholders on the origin, location and life history of a product as well as assisting in crises management in the event of a safety and quality breach.” share the idea that traceability is a tool to enable the capture of data and is beneficial to the Supply Chain. Information collection on the processes of the Supply Chain to provide all stakeholder visibility of the product life and path, ensure greater safety and quality outcome. This idea is also shared by Bosona and Grebenbet (2013), who argue that traceability means capturing all the physical steps and data associated to them, from the different resources, activities and actors involved in its production and distribution. 5 As an example of food traceability, Dickinson & Bailey (2002) define meat traceability as the “ability to trace the retail meat back to the farm or [the] animal of origin]” and transparency as “knowing the meat was produced without added growth hormones, or knowing the animal was humanely treated”. Some organization specialize in assessing and certifying the traceability and transparency of businesses’ Supply Chain. As an example, the International Organization for Standardization (ISO) has a 9000 series on quality management and quality insurance. In it, it defines traceability as the ability to trace the history, application, use and location of an item or its characteristics through recorded identification data. The 9000 family includes several norms, in the 9000:2015 on quality management systems, Subclause 8.5.2 Identification and Traceability states the following three requirements around identification and traceability: ” i. Use suitable means to identify outputs when it is necessary to ensure the conformity of products and services. ii. Identify the status of outputs with respect to monitoring and measuring requirements throughout production and service provision. iii. Control the unique identification of the outputs when traceability is a requirement and retain documented information to enable traceability.” 6 This norm specifies that the records of product information (that could be origin, process or different location points) are the key output used to enable traceability. (ISO, 2015) According to Norton (2019), Supply Chain traceability is the process of tracking the provenance, route of products and their inputs from the beginning of the Supply Chain to the end. Traceability allows companies to find Supply Chain efficiencies, to follow regulations, to build trust and to connect with all the actors of the chain. Meanwhile, Supply Chain transparency refers the disclosure strategy of the information of the Supply Chain to stakeholders. Any organization seeking building customer trust must think about transparency from the start. In this thesis, we will the above definition as a reference point. 1.2 Motivation and benefits of traceability in Food Supply Chain Bosona et Gebresenbet (2013) argue that food traceability has for goal the safety of food and the control of quality. Improving the traceability and transparency in Supply Chain has benefits for all the participants of the Supply Chain. Bateman and Bonanni (2019) share serval operational and competitive advantages of food traceability and transparency: • Supply Chain efficiencies from better knowledge on the Supply Chain. It allows companies to identify opportunities for improvement, reducing communication costs between participants and build a better long-term strategy • Compliance with regulations 7 • Transparent Supply Chains also reduce the scandals risk and improve a company's reputation as a reliable business. • Attraction and fidelity of customer and stakeholders: individuals who to work and shop at companies that matches their values. I.e Patagonia and Nike receive a lot of job applications and have a low staff turnover rate, which is partly due to their reputation as responsible corporations. Patagonia claim a low staff turnover rate of less than 4% each year. • Consumer trust and satisfaction improvement by enhancing accountability and truth in messages Food Industry and their Supply Chain benefits from improvement in traceability and transparency. Zhang and Ting (2017) argue that the implementation of food traceability systems is driven by many different forces. These forces can be categorized under five concerns: safety and quality, economic, social, regulatory, technological. He also argues that food traceability systems are a consequence of customer demand and government regulations, that food companies must address. Finally, there are also potential economic benefits behind the adoption of better traceability systems, from allowing better flow and transfer of information within the Supply Chain. In example, capturing essential products attributes (i.e vaccination status / ownership report) at the first step and sharing it to every participants reduces communication and middleman costs and provides value for all participants. 8 In this thesis will bring a particular look at how traceability is a key factor for food fraud reduction, better food safety and a competitive and economic advantage. Reducing Food Fraud Research from (Aung et Chang, 2014; Bosona et Gebresenbet, 2013) share that improving traceability will reduce food fraud, allowing a better identification of cheating parties and by pro-actively de-incentivizing food fraud tentative by malicious actors. From a customer and regulator point of view, better traceability system will enable better tracking and transparency of product journey to limit food fraud and improve food safety. According to the EU regulation, food fraud is “any suspected intentional action by businesses or individuals for the purpose of deceiving purchasers and gaining undue advantage therefrom, in violation of the rules referred to in Article 1(2) of Regulation (EU) 2017/625 (the agri-food chain legislation)”. The horse meat scandal of 2013 is a good example of food fraud resulting from lack of traceability. In several parts of Europe, the food advertised as containing beef was found to contain horsemeat or pork meat. These different meats were not or improperly declared, reaching 100% of the meat content in some cases (BBC, 2013). This issue came public when horse DNA was identified in products. Although the presence of undeclared meat this time was not a health issue, it represented a major trust scandal from false advertisement. According to some investigations, the horse meat 9 was slaughtered in Romania clearly and correctly labelled as horse. However, its label was changed later to beef. Companies faced the consequences of a lack of traceability of the food Supply Chain. This food fraud case shows that malicious actors have tampered with the product information in the Supply Chain (BBC, 2013). In consequences, consumers and other participants have been lied to and bought a product without full knowledge of its content. Improvement of Food safety (Opara, 2003) argues that the capture of product information against safety standards and production process details will simplify the identification of non-compliant products. Traceability systems will allow a better and faster identification of the root causes, responsible actors will be identified easily, customer trust will increase and number of recalls and the associated costs will be decreased. Traceability systems will also support the collection all the product information related to health and safety. With as effect, improving the identification of non-compliant products. According to the World Health Organization (WHO, 2015), 1 in 10 people fall ill after eating contaminated food. Unsafe food contains harmful bacteria, viruses, parasites, or chemical substances that are the root cause of many diseases, resulting in 420 00 death and impacting the health of 33 million persons. Decrease of costs & Competitive advantage 10 Golan et al. (2004) point out that a traceability system tends to improve the Supply Chain in its whole. Indeed, the efficiency gains generated by one end of the chain are transmitted throughout the chain. An efficient traceability system allows a quick transmission of data and eliminates duplication of checks between the different parties in the chain. Information and transactions costs (electronically implemented) are reduced. Thus, overall production and distribution costs can be optimized. Moreover, the advantage of being able to specifically trace the batches affected by the defect is that they can be identified and removed from the market, reducing losses related to negative consequences on corporate reputation (Golan et al., 2004). The E-Coli outbreak of 2006 had an economic cost evaluated at 350 $Million (Hussain and Dawson, 2013). E Coli had contaminated a batch of fresh spinach. It took 2 weeks for the FDA to trace the origin farm. It was only 1 supplier, 1 farm, 1 lot and1 day production that created this massive health issue. As a result, all the spinach was destroyed, and the farmers livelihood affected, as consequences of the inability to trace the origin of the product. Finally, traceability systems are a competitive advantage by improving brand image and consumer trust Golan et al. (2004). Proving the claims made by the product (quality or origin) and reinforcing customer trust versus competitors products. 11 1.3 Challenges of Supply Chain and Food Traceability Modern day Supply Chains are very complex, involving many different actors and cross border operations. The different actors often work isolated in silos, overall communication between them is often kept to minimum due to a lack of global structure. This is causing efficiency and cost issues, limiting the data availability, and impacting negatively trust and transparency (Jain, 2021). According to (Zhang and Ting, 2017), food traceability challenges can be categorized between awareness limitation, economic limitation, information limitation and standard limitation. - Awareness limitation: traceability is perceived as bureaucratic, and companies are reluctant at investing, paying less attention to quality and safety monitoring - Economic limitation: traceability is perceived as a cost burden and additional work necessary for all the Supply Chain stakeholder (implying labor cost). Additionally, there are difficulties in coordinating and allocating cost of across the chain - Information limitation: food traceability systems suffer from lack of complete; accurate and easily accessible data as well as information asymmetry - Standard limitation: different stakeholders mean different standards, provoking a lack of uniformity, different level of accuracy in the data as well as trust issues between the different partners. 12 Hence, the agri-food Supply Chain benefits from traceability and transparency to become more sustainable, as well as improving customer trust and their purchase willingness. Identifying and addressing the source of food hazard or contamination in the food Supply Chain is possible with tracking and authenticating of all the data along the product path (Zhao et al., 2017, Bosona and Gebresenbet, 2013). Chapter 2: Blockchain integrated food Supply Chain 2.1 Blockchain overview Blockchain is a recent and fast-growing technology that has drawn interest in many different sectors. Blockchain was introduced in 2008 with the creation of Bitcoin. The blockchain is also referred as distributed ledger technology and was created specifically for the cryptocurrency (by Nakamoto in 2008). In summary, Bitcoin is a virtual currency where ownership of bitcoin assets is recorded and verified on the blockchain. Blockchain technology removes the reliance on intermediaries that usually centralize the operation of monetary assets (banks, financial firms, insurance companies…). This is done by building a decentralized ledger that is distributed across all the participant of the network, where are all transactions are recorded and verified by its participants. This thesis doesn’t have for intention to explain Bitcoin and the technologies being the blockchain, but it is important to understand how the blockchain works to 13 understand why it enables specific applications. (Tripoli and Schmidhuber, 2018). Blockchain as a trust solution for databases According to Deloitte, blockchain technologies, also called distributed ledgers, “provide a way for information to be recorded and shared by a community. In this community, each member maintains his own copy of the information, and all members must validate any updates collectively” (Deloitte, 2017). In regular databases, data is managed by one party (usually stored in central servers). This party has full control of the data, and the users trust that the data will not be altered by this central authority. However, with a unique owner of the database, the data is sensible to tampering by this owner. Hence, in traditional database, trust in the central party is essential for its functioning. This issue is referred as the single point of failure. The solution to the single point of failure of a central owner is to share the ownership and maintenance of the database to all the users of the network. Xu et al. (2020) present the blockchain technologies as referring to the combination of cryptographic and peer-to-peer (P2P) technologies and design build to support the distributed ledger. A network of computer executes a pre-determined protocol to maintain a record of transactions, that are stored in “blocks”. This block contains data (i.e transaction record) and the hash value of the preceding block. All blocks are linked to each 14 other with these “hashes”, like in a chain (hence the name blockchain). This hash and block combination are what makes this blockchain working. The Blockchain follow several rules: 1) Data must be consistent: Addition of data cannot be in contradiction with data that is already existing in the blockchain 2) Data can only be added on the top of what already exist in the blockchain, previous data cannot be altered. I.e the transfer of asset from a previous owner to a new one is recorded in a new block with the change in ownership, but the information that the previous owner once had the asset at a point in time will always be present. 3) All the computing systems maintaining the distributed ledger must agree on the similar data (two computing systems cannot have different data) 4) No single entity can modify unilaterally the data 2.2 Functional characteristics of blockchain-based traceability Feng et al. (2020) argue that blockchain technologies represent an innovation solution for distributed data storage and transfer. The key blockchain characteristics of blockchain applicable to traceability are the following: - Decentralization and trust in the network: Decentralization and distribution of the data in Blockchain enable high level of integrity and security. With no central server and central entity to control the data management, this provides a reliable and tamper-proof source of 15 information. In a decentralized system, all nodes hold records of the data, exchange between each other and guarantee the security of the whole network. These networks are robust to manipulation and provide high degrees of trust. (Bosona and Gebresenbet, 2013). - Consensus mechanism and immutability of the data: All party of the network reach consensus and agree on the new data put into new block. Data is stored on the Blockchain in timestamped blocks that are connected chronologically by cryptographic hashes. Because Blockchain records are immutable, data modification after being added is not possible and malicious actors cannot alter it. (Wang et al., 2019a). - Smart contracts to enhance traceability processes: Transaction recorded in the blockchain can be automated using smart contract. When a participant initiates a traceability action (through scanning, sensor, or any other pre-defined input) that follow a rule, smart contract will record an entry in the blockchain to validate the rule. A smart contract, like any other transaction on the blockchain, cannot be withdrawn or changed once it is formed. (Wang et al., 2019a). With smart contracts, data is captured and shared easily to the rest of the network. I.e the stable temperature can be recorded every 24h hours through sensor and combined with Internet of Things IoT shared into the blockchain with a smart contract. Feng et al. (2020) adds that the combination of smart contract and IoT helps capturing reliable data inputs and limits error record (i.e from manual entries) 16 - Customization of transparency and access of the data: Blockchains have numerous customization possibilities and companies can set the conditions for which participants can be involved and specify which data is visible by the participants (Feng et al., 2020). First, blockchains can be private or public. In public blockchains, everyone can see every transactions and participate. In private blockchains, the access is restricted to some participants and decided by a central entity. This is convenient to control who is invited and can participate. I.e companies have private information that they want to keep confidential and not being public shared. Second, blockchains can also be permissioned or permissionless. Permissionless blockchain are like public blockchain where any one can read and participate. However, in permissioned blockchain participants can read the information but cannot participate unless given the right to. This customization possibilities to design platform with different roles. (IBM, 2017) 2.3 A blockchain integrated food Supply Chain (Tripoli and Schmidhuber, 2018) argue that the technology provides immutable data records and traceable transaction history, that can be used to improve efficiency, transparency, and traceability. In recent years, the food and agriculture industry have shown a strong interest for the technology and many initiatives have surfaced to leverage the ability of 17 blockchain to trace data in order to improve the safety and quality of the global food Supply Chains. The food chain is composed of many steps with different actors such as farmers, processors, shipping companies, distributors, and retailer. A traditional food Supply Chain can be represented as below (Caro et al. 2018): 1. Production: This phase includes all the farm's agricultural activities, to raise crops and cattle (fertilisers, seeds, animal breeds, and feeds). 2. Processing: This phase start by the transformation of a raw product into another form (or several). This product is often packaged, and identified with a production batch ID code that includes information such as the dates, ingredients utilised etc. 3. Distribution: Following processing, the product is transported to the retailers. Some in-between step might happen basis the Supply Chain size and complexity. 4. Retailing: This is where the product is received (Retailers) and offered to sale to customers. 5. Consumption: The customer is the chain's final user; he or she purchases the product. This customer chooses products based on a information on quality standards, country of origin, and manufacturing procedures, traceability support his decision. 18 In traditional food Supply Chains, product transactions are usually only recorded internally and heavily really on paperwork, affecting the transparency. Fraud of data is possible, many intermediaries are exchanging the goods, increasing cost and inefficiencies. Cost of Supply Chain operation can range from 10 to 20% of the revenue of a product, and optimization of the Supply Chain can reduce cost up to 25% (Oliver W). (Tripoli and Schmidhuber, 2018) argue that this system is not efficient and cannot be trusted. According to Feng et al. (2020), Internet of Thing (IoT) already offer a possibility to capture this data. Technologies such as scan, QR codes, Radio Frequency Identification (RFID), Wireless Sensors Network (WSN), Near Field communication (NFC). These smart devices capture and share data at the different phases of the product journey. However, their implementation at each step and a central collection of all the data from participant is challenging. Using the generic agri-food Supply Chain model presented above, below is the description of a blockchain integrated food Supply Chain and all the information that can be recorded. At each step, information is captured creating a digital flow (using digital technologies such QR codes scan, RFID, NFC or simplify a data entry from a web interface). These information are shared via Internet to the blockchain infrastructure. The capture of all the key information can be uploaded automatically (smart contract) or manually (manual data entry input): 19 1. Provider and Producer: Record all the crop, pesticide, fertiliser application, machinery engaged information, weather conditions, animals records… The transaction between the farmer and producer are also recorded. 2. Processor: Factory, equipment, processing methods, batch numbers, hygiene records etc are recorded. As above, the transactions between the previous and following actor of the chain are recorded too. 3. Distributor: Itinerary and transportation data (type of transportation, container information, time in transit, temperature, humidity) etc. All transactions between the distributors and actors engaged (i.e. retailers) are recorded. 5. Retailer: Share the product information, processing and consumption recommended dates, usage and time spend in the shop are recorded. 6. Consumer: When doing the grocery, the customer can access all the information on the product he desires to purchase. By scanning a QR code (or enter the reference number) on the product on the packaging, the customer can access all the product information directly queried from the blockchain, tracing the product path from producer to the shop. This is often referred as Farm to Fork. 20 Figure 1 Simplified blockchain integrated Supply Chain system (Source: Kamilaris, 2019) 2.4 Benefits of Blockchain traceability systems versus Traditional ones Application of blockchain on the food Supply Chain can improve processes transparency and efficiency, improving trust and communication between suppliers and businesses and improve customer trust. (Saurabh and Dey, 2021) We have presented an integrated model of the food Supply Chain using the blockchain, however, what justifies the usage of blockchain versus traditional system using Internet of Things (IoT) technologies? The blockchain technologies offer to close two gaps versus traditional traceability systems: improve the trust in data shared by the actors of the chain and facilitate the capture and storage of data by multiple actors. 21 First, it is important to remind that blockchain are complimentary with the usage of IoT devices. It is not meant to replace them. IoT reduces the need for manual recording and Blockchain offer a structure to collect and store the data (Lin et al., 2018). Trust is limited in existing food traceability systems (Feng et al., 2020; Zhao et al., 2017). Trienekens et al. (2011) argues that IoT technologies alone won’t offer guarantees of information integrity and transparency. The key reasons are the lack of visibility in large Supply Chains (too many steps and actors), Supply Chain opacity from governance issues (for international Supply Chains) and stakeholder compliance (actors can be reluctant to share their data to a central organization). Feng et al. (2020) argue that the food safety and quality concerns can be improved through increased traceability and transparency. Therefore, Blockchain capacity at storing data combined with its structural design of providing immutable records of data and transaction history offers a solution to the trust problem. If transparency and traceability are key to enable customer trust and growing a business, some businesses have been slow to adopt traceability system. According to Bateman and Bonanni (2019), traditionally Supply Chains were originally opaque. Sharing information is often perceived as a loss of a competitive advantage (i.e diminution of bargaining power between suppliers) and traditional IoT support traceability system presented strong asymmetry of information. Hence, companies were 22 reticent to adopt these systems. Additionally, trust relationship between parties was sufficient and few data was recorded or presented a high degree of error from manual work. (Bosona et Gebresenbet, 2013) argue that traceability usually operates following the One step up – One step down model. In this model, companies usual trace the origin and the destination but only at one direct level (i.e who supplied them the resource and who did the company supplied the resource to). Therefore, the company only has a limited view on the product journey and data, and this information isn’t always shared to the remaining stakeholders. Total traceability requires a connection of data inputs across all participants, effectually removing individual traceability system for an inter-organizational solution, at the expense of complexity and cost alignment (if using current traceability structures). Regulation have impacted the structure of the traceability systems, i.e EU food law in Regulation (EC) No 178/2002 mandates all food companies to comply with the “one step forward, one step back” approach. If no systems offer a holistic view of the product journey, tracing the source of a precise product will require going backward into the chain by reviewing individually each supplier. Total traceability of the supply necessitates a deeper integration of the traceability and a more accessible Supply Chain (Bosona et Gebresenbet, 2013). Hence, a transparent and efficient traceability system for our food 23 product is necessary to reach the goals of greater food traceability and transparency. 2.5 Research limitation: still a new technology Several academic research have highlighted that although it is considered as a promising technology, more research is need. Blockchain application in food supply is still i) a recent topic ii) does not have enough data (mostly pilots) iii) share different views on best practices. In 2019, Gartner evaluated the application of blockchain to supply chain as in peak of inflated expectations. This stage represents when a lot of hype around a technology has been produced, supported with eagerly shared success stories but also accompanied by scores of failures (often with less traction). According to the Gartner hype cycle, it is unclear whether the hype is justified or simplify following the trend that accompanied the rise of cryptocurrencies. 24 Feng et al. (2020) argue that there are research gaps. First, studies on food traceability systems are still incomplete and it is a topic that has not fully been explored. Second, there are still some unknowns around how blockchain technologies actually enable better transparency and traceability for food Supply Chains. Third, blockchain encompass a wide range of possibility in terms of system infrastructure and consensus, with each their problems and it is not clear yet what blockchain setup are really beneficials. Lastly, companies using blockchain might over-exaggerate the benefits of blockchain to boost trust and brand reputation by using “cutting edge technologies”. 25 Chapter 3: Blockchain traceability systems designs and strategic value for agri-businesses 3.1 Blockchain design to support Strategic Value Creation for Companies Carson et al. (2018) argue that the strategic value creation behind blockchain adoption is a reduction of the transaction complexity and cost, an improvement of transparency and trust, and a cost reduction by reducing intermediaries and lower effort of record collection and keeping accurate database. For Agri-food companies, the best design for Food Supply Chain is the use of Private and Permissioned blockchains. This enables Private, permissioned blockchain allows businesses both large and small to start extracting commercial value from blockchain implementations. Figure 2 Blockchain-architecture options (Source: McKinsey) 26 To apply blockchain benefit in companies’ strategies, firms should follow a structured approach (Carson et al., 2018): 1. Analyze impact and feasibility of potential changes, after identifying where value is created and what pain point in the existing processes would need to be solved 2. Customize the design and approach to implement blockchain basis the current market position, taking in account influence capacity for change, ability to set standards, and regulations compliance. Finally, Blockchain must be seen as the backbone of Supply Chain digitalization. It offers a central IT infrastructure to capture and store data, connecting all IoT and smart devices inputs from all the different steps. Blockchain is a complementary database infrastructure that is added on the top of current companies’ infrastructure and help structuring existing systems and push for strong digitalization of the processes (Oliver Wyman, 2018). 3.2 IBM and Hyperledger Fabric blockchain solution for food traceability and transparency IBM is an American multinational technology corporation founded in 1911. The company main products are the production of computer hardware and software, and the offering of hosting and consulting services in technological sectors. IBM renown is global and created several famous informatic inventions such as the ATM machine or the hard disk drive. 27 IBM Blockchain in its own words “Enable trusted data exchange and workflow beyond the boundaries with distributed ledger technology and IBM Blockchain”. IBM is considered a leader for blockchain providing services (CNBC, 2017). The benefits of IBM Blockchain Platform are to give customers the flexibility, speed, and power of blockchain using an external provider, removing the need to develop in house technical competencies and technology. IBM competitive advantages lie in having proven benefits from success cases and improvement in productivity and ROI. IBM is a Blockchain-As-A-Service provider (BAAS). It offers customers the support, tool, and setup necessary for the blockchain solutions deployment, development and operations. IBM Blockchain Platform is the commercial service sold by the company to customer and that leverage the technology from Hyperledger Fabric. What is Hyperledger Fabric? Permissionless blockchain networks that require every peer to execute every transaction, maintain a ledger and run a consensus are not well designed for business application. Additionally, they cannot support truly private transactions and confidential contracts that are necessary when doing business with different partners (Carson et al., 2018). Hyperledger is a project with different frameworks offering different solution based on the problem an entity is trying to solve. One of this framework for permissioned blockchain with a private channel support is Hyperledger Fabric. 28 It was in this context that the Hyperledger community designed Fabric, a new blockchain platform with modular, scalable, and secure components to be used as a foundation for business usages. Figure 3 Hyperledger main frameworks (Source: Hyperledger) Hyperledger Fabric is an open source and permissioned blockchain framework project from the Linux Foundation. It was designed as a foundation for developing applications and solutions with an open and modular architecture, to accommodate each customer needs. It also enables easy and fast transactions between different actors of a same network. Currently, Hyperledger Fabric is the most used private blockchain in supply chain adoption because of its design as a business solution architecture. There are two node types within the Hyperledger Fabric network. Peer nodes and ordering nodes. Peer nodes execute and verify transactions. Ordering nodes order transactions and the history of transaction to the 29 blockchain. This allows grouping up transaction together for increasing efficiency and scalability. Like all blockchains, Hyperledger Fabric records an history of transactions in a chronological ledger. In Bitcoin, for example, the ledger holds the record of transaction of bitcoins between different parties. In Fabric, what is transferred is assets. In our case, it can be any food asset that is transferred along the Supply Chain by the different actors. Hyperledger Fabric gives businesses the ability to create their own assets and their values, and the state changes are recorded on the ledger using chain code. Chaincode is the software used to define an asset and the transaction instructions needed to modify those assets. It is used as the business logic between the exchange of asset between parties. The benefit of Fabric is to have a central business logic that facilitating the exchanges and record them. Fabrics Ledger is comprised of two components. First, a Blockchain Log that stores the immutable sequenced record of transactions in blocks. Second, a State Database that maintains the blockchain's current state. By storing the current state of the blockchain, this enables speed and efficiency (by not having to calculate it by looking at all the transactions in the database) and allows the members of the network to retrieve transactions information from there. In example, if access is granted, it is possible to retrieve the information linked to a specific food asset transaction between two 30 participants that happened in the past. By having all the transaction logged, it allows to find the place of origin of the asset along the chain of exchanges, by querying it using SQL like jobs. Hence, Hyperledger Fabric enables traceability of the asset, its provenance, and its different steps. Another key benefits of Hyperledger Fabric is that it provides privacy to the transactions. Businesses do not want strategic information such as the price deals with their suppliers to be openly accessible by their competitors. As a permissioned blockchain, Fabric can define the participants and what their access are. The framework provides a membership identity service that manages user IDs and authenticates all participants on the network. However, competitors can be in the same network. Hyperledger Fabric solves the privacy problem by using Private Channels. These are restricted messaging channel that can be used to provide transaction privacy and confidentiality for specific subsets of network members. Without explicit access to that channel, all data including transactions, member, and channel information cannot be seen or accessed by anyone else in the network. This allows competing business interests and any groups that require private confidential transactions to coexist on the same permission network. Hence, Hyperledger Fabric enables business a control on privacy of information and flexibility to whom they want to share it. In conclusion, Hyperledger Fabric has a flexible structure that present the following advantages: 1. Members of a business have control over the asset 31 creation. Assets on the network are added, updated, and transferred using chaincode. 2. It enables privacy by having private memberships for the network access and private channel options inside the network. 3. It increases efficiency versus public blockchain by dividing nodes into two types: peer nodes and ordering nodes. 4. It is a ledger that store the data of the networks current state which can be queried for tracking each assets' providence. Thanks to these core functionality, it allows traceability, privacy, decentralization using blockchain. 3.3 Blockchain-As-A-Service for traceability in food Supply Chain To answer growing demand for Food Supply Chain Blockchain based solution, IBM has developed IBM Food Trust leveraging Hyperledger Fabric Technologies. This solution enables tracing and tracking capability to meet demand for smart and safe food chain. IBM Food Trust advertised benefits and applications are Supply Chain efficiency, brand trust, food safety, sustainability, food freshness, food fraud, and food waste. It allows every participants of the network to generate value from participation. Customers and regulators gain access and visibility on the product path and origin, Companies gain efficiency by better inventory tracking and Supply Chain optimization but also benefit from customer improved trust and regulation compliance. 32 Figure 4 Blockchain Integrated Supply Chain (Source: Deloitte) Several examples of successful implementation of the IBM Blockchain using Hyperledger Fabric for its customers at different steps of the food Supply Chain: - Carrefour (retailer): The supermarket multinational identified challenges like the increasing demand from customer for more information and how to share it. The goal was to connect consumers with information about their food. As a solution, the retailer used IBM Hyperledger Fabric to implement blockchain traceability. Carrefour implemented QR codes with chicken products that consumers scan for information as certificate of the origin and the quality. As a result, Carrefour shared that it increased revenues and improved brand trust and stronger relationships with consumers, - Nestle - Gerber Foods (processor): Gerber Foods: The goal behind blockchain implementation was to improve traceability visibility of 33 supplier, origin, and ingredients. Nestle realized that Supply Chain complexity was affecting negatively. As consumer rely more on the product information it become important to be able to collect and share this information. Nestle used IBM Food Trust to experiment new traceability solutions. The company concluded by affirming that the visibility into the Supply Chain was highly increased and offered opportunities for Supply Chain optimization. - Ecuador’s Sustainable Shrimp Partnership (producer): Ecuador produces high-quality, sustainably grown shrimp but is not known from customers. To gain brand reputation of their product (shrimps), the company partnered with IBM to share provenance and visibility of sustainability of its practices to upstream partner (retailers and consumers). As a result, this partnership improves the reputation of Ecuador a premium producer of shrimps and the transparency enabled by blockchain facilitate exportation criteria. - Terra Delyssa (producer): The olive oil producer company wants to answer customer demand on authenticity for products: if product is sustainably grown, properly harvested and ethically produced (i.e. if its origins free of child labor). As a high-end olive oil producer, Terra Delyssa has strong control mechanisms that follow the production of its product from the tree to the bottle. It crushes all its olives within 24 hours of harvest and tests every production batches. By partnering with IBM, it allowed them to share this quality focus with consumers. As a results, it strengthens the brand positioning and image by being 34 the first in olive oil sector to “open up his books”, providing full transparency on origin and production process to gain trust and differentiation Chapter 4: Case Study: Walmart usage of blockchain to improve traceability and transparency in its Supply Chain 4.1 Walmart presentation Founded in 1962, Walmart is a leading multinational retail corporation. The American companies operates a chain of hypermarkets, discount department stores and grocery stores. In 2022, Walmart operates in 24 countries and has 10593 stores. Walmart is the highest revenue firm in the world with a revenue of US$548.743 billion in 2020. Walmart has developed a reputation for embracing digital innovation and leverage technology and scale as competitive advantages. In 2014, the company changed is strategy with the goal to become a technology-centric company. This will allow the company to develop new capabilities to serve customers in new way. In 2015, Walmart was the biggest IT spender worldwide with $US10.5 billion expenses and saw its e-commerce sales increase by 43%, a direct consequence of its investments in digital technologies. In the recent years, the company developed the usage of cutting-edge technologies: machine learning; cloud powering and IoT integration to offer innovative retailing experience and improve customer convenience. The company has an appetite for disruptive technologies that are meant to represent the future. By using innovative and emerging 35 technologies, the company offers customers an innovation and immersive hopping experience. According to Walmart, these technologies pushed for a high digital adoption, the repeat rate (percentage of your current customer base that has come back to shop again) topped at 95% and the customer ratings at 4.7/5. As an example of their commitment to improve traceability and food safety, Walmart is also currently developing AI technologies in its store to monitor stock management and store cleanliness. Cameras will trace misplaced items and identify food hazard in the store (water on the floor, fallen shelves). The technology will enable rapid intervention and optimal conditions to guarantee food safety. 4.2 Blockchain traceability impact on Walmart Value Chain An analysis of Walmart’s Value Chain helps understanding Walmart key activities and identifying which of its activities would see additional value created from an integration of the blockchain technologies for traceability. The value chain analysis (Porter, 1985) is a tool created to analyze how a business generates value. It investigates the primary and support activities and processes that a company uses to produce and sell goods and products and gain competitive advantage. 36 Figure 5 Value Chain (Source: Porter) Primary activities - Inbound Logistics: One of Walmart strategies is to limit the number of links in the Supply Chain and create strong partnerships with suppliers. The size of the retailer also allows it to leverage large orders and economies of scale. Sustainable and long-term partnership support the procurement of high-quality resources. Additionally, Supply Chain and inventory management support an optimization of costs. A blockchain traceability system could support both. It helps creating stronger trust and partnership between participants and allow collecting and storing data in the blockchain ledger. Hence, these is potential for improvement in the inbound logistic value activity. - Operations: For Walmart, operation activities mean processing the product from the supplier and distributing them to the different store 37 across the country. As the company already have internal traceability system, adding blockchain traceability seem having a limited direct impact. However, a benefit would be to integrate the operation data in the blockchain to build a better end to end view and improve transparency and trust of the Supply Chain to other participants. - Outbound Logistic: For Walmart, this is usually limited to getting customer buying into stores. Using a blockchain based system could increase customer trust and expense by providing true information on origin and quality of a product when a customer wants to know the product information in the shop (information directly available from his or her phone). - Marketing and Sales: The strategy is based on being the best-cost retailer. Walmart will be able to leverage improved traceability and transparency. Providing accurate and true information on product origin to customer will become a key competitive advantage for Walmart. It will improve brand reputation and customer trust. Additionally, efficiency from the blockchain technology might help saving costs and support the Walmart strategy of a low cost retailer by providing good quality and affordable product . - Service: Customer service is limited for Walmart. However, with an improved traceability system, if a food safety incident was to happen, the retailer would be able to investigate and react rapidly to recall the precise contaminated goods and limit more cases. 38 Support activities: - Firm Infrastructure: This refers to the management, planning, finance, accounting, and quality control. Improving traceability with blockchain would enhance the company quality and safety control, which are key challenges for the food industry - Human Resource Management: The impact of better traceability system is very limited or nonexistent in this activity. - Technological Development: A blockchain traceability system would support improved efficiency if data collection can be improved and identifying inefficiencies - Procurement: Strategic partnerships are key for Walmart. By improving trust and collaboration using blockchain, the retailer will create value from better communication, data transfer and efficiency. Walmart decided in 2016 to invest $25 million towards its goal of food traceability and safety. It founded the Walmart Food Safety Center and leveraged IBM's blockchain solution to deliver two blockchain pilots: traceability of mango Supply Chain in the US, and transparency of freshcut pork products Supply Chain in China. 4.3 IBM-Walmart Partnership In 2017, Frank Yiannas the vice president of food safety and health at Walmart said, “Through collaboration, standardization, and adoption of new 39 and innovative technologies, we can effectively improve traceability and transparency and help ensure the global food system remains safe for all.” This speech represents the vision that Walmart had at the time on the usage of Blockchain and technologies in general to improve traceability and associated benefits in the Supply Chain. Walmart believed blockchain technology had potential to enhance food Supply Chain by using decentralized systems. To test this theory, Walmart partnered with IBM to build a food traceability system using Fabric Hyperledger. To test this new system, the companies launched two proofof-concept initiatives to transform digital their Supply Chain. In the first experiment, they build a traceability system for the pork meat provenance sold in Walmart store in China. In the second, they digitally transformed the mango Supply Chain sold in the Walmart store in the US using. We will explore the transformation and the result of the integration of blockchain into these product Supply Chain in the following parts. The challenge Walmart wanted to address was to improve the speed of the tracing the source of the network and increase trust from greater transparency. Indeed, when outbreak of food disease happens, the time to trace the source of it increase economic and health consequences. More time equals more risks of customers getting sick as well as increasing the losses of all the farms that must discard all the products when the source farm cannot be identified. The E-Coli outbreak mentioned in the literature 40 review is a good example with all the products being destroyed and farmer losing their incomes. Hence, as a retailer Walmart has a strong incentive in in improving transparency and traceability of the food Supply Chain. Walmart also understand that Supply Chain are complex networks and that navigating through them present a lot of challenges. The idea was that a blockchain based traceability system would offer a centralized gathering data platform while ensuring security of the data from the different parties. As we have seen, traditional public permissionless blockchain are limited for privacy and scalability. With the rise and hype of blockchain as a solution for Supply Chain, Yiannas was initially skeptical. However, IBM who was a strong contributor of the Hyperledger Fabric project, offered them a partnership made sense. They had the expertise of the technology that had a potential big impact. Although Walmart had a unique data, the company had very limited knowledge on the technology that would have taken years to develop. Additionally, even if the potential of business value was high, the blockchain applications and benefits were still in their beginning and very hypothetical, presenting a hidden opportunity. Hence, Walmart decided to go after a partnership for the proof of concept. As many different blockchain technologies design and platforms exist, Walmart also considered other options such as using Ethereum or Burrow 41 project. But Hyperledger Fabric was deemed the most suitable for the company needs. In addition to be able to leverage IBM expertise, another factor that was key in the decision was the open-source and vendor neutral aspect of Hyperledger Fabric. Since food traceability is meant to affect and involve many different stakeholder (suppliers, regulators, customers and even competitors), it was important that the traceability system was transparent and adopted by all. Using an open source and neutral existing framework helped. 4.4 Traceability of the fresh cut pork product in China 4.4.1 Pork Supply Chain in China Walmart decided to launch a pork pilot using blockchain in China. The focus of this initiative was enabling product traceability within a nationwide scope. It is important to understand the Chinese pork market and its challenges to understand why this is crucial to Walmart strategy in China and the motivation behind adding blockchain technologies to the processes. Walmart entered China in 1996 and has nowadays 425 stores in the country. In 2020, Walmart made $11.43 billion in annual revenue in the country. This makes China the 2nd biggest international market after Mexico and Central America (with 2,700 stores and $32.6 billion). Hence, Walmart interests are big in the country, where the fast-growing economy and 42 purchasing power of its inhabitants makes it a very attractive market. However, similarly to many international multinationals, Walmart is not exempt of struggles in the country. Among them, difficulty in adapting its business model to the local market, strong competition from local and international retailer competitors, governmental and regulation issues as well as some food safety scandals (BI, 2018). To address these issues and remain competitive, Walmart has partnered with JD.com (largest Chinese e-commerce retailers) and invested heavily for changes, and the blockchain pilot is one of these output. (JD.com, 2017) The Chinese Pork market is very big. The country is the largest pork producer and importer. China counts 415.9 million pigs. Not only is it the world’s biggest pork producer, but it’s 1.4 billion population has a per-capita pork consumption of 20.3 kg. As the country continue its development and the middle class grow, this number is expected to grow. Hence, this represents a big opportunity for retailers that want their share. 43 Figure 6 Global pork production by country (Statistica) However, in recent years Chinese consumers demand for information on product origin and processing has risen. Providing reliable information on the pork origin is became a key necessary differentiator for retailers. This is phenomenon happened following several large scandals in the country: in 2015, 110 people where arrest for selling contaminated pork (BBC, 2015), 900 person were arrested in 2013 in a fake meat scandal where 20000 tons of seized fake mutton meat was in reality fox, mink or rat (The Guardian, 2013). The lack of regulation and quality inspection often are blockers to monitor the quality and source of the pork products. These scandals also affected retailers and food companies: in 2015 Yum Brand was forced to sell its KFC Chinese business branch after a series of scandals (Reuters, 2011) and Walmart itself had a pork scandal in 2011 in China for mislabelling its products (Reuters, 2011). Authorities in the Chongqing 44 accused Wal-Mart of mislabeling ordinary pork as organic over the past two years, coming from poor monitoring and training of employees. Therefore, providing proof of the product quality during the pork production process and developing a reliable and tamper-proof traceability system became important for the company. 4.4.2 Pork traceability pilot To support the adoption blockchain technologies to improve the food traceability systems, Walmart in China partnered with IBM, the e-commerce retailer JD.com and Tsinghua University National Engineering Laboratory for E-Commerce Technologies and created the Blockchain Food Safety Alliance with the goal to enhance food tracking and food safety in China (Forbes, 2017). This collaboration between different actors had for goal to join forces in order to work with the Supply Chain suppliers and government regulators to develop changes in processes and standards towards for food Supply Chains in China. Walmart and JD.com would be the main retailers selling products to customers and dealing with suppliers, Walmart being largely physical retailer whereas JD.com an online retailer. IBM support on providing the technologies and expertise. Tsinghua University as a consultant on technologies adoption and on the Chinese food safety ecosystem. The alliance goal is to democratize the technology adoption to improve the 45 Chinese Supply Chain environment, and ultimately to add more suppliers and retailers for an overall bigger impact. The alliance released a blockchain based pilot in 2017 to trace fresh-cut pork products in China. Ahead of the pilot, two key activities were performed to support the traceability system changes: First, the identification of the key tracking factors. A tracking factor is the key information that needs to be recorded for the traceability system to guarantee an aspect of a product. If a health issue arises with a product, the tracking factor will be used to trace back the source of the issue. The origin or the inspection data recorded are the tracking identification points. Second, a special training was provided to employees of the different steps of the Supply Chain, that would be involved in the pilot. The coaching supported the changes of the processes under the roof and coached the employees on the tools to use, such as the devices used for data collection, scanning, reporting… The pork journey in the Supply Chain is usually composed of farmer, slaughterhouse, packaging and identification, transportation, distribution, and retailers. The implemented traceability system for pork food followed the main steps described below: 1. Farm and slaughterhouse tracking: The process begins at pens, where each pork is given a bar code. This allows to follow its journey all the 46 way to the package pork sold in the supermarket. Pigs arrive in a slaughterhouse. When arriving, the first step of the process is to control the pig health and quality information and record them along the farm origin in the inspection step. These are the first key information collected and linked the information of the vendor ID (geographical position, name, details etc). 