Summary.Walmart Canada applied blockchain to solve a common logistics nightmare: payment disputes with its 70 third-party freight carriers. To solve the problem it built a blockchain network. The system has not only virtually eliminated the payments problem; it also has led to significant operational efficiencies. This article offers five lessons on how to create a blockchain network for improving business processes.
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Walmart has long been known as a leader in supply chain management. However, its prowess could not insulate it from a problem plaguing the transportation industry for decades: vast data discrepancies in the invoice and payment process for freight carriers, which required costly reconciliation efforts and caused long payment delays. Then Walmart Canada pioneered a solution: It employed blockchain, a distributed-ledger technology, to create an automated system for managing invoices from and payments to its 70 third-party freight carriers.
The initiative started when one of us (John Bayliss) and his Walmart Canada team began thinking about new ways to solve the problem. The sheer magnitude of the data was immense. Walmart Canada delivers over 500,000 shipments annually to distribution centers and stores across Canada, using both its own trucking fleet and third-party carriers.
The essential service of moving a massive quantity of goods (many of which are perishable) across borders, time zones, and different climates is an enormous operational challenge. For example, each load shipped requires tracking data points such as stop locations, gallons of fuel, and temperature updates that need to be independently calculated and incorporated into each invoice. With over 200 data points that needed to be factored into invoices, it is easy to see how the invoice and payment process could be fraught with data discrepancies. And with 70% of invoices requiring reconciliation efforts, there were increased transaction costs and unhappy carriers waiting for payments.
An analysis identified the root cause of the problem: the use of multiple information systems between Walmart Canada and its carriers that could not talk to each other. Consequently, reconciliation had to be performed manually— a labor-intensive, time-consuming process riddled with inconsistencies.
One of Walmart Canada’s tech leaders suggested automating the process by creating a blockchain network, which would overcome the problem of incompatible enterprise systems and would establish a shared single source of truth for all parties. But there were skeptics because, at that point, blockchain technology had not been used in a substantial, business-critical function. Plus, there were multiple flavors of blockchain. Would it be better to have a public blockchain network like those used for cryptocurrencies or a private blockchain network?
To help it, Walmart Canada turned to DLT Labs, a leader in developing and deploying innovative enterprise solutions using distributed ledger technology. A short time later, Bison Transport, one of Walmart Canada’s carriers, joined the team charged with developing a network. A pilot version, which initially just involved Walmart Canada and Bison Transport, went live in January 2019 after being exhaustively tested. It was successful, and in March 2021, the network, known as DL Freight, was rolled out to the 69 other carriers. The system continuously gathers information at every step— from the tender offer from the carrier to the proof of delivery and the approval of payment. This information is automatically captured and synchronized in real-time and is visible only to the parties involved in the transaction.
By all accounts the system has been a tremendous success. Prior to DL Freight over 70% of invoices were disputed. Today less than 1% of invoices have discrepancies, and these disputes are easily flagged and quickly resolved. Gone are the days of payments taking weeks or months; carriers are now getting paid on time.
Here are the lessons from the Walmart Canada effort that other companies interested in creating a blockchain network can apply:
1. Involve key stakeholders.
The participation of Bison Transport, which has one of the largest truck fleets in North America, allowed the design team to get the carriers’ view of the problems that needed to be solved and ensured that solutions would work not just for Walmart but also for its logistics partners.
2. Weigh the pros and cons of using a private vs. a public blockchain.
A public blockchain network— one that anyone can join without asking for permission— allows unlimited viewing of information stored on it, eliminates intermediaries, and operates independently of any governing party. It is well-suited for digital consumer offerings (like NFT’s), cryptocurrencies, and certifying information such as individuals’ degrees or certificates.
But private networks— those that require a party to be granted permission to join it— are often far better suited for businesses because access is restricted to verified members and only parties directly working together can see the specific information they exchange. This better satisfies industrial-grade security requirements. For these reasons, Walmart decided to go with a private network built on Hyperledger Fabric, an open-source platform.
3. Agree on the business rules and calculations.
Any complex business has both fixed and variable processes and costs and they are rarely, if ever, the same for any two companies. A fundamental prