Who is buying into IBM’s blockchain dreams?

If you watched football last season, or just about any major sporting event over the last few years, you might've seen a blue-banded commercial for IBM's blockchain offerings. They're inescapable.

But the grand visions portrayed in the commercials of a world where everyone knows everything about how products are made and shipped to them are still very much a work in progress. Many companies who have linked up with IBM over the last five years are still in the early testing phases of rolling out the blockchain for their supply chains, and some have even scaled back. Supply chain managers and CTOs need to closely weigh the potential transparency advantages against the infrastructural difficulties and costs of implementing a blockchain system like this. And with IBM, it's a slow process that hasn't fully lived up to the early hype yet — or the commercials.

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IBM touts its blockchain in its ads as being able to give companies better visibility and understanding into their supply chains. It's a relatively simple pitch: Companies and consumers want to know where their produce came from, and the blockchain is a distributed, immutable ledger of transactions that theoretically can provide that sort of information to everyone who would want it. In today's globalized world, supply chains are mind-numbingly complicated, Ramesh Gopinath, IBM's VP of blockchain solutions, told Protocol.

"Think of a cup of ice cream: Where do all these ingredients come from, how do they get to the factory, how it gets converted to this lovely tub of ice cream?" Gopinath said. "Once the supply chain gets fairly deep — meaning many players, many handoffs — you can get into this problem of siloed information, and a lack of visibility across the supply chain."

One potential advantage IBM likes to tout: It could be possible to cut down on food-related illnesses if everyone in the supply chain has access to the same information, on the same system. If one lettuce grower has an issue, everyone it sells to will want to know about it so they can recall as surgically as possible. "You make that happen only if all the suppliers and all the retailers and all the farmers are all on the same platform," Gopinath said. Tactical recalls like this could end up saving suppliers cash in the long run.

So far, IBM has managed to convince some large names in the food industry to sign on to use its blockchain solution. It's worked with Walmart for years now, as well as producers including Nestlé, Tyson Foods, grocers Carrefour and Albertsons, as well as the wholesalers Raw Seafoods and the olive oil company CHO. Its main product is called Food Trust, based on its own blockchain technology, which retailers, logistics companies and producers can pay for to track goods as they move through their supply chain.

IBM blockchain users can decide how they want suppliers to upload information to the system. In some cases, it might just be someone filling out a spreadsheet when they log something, such as receiving a shipment of olive oil to their warehouse. That information can get fed into ERP systems of the grocers and retailers they're working with, and as it's on the blockchain, it can't be altered or changed to cover up mistakes (you can flag mistakes, though, if need be).

For growers and producers, they might be uploading information from their phones or devices in the field, tagging bags of coffee beans as they're getting filled, or marking shipments of shrimp as they're brought in from the ocean. Everyone who the company has given access to their blockchain can access the information through a single portal run by IBM. Even end customers can see information about their food using that same data, though usually filtered through an app designed by the company.

But that doesn't mean companies using IBM's technology are going to solve their supply-chain headaches overnight.

"Blockchain is an interesting technology," said Inma Borrella, research scientist at MIT's Center for Transportation & Logistics. "I think it has its uses, but I also think that people are looking at it as a silver bullet for supply chain traceability, and it is not, at least not by itself."

"There's so many other things that need to happen on top of it to actually achieve this end-to-end visibility in food supply chain," Borrella added.

Early adopters

IBM has had backers for its blockchain project for years. A representative from Nestlé told Protocol that the company has been working with IBM on blockchain since 2017, but it's still in the early stages of tracking food safety for two key products in its supply chain: palm oil and dairy. But the prospects are promising. "We are rolling out it per phase," Nestlé said. "The experimentation phase for IBM Food Trust has been completed and based on early positive signs from the few experiments we carried out we have extended our commitment with IBM on a multiyear engagement to allow for a progressive and sustainable scale-up of the platform across the group."

Golden State Foods, a supplier of beef, produce, and other products for the fast-food industry (including McDonald's), started working with IBM on a blockchain pilot two years ago, the company's CTO Guilda Javaheri told Protocol over email. "Today, we've launched into full-volume production," Javaheri said, adding that the company is using the technology to better trace products as they move through the infrastructure of its supply chain. It's fine-tuning its blockchain now, but Javaheri sees it becoming a stronger product with more support from the industry. "We anticipate realizing the full benefits of this solution when more entities within our ecosystem participate and in turn, heighten the value of leveraging this technology," Javaheri said.