2. Pork processing: The pigs are transformed from animal to several packages. An ID tracker links the vendor ID to the different item ID numbers. Each ID will have associated the product information, ID and data of supplier and processors, date and time, inspection checks. By doing so, unique data point for each package are created and link to every step and process it goes through. 3. Departure from producer (First data entry into the blockchain): The ID of product is linked to the transportation mean. In this pilot, this is when the data is uploaded into the blockchain. All the information associated with the ID are published in the ledger for traceability. In this situation, the product's origin or source is documented. Shipping trucks are geo-localized, monitor temperature and humidity with sensors to guarantee the meat is safe all along its transportation. 4. Arrival at Distributer and Retailer (Second data entry into the blockchain): At arrival in the supermarkets, GPS tracker will automatically record the location of the receiving stores. Information is being posted for the second time into the blockchain system. The 47 data are for each store the list of product ID, product info, and the transportation data (carriers and time). 5. Selling and storage: In the supermarket, a consumer label is added on the product and place in the shelves. Each label gets a unique bar code that allows the user to access all product information previously uploaded and stored on the blockchain. 6. Consumers: At the store or at home, the consumers can scan the barcode on pork product and read the product information on a web interface. 4.4.3 Pork Traceability Pilot Results Walmart concluded that the piloting of pork traceability was successful. It allowed uploading certificates of authenticity to the blockchain to trace the pork information. As a benefice, it improved customer trust and offer a reliable answer to food Supply Chain issues in China. Additionally, strong of this success, the alliance parties decided to continue working together to enhance traceability and transparency of food Supply Chain in the country. Brigid McDermott, the vice president of food safety at IBM declared that “IBM, Walmart, JD.com and Tsinghua University will work together closely, maintaining collaboration and communication, to ensure that JD’s solution and IBM’s solution have standards necessary for Wal-Mart and JD customers to have a consistent user experience when accessing the food safety and traceability information.” 48 The successful results of this pilot offered great promise in terms of traceability of the Supply Chain and improvement of customer trust. Bridget van Kralingen, senior vice president at IBM Industry Platforms commented “Blockchain holds incredible promise in delivering the transparency that is needed to help promote food safety across the whole Supply Chain. This is a fundamental reason why IBM believes so strongly in the impact this technology will have on business models […] the technology brings traceability and transparency to a broader network of food Supply Chain participants.” In conclusion, the implementation of blockchain based traceability system seem to offer a great traceability and transparency for fresh cut pork produce. For retailers such as Walmart and JD, it improved the food safety by tracing the pork origin, enhanced customer trust by accessing true information on the product and developed stronger relationship with regulators by enabling better visibility of the product life cycle. Additionally, it could potentially improve Walmart efficiency by enhancing internal visibility and communication between its suppliers to select the best and being pro-actively fighting food fraud and reducing costs associated to scandals and recalls. 4.5 Traceability of mango product sold in the U.S. Whereas the pork pilot focus was mainly answering a customer need for greater product transparency in one market, this second pilot efforts focus 49 on improving traceability systems in complex multinational Supply Chain for the company efficiency. 4.5.1 Mango Supply Chains in the Americas Most of the mangos sold in the United States are imported from Central and South America: Peru, Ecuador, Brazil, Guatemala, Haiti, and Mexico. Mexico is the largest supplier to the U.S, eighty-six percent of the mangos imported into the U.S. are supplied by Mexico (FDA, 2016) Mango is a fruit originating in tropical/subtropical regions appreciated everywhere around the world because of its excellent flavor and taste. However, as a climacteric fruit, the mango is sensitive to become easily perishable after harvesting. Ripening process, transportation and storage conditions condition can lead to a fast degradation of the fruit quality. The quality loss can be translated as an economic loss along by the participant of the Supply Chain. Moreover, the fruits are also sensitive to diseases and to be a vehicle for health hazard. As an example, in 1998 and 2014 Salmonella outbreaks were traced back to raw mangos (Mathew et al 2018). Therefore, monitoring the transportation and quality of the fruit is important for customer safety. However, in global and complex Supply Chain, the information can be hard to track and trace if a problem arises. The common stages composing the mango Supply Chain are harvesting, pre-treatment, packaging, storage and distribution. Each step handling the 50 mango and being a potential factor for degrading the quality of the fruit (Mathew et al 2018). . 4.5.2 Mango Traceability Pilot For this second pilot, Walmart also partnered with IBM to implement blockchain technologies into the Mango Supply Chain. Frank Yiannas, the vice president of food safety and health at Walmart wanted to see if a blockchain integrated Supply Chain would help tracing the source of a mango. To do so, he created a benchmark by asking his team to trace the farm from which originate a packet of sliced mango he just bought at a nearby Walmart. Simulating an urgent food epidemy, the team tried to identify the source farm as fast as possible by calling and emailing distributors, suppliers. Seven days later, they identified the origin farm. Although fast for industry standard (During the E.Coli outbreak of 2006 took 2 weeks for the FDA to trace the origin farm), the benefits of improving the time to trace offered great benefits such as higher response time to identify problematic product batch and customer affected, as well as limiting economic losses from food recalls or destructions. For this pilot, IBM and Walmart wanted to understand what the benefits of blockchain technologies are on fruit product quality and traceability by improving the traceability system as well as experiment on improved crossborder logistic and accountability. Mangos are followed from their source in Central America, different element related to the quality, process and transportation of the fruit are recorded until their arrival in the US. The blockchain technologies was used to capture and store the data along the 51 process, with the data being inputted by the different suppliers along the fruit itinerary. Different factors can be captured to analyze the quality of the fruit along side its journey: environmental factors such as temperature, or moisture of the container or fruit quality-related characteristics, such as appearance (color, shape, etc.), physical damages or biological damages (insects, etc.). These different factors can be captured using the IoT sensors/ camera or manually to generate data entries to be then uploaded into the Blockchain. During the pilot, the IT team from Walmart designed the application based on Walmart and its suppliers’ processes. To begin with, they identified the data attributes they wanted to capture and upload in the blockchain. They started by selecting the data attributes they want to capture using the GS1 standards (barcodes and labeling authority). Then, IBM set up the blockchain and applications allowing sending transactions and data in the blockchain by different actors. Using Hyperledger Fabric, they wrote a chain code (similar as smart contracts). Finally, the suppliers changed labels for the pilot and connected the data to the blockchain through internet (with a web-page). Although for the pilot a manual inputting of data in the ledger seems to have been done, a functioning pilot open doors for further automation in the future with smart tech and IoT, reducing the need for manual work and boosting efficiency by automation. 52 The mango pilot involved 16 farms, two packing houses, three brokers, two import warehouses, and one processing facility. At each step, they captured 23 different lot codes and tens of thousands of sliced mangoes. Ahead of the pilot, Walmart identified important data to capture and shared with the participants a list of mandatory attributes (lot number, pack date, quantity shipped, unit of measure, purchase order number, shipment identifiers) and a list of optional attributes (carton serial numbers, pallet number, harvest date, buyer identifier, vendor/supplier identifier). - Farm stage: In production, usually Mango ripe between 1 to 2 weeks from the moment they are harvested. Mango can suffer from quality decrease from temperature variation, bad handlings or carry diseases from viruses or bacteria, their handling and processing need to solver these problems. Fruit batches are being recorded with their provenance and shared with the packing house at arrival. - Packing House: The fruit are washed and boxed to eliminate residues. Each box will have a unique identity code with a bar code containing the fruit provenance, indicating the farm, and packing house information (name, location) as well as all the fruit process (date, quantity, weight...) - Transportation: Boxes will be linked with the transporter. Carrier info will be recorded (transport type, date, company etc). These information will be shared when border crossing to the customs and border crossing approval will be added to the mango information recorded. 