Walmart has been using IBM's blockchain since 2018 to track leafy greens and has actually started to expand use since then. "The success of that rollout encouraged us to expand the requirement to our green bell pepper suppliers," a spokesperson for the company told Protocol. "We have spent the last few years building the foundation for digitizing the food supply chains and enabling greater traceability from farm to store."

Others, like Farmer Connect, a coffee supply chain project incubated within the coffee trader Sucafina, are just starting to ramp up. Farmer Connect announced with IBM at CES that it would be using its blockchain to develop an app that any company within the coffee supply chain could use to increase visibility into their suppliers. DJ Bodden, the group's chief operations officer, told Protocol that several coffee companies, including J.M. Smucker Co. (which produces Folgers), Bluestone Lane and the Belgian company Beyers, should have their products live in the Farmer Connect app between the end of March and May.

CHO, originally a Tunisian olive oil wholesaler, recently started producing its own oil under the name Terra Delyssa, and turned to IBM to help show customers where its product is coming from. Wajih Rekik, CEO of CHO America, told Protocol that within the space of about six months, it had figured out its processes and gotten up and running on the Food Trust platform. Roughly a month from now, CHO's first olive oil product on the blockchain will be available on shelves, Rekik said. Consumers will be able to scan a QR code on the back of a Terra Delyssa bottle to find out when the olives were picked, processed and analyzed.

Huge supply chains, huge challenges

But even when companies have agreed to use a blockchain service like IBM's, MIT's Borrella said that there's no guarantee that workers at all the businesses in a company's supply chain will use it as intended. It's a "huge challenge," she added, to ensure data is being uploaded to the blockchain correctly, and there's currently not that many incentives for suppliers spend time making sure they're logging everything. Some instances, like Farmer Connect, only require a grower to have something as complex as a flip phone to upload information to the blockchain.

"The little farmer who doesn't have IT infrastructure — maybe just knows how to use a spreadsheet — should also be able to send data to us," IBM's Gopinath said of the ways the company is thinking about getting the actual food growers onto its platform. "They can send it multiple ways — it could come on spreadsheets, or it could come from a simple mobile application."

Some large retailers, like Walmart, can force companies to take part in a system like this, telling suppliers that they can't sell to the company if they don't log all their produce on the blockchain, but for others, the incentives for cooperating are less obvious. Farmer Connect did announce that it would be offering the ability for customers to thank and even tip the farmers growing their coffee through the blockchain — but this is still being rolled out, and also comes close to half a decade after IBM started working commercially on blockchain.

But not every partnership has worked out. IBM had previously worked with Brooklyn Roasting Co. to track how some of the beans it used got into consumers' lattes. But IBM said it was no longer working with it, adding it was a "one-off marketing project." Brooklyn Roasting wasn't immediately available to comment on its use of IBM's blockchain.

Changing decades-old supply chain protocols was never going to be a quick, simple task. "The advent of blockchain is a significant cultural shift for most companies," Gartner analyst Andrew Stevens told Protocol.

Borella added that she hasn't seen too many companies using blockchain in supply-chain management as a long-term solution. "I've seen lots of companies with pilots and proof-of-concepts, but not so many of them operating at a scale with it yet," she said.

"We are finding that every organization is still very much in that learning and development phase for blockchain," Stevens said.

A wait-and-see future

Beyond IBM's partnerships, many companies are tentatively exploring how the blockchain could aid their supply chain, but as of yet, haven't taken the plunge. Deoleo, a large olive oil processor that bottles the Bertolli, Carapelli and Carbonell brands, is currently looking into blockchain options from several suppliers, according to Paula Lopes, the company's chief quality, product and regulatory officer, but it hasn't gone ahead with any yet.

"We are proactively scoping ways to implement blockchain, and we see this as an opportunity to further differentiate ourselves," Lopes said. "For our business, traceability from the olive grove to the supermarket shelf is important and we are looking at options to implement this technology across our value chain."

As hype fades to reality, the industry appears to be in a wait-and-see mode. "We're not advising companies to withdraw or postpone and blockchain activities, even with that very accelerated hype over the last couple of years," Stevens said. He said that "mainstream adoption" of blockchain in the supply chain is still probably five to 10 years out, but now is really a great time to start exploring how to integrate it into your business.

"The next two to four years are really optimum for that continuation and perhaps ratification of embedding the core competency for blockchain within organizations," Sanders said.