53 - Processor and distributor: Mango processors and distribution centres inspect for quality, measure shipments, check container temperature, and evaluate both the outside and interior quality. Then, they can provide recorded certificates to guarantee the verification and quality, increasing accountability. Mango will then be processed and be transformed, sliced, and put in packaging. Each package will also have its own ID code, including the data from the previous step. Finally, transportation of the package’s mangos will be recorded and added to the blockchain until the store. - Store: At the store, final step of the product journey each mango product will be then sold to customers. The bar code of the product will allow to trace back it’s journey from all the data inputs that have been capture along the mango’s journey. Figure 7 Walmart blockchain integrated traceability system for Mangoes (Source: IBM) 4.5.3 Mango Traceability Pilot Results The pilot results were very concluding, to trace back the source of a mango Walmart need 2,2 seconds instead of a week. This represents a huge 54 improvements in the ability to trace back the origin of product and indicate clear risk management benefits. Reactively identifying the source of an issues in a very limited time bring considerable competitive advantages such less cost from global recalls and better visibility of the on the product data in the Supply Chain. This also shows that Walmart was efficiently able to track data across border with several intermediaries. Mango characteristics can be shared with many other fruits, implying that these results and the benefits of blockchain traceability could be applicable to a wide range of other products. In conclusion, the Walmart pilot managed to improve traceability, demonstrated transferability and accountability of the mango supply by using blockchain technologies. In case of a food safety issue with its mango product, Walmart would beneficiate from quick reaction to identify a contamination source and limit recall costs. Moreover, using blockchain as a ledger reinforce public trust by providing true reliable information about the supply. 4.6 Walmart learnings and the future of blockchain in food Supply Chain These trial provided evidence to Walmart that blockchain technologies could improve the transparency of its Supply Chain (pork certificates) and its efficiency (faster tracing of its product origin). The single historical record created allowed to build trust into the Supply Chain but also improved the 55 company existing traceability system by having a digitalized records of all the transaction and product information. Following the pilots results and benefits from using blockchain to enhance traceability and transparency, Walmart has continued to expand it. Since most of the food system are interconnected (i.e a single supplier providing food to several retailers), Walmart understood that the competitive advantage would we limited if only used by them. Frank Yiannas said “(Walmart’s) CEO was reaching out to other food companies the next day, including other retailers!” to expand the traceability to a greater pool of players, for everyone. Walmart pilot has been one of the earliest proof of concept, and many companies have been following up. Following the pilot, several big players have developed their own blockchain traceability system or leverage Hyperledger Foundation, such as Nestle, Unilever, Carrefour and many others. In 2020, another Mango blockchain pilot ran by Trust Provenance (Cointelegraph, 2020) demonstrated that blockchain traceability improve the mango distribution, reduced waste and identify Supply Chain inefficiencies. Employees used sensors placed in mango crates to track the movement of the sweet fruit in addition to monitoring its temperature, humidity, and transit time to monitor better fruit quality condition. The association of IoT and Blockchain enhance traceability and transparency of the food Supply Chain. 56 Today Walmart has over 25 products from 5 different suppliers being traced using Hyperledger Fabric. The company is planning to integrate blockchain into the Supply Chain of many more of its product in the future. As an example, in 2018 to fight E. Coli potential outbreak, Walmart has asked its fresh leafy greens suppliers (i.e salad or spinach) to use blockchain to trace their products. On top of capture data of the product journey, other data such as CO2 emissions could be added to evaluate and share the sustainability impact of a product. This is more and more demanded by customers. Additionally, Walmart has continued to develop the application of Blockchain: the retailer is using the Vechain blockchain technology integrated with the social network WeChat to directly share the product info scanned in store (Medium, 2021). Walmart also launched a blockchain based freight network to enhance its middle mile transportation. The initiative will track deliveries, verify transactions, and automate payments with carriers (Vitasek et al., 2022). Chapter 5: Discussion and limitations In the above-mentioned analysis, blockchain initiatives in the food Supply Chain have brought results and tangible benefits for the retailers. Overall, blockchain seem to be a solution to improve traceability and transparency, as well as reducing costs and risk inherent from food Supply Chain. From this analysis, we can conclude that blockchain technologies applied to food 57 Supply Chain seem to have the 3 following benefits to agro-business and particularly retailers: - Improvement of Supply Chain visibility: by digitalizing the physical assets journey and creating a decentralized immutable database, food companies can track and trace any product along the Supply Chain. The blockchain enables better data collection, and from it, improves traceability for all stakeholders and improve food safety. - Improvement of trust through decentralization: by using blockchain technologies and the immutable function, food companies create accountability and reduce falsification of data in the database. This in turn improve customer trust and regulators compliance by providing an accurate source of data. Food fraud will be reduced, and customer will accurately know where their product came from. - Improvement of efficiency and cost reduction by better digitalization: Implementing blockchain to support the traceability systems bring efficiency by improving the speed at which data is captured. This enables better audit of the Supply Chain to improve processes and the improved digitalization could lead to reducing costs related to paperwork and middle-men costs. Although the potential benefits of blockchain traceability are clearly visible with the existing success stories, the technologies have some limitation in their application to the food Supply Chain. 58 First, the technology is not fully understood, and its adoption will take some time. 80% of Supply Chain blockchain initiatives will remain at a pilot stage through 2022 (Gartner, 2020). The hype of the technologies seems to push many company to enthusiastically consider blockchain without fully understand its functioning or real benefits. The lack of enough research and the limitation of pilot scale need to be addressed. Additionally, analysis on alternative traceability system should be explored to determine if blockchain is truly the most efficient and best cost saving solution. Second, for a functionnal food Supply Chain using blockchain, it requires full and honest participation from all the participants. If not all the participants agree to participate, some information will not be capture and defeat the purpose. This might be challenging in global and complexes food Supply Chain with many different participants from different environment and different regulations. Moreover, honest participation is required because the assets are initially physical. The input needs to be correctly added into the database. Blockchain doesn’t remove the need for auditing, if the quality input is bad the traceability will be negatively affected. Smart contract and smart devices can help improving the quality and reliability of the data input; however, the data entry isn’t fully reliable if the participant is malicious or make mistakes. Finally, permissioned blockchain and Hyperledger benefits are criticized. Overoptimism and hype might have overexaggerated the actual benefits. Companies will only share the benefits from their pilots for PR and Brand 59 image purpose, especially when adopting new technologies. The blockchains design is also criticized, permissioned blockchain are sometime called not really decentralized. Indeed, participation decides who the participants are, and these solutions are less secure against tampering and attacks than public platforms. However, a benefit of the blockchain solution in the Supply Chain could be a strong enough justification to update tracing system and stronger digitalization using the hype of “new technology”. Conclusion This thesis presented the many vulnerabilities and challenges of food Supply Chains, and the limitation of current technologies to provide sustainable and scalable solutions. To earn customer trust, greater transparency of product information is needed. Food Supply Chain inefficiencies and costs could be enhanced by better traceability systems. Blockchain technologies characteristics seem to be a promising answer to both. New blockchain designs have facilitated and accelerated companies’ adoption of blockchain. Private and permissioned blockchains such as Hyperledger Fabric can leverage the benefits of blockchain technologies such a decentralization, immutability of data and smart contracts for agro-businesses Supply Chains. Far from the original blockchain design to support Bitcoin, new blockchain platforms have evolved to answer specific businesses needs: Hyperledger Fabric technological innovations support transaction privacy 60 with the creation of Private Channels and improve the scalability of operations and data accessibility by storing the current database in the State Database. Companies approach for generating value from blockchain integration Supply Chain should focus on capturing cost and efficiency improvement opportunities, starting with simple applications. Early adoption of the technology in various initiatives has already showed tangible benefits. This thesis presented the implementation of the technology by the different actors of the food Supply Chain, and the challenges and benefits it is solving. By capturing the products information in the blockchain database, these immutable data entries provide reliable and trustworthy record of the product journey. Producer, processor, and retailers can guarantee the origin and quality of their products, adding accountability and strengthening internal communication and partnerships. Blockchain integration is facilitated by the develop of Blockchain-As-A-Service products offered by technological companies. They simplify the integration of the technology in the chain and share expertise. Retailers such as Walmart have been eager to deploy and test blockchain in their own Supply Chain. Early results presented strong evidence of the benefits to supermarket value chain. Products certificates using blockchain for fresh product such as pork provides transparency on their origin and quality. As a results, customer demand on more transparency is answered. This reduces food fraud possibilities and enhances trust. Moreover, 61 blockchain technologies support a greater integration of traceability systems in complex Supply Chain. The ability to gather all the product information in a central database (ledger) improves efficiency by having greater data accessibility and reduces inefficiency costs from disintegrated chains. Time to trace back a product improves from several days to few seconds, ensuring greater food safety. However, blockchain technologies are still in early stages and more time is needed to confirm their true potential and best applications. Although the benefits seem clear, more researches and tests will support the resolution of technological and operational challenges that the blockchain adoption is facing. With the ever-growing digitalization of our activities, it makes no doubt that blockchain combined with IoT will eventually become the backbone of greater transparent and traceable food Supply Chains. 62 Bibliography Aung, M.M. and Chang, Y.S. (2014). Traceability in a food Supply Chain: Safety and quality perspectives. Food Control, 2014, 39, 172–184. Bateman A. and Bonanni L. (2019). What Supply Chain Transparency Really Means, Harvard Business Review https://hbr.org/2019/08/whatsupply-chain-transparency-really-means BBC (2013). Findus beef lasagne contained up to 100% horsemeat, FSA says https://www.bbc.co.uk/news/uk-21375594 BBC (2015). Chinese police arrest 110 for selling 'contaminated pork' https://www.bbc.co.uk/news/world-asia-china-30774296 Bosona, T., et Gebresenbet, G. (2013), Food traceability as an integral part of logistics management in food and agricultural Supply Chain, Food Control, vol. 33, n° 1, p. 32-48. Brant Carson, Giulio Romanelli, Patricia Walsh, and Askhat Zhumaev (2018). Blockchain beyond the hype: What is the strategic business value? McKinsey Article https://www.mckinsey.com/businessfunctions/mckinsey-digital/our-insights/blockchain-beyond-the-hypewhat-is-the-strategic-business-value Business Insider (2018), Photos reveal what it’s like to shop at Walmart in China — which is shockingly different from the US and struggling to 63 compete https://www.businessinsider.com/walmart-in-china-mostpopular-international-supermarket-photos-2018-4?r=US&IR=T CDC (2006). Multistate Outbreak of E. coli O157:H7 Infections Linked to Fresh Spinach (FINAL UPDATE) https://www.cdc.gov/ecoli/2006/spinach102006.html#:~:text=Outbreak%20Summary,%2Duremic%20syndrome%2 0(HUS) CNBC (2017). IBM far outranks Microsoft as blockchain industry leader, research says https://www.cnbc.com/2017/09/18/ibm-far-outranksmicrosoft-as-blockchain-industry-leader-report.html Cointelegraph (2020). 'Game changing' blockchain program tracks mangoes in Australia https://cointelegraph.com/news/game-changingblockchain-program-tracks-mangoes-in-australia Deloitte (2018) Beefing Up Blockchain How Blockchain can Transform the Irish Beef Supply Chain https://www2.deloitte.com/ie/en/pages/technology/articles/beefing-upblockchain.html Dickinson D.L., & von Bailey D. (2002). Meat Traceability: Are U.S. Consumers Willing to Pay for It? Journal of Agricultural and Resource Economics, Vol. 27 Issue 2 pp. 348-364. Feng H., Wang X., Duan Y., Zhang J., Zhang X. (2020). Applying blockchain technology to improve agri-food traceability: A review of 64 development methods, benefits and challenges, Journal of Cleaner Production, Volume 260, 2020, 121031, ISSN 0959-6526, Forbes (2017). IBM & Walmart Launching Blockchain Food Safety Alliance In China With Fortune 500's JD.com https://www.forbes.com/sites/rogeraitken/2017/12/14/ibm-walmartlaunching-blockchain-food-safety-alliance-in-china-with-fortune-500s-jdcom/?sh=41aca2007d9c Forbes (2022). Predictions For The Blockchain Industry In 2022 https://www.forbes.com/sites/forbesbusinesscouncil/2022/02/04/predictio ns-for-the-blockchain-industry-in-2022/?sh=bdce86b685a3) Gartner (2020), Gartner Says 80% of Supply Chain Blockchain Initiatives Will Remain at a Pilot Stage Through 2022, Press Release https://www.gartner.com/en/newsroom/press-releases/2020-01-23gartner-says-80--of-supply-chain-blockchain-initiativ Golan, Elise & Krissoff, Barry & Kuchler, Fred & Calvin, Linda & Nelson, Kenneth & Price, Gregory. (2004). Traceability in the U.S. Food Supply: Economic Theory and Industry Studies. US Department of Agriculture, Economic Research Service. 2. Hussain, M. A., & Dawson, C. O. (2013). Economic Impact of Food Safety Outbreaks on Food Businesses. Foods (Basel, Switzerland), 2(4), 585– 589. https://doi.org/10.3390/foods2040585 65 IBM (2017). The difference between public and private blockchains. https://www.ibm.com/blogs/blockchain/2017/05/the-difference-betweenpublic-and-private-blockchain/ IBM (2019). Focus on FOOD SAFETY, Case Study https://www.ibm.com/uk-en/blockchain/solutions/food-trust IBM (2020). Meet the 2020 consumers driving change https://www.ibm.com/thought-leadership/institute-businessvalue/report/consumer-2020 Independent (2013). Findus horse meat scandal: a company whose reputation is changed forever https://www.independent.co.uk/news/uk/findus-horse-meat-scandal-acompany-whose-reputation-is-changed-forever-8486098.html ISO (2015). ISO 9000 FAMILY QUALITY MANAGEMENT https://www.iso.org/iso-9001-quality-management.html Jain N. (2021). How innovative Supply Chain solutions can increase blockchain adoption, https://www.hyperledger.org/blog/2021/07/26/howinnovative-supply-chain-solutions-can-increase-blockchain-adoption JD.COM (2017). Walmart and JD.com Expand Strategic Cooperation, Press Release, https://ir.jd.com/news-releases/news-release-details/walmartand-jdcom-expand-strategic-cooperation 66 Kate Vitasek, John Bayliss, Loudon Owen, and Neeraj Srivastava (2022) How Walmart Canada Uses Blockchain to Solve Supply-Chain Challenges https://hbr.org/2022/01/how-walmart-canada-uses-blockchain-to-solvesupply-chain-challenges Lin J., Zhiqi Shen, Anting Zhang, and Yueting Chai. (2018). Blockchain and IoT based Food Traceability for Smart Agriculture. In Proceedings of the 3rd International Conference on Crowd Science and Engineering (ICCSE'18). Association for Computing Machinery, New York, NY, USA, Article 3, 1–6. M.P. Caro, M.S. Ali, M. Vecchio, R. Giaffreda, (2018). IoT Vertical and Topical Summit on Agriculture -Tuscany (IoT Tuscany). Tuscany, Italy, 8-9 May 2018, Mathew Elza N., Muyyarikkandy Muhammed S., Kuttappan Deepa, Amalaradjou Mary Anne (2018). Attachment of Salmonella enterica on Mangoes and Survival Under Conditions Simulating Commercial Mango Packing House and Importer Facility, Frontiers in Microbiology, VOLUME 9, 2018 Medium (2021). Far More Than Walmart China — How VeChain Leads Blockchain Adoption in the Food Industry Around the Globe https://medium.com/vechain-foundation/far-more-than-walmart-chinahow-vechain-leads-blockchain-adoption-in-the-food-industry-arounda177fdf09fde 67 Norton T. (2019) Supply Chain Visibility: Traceability, Transparency, and Mapping Explained, BSR https://www.bsr.org/en/our-insights/blogview/supply-chain-visibility-traceability-transparency-and-mapping Oliver Wyman (2018). Supply-chain optimization: levers for rapid EBITDA, https://www.oliverwyman.com/our-expertise/insights/2018/may/supplychain-optimization--levers-for-rapid-ebitda.html Opara U. (2003). Traceability in agriculture and food Supply Chain: A review of basic concepts, technological implications, and future prospects. Food, Agric. Environ.. 1. Porter M. E. (1985). "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York. Reuters (2011). Wal-Mart's pork scandal highlights struggles in China https://www.reuters.com/article/us-walmart-chinaidUSTRE79D1S020111014 Reuters (2016). Yum to sell stake in China business ahead of spinoff https://www.reuters.com/article/us-yum-brands-china-primaveraidUSKCN11817H S. Saurabh, and K. Dey. (2021). Blockchain technology adoption, architecture, and sustainable agri-food Supply Chains. Journal of cleaner production, 284, 124731. 68 S. Wang, L. Ouyang, Y. Yuan, X. Ni, X. Han and F. -Y. Wang (2019), "Blockchain-Enabled Smart Contracts: Architecture, Applications, and Future Trends," in IEEE Transactions on Systems, Man, and Cybernetics: Systems, vol. 49, no. 11, pp. 2266-2277, Nov. 2019, doi: 10.1109/TSMC.2019.2895123. Scharff R. L. (2015). State estimates for the annual cost of foodborne illness. Journal of food protection, 78(6), 1064–1071. https://doi.org/10.4315/0362-028X.JFP-14-505 The Guardian (2013) China arrests 900 in fake meat scandal https://www.theguardian.com/world/2013/may/03/china-arrests-fakemeat-scandal Trienekens, J.H., Wognum, P.M., Bremmers, H., van der Vorst, J.G.A.J., & Bloemhof, J.M. (2010). Systems for sustainability and transparency of food Supply Chains – Current status and challenges. Advanced Engineering Informatics. Vol. 25, pp. 65-76. Tripoli, M., Schmidhuber, J., (2018). Emerging opportunities for the application of blockchain in the agri-food industry. FAO and ICTSD: Rome and Geneva. Licence: CC BY-NC-SA 3. WIFSS and FDA (2016).A PDF about the growing, harvesting, and postharvesting practices of the mangos commodity. https://www.wifss.ucdavis.edu/ 69 World Heath Organization (2015). WHO’s first ever global estimates of foodborne diseases find children under 5 account for almost one third of deaths https://www.who.int/news/item/03-12-2015-who-s-first-everglobal-estimates-of-foodborne-diseases-find-children-under-5-accountfor-almost-one-third-of-deaths Xu J., Guo S., Xie D., Yan Y., (2020). Blockchain: A new safeguard for agri-foods, Artificial Intelligence in Agriculture, Volume 4, 2020, Pages 153-161, ISSN 2589-7217, Zhang Y. and Ting Z. (2017). A Review of Food Traceability in Food Supply Chain, Proceedings of the International MultiConference of Engineers and Computer Scientists 2017 Vol II, IMECS 2017 Zhao G., Shaofeng Liu, Carmen Lopez, Haiyan Lu, Sebastian Elgueta, Huilan Chen, Biljana Mileva Boshkoska, (2019). Blockchain technology in agri-food value chain management: A synthesis of applications, challenges and future research directions, Computers in Industry, Volume 109, 2019, Pages 83-99, ISSN 0166-3615, Zhao, J.; Liang, X.; Shetty, S.; Liu, J.; Li, D (2017). Integrating blockchain for data sharing and collaboration in mobile healthcare applications. In Proceedings of the 2017 IEEE 28th Annual International Symposium on Personal, Indoor, and Mobile Radio Communications (PIMRC), Montreal, QC, Canada, 8–13 October 2017; pp. 1–5. 70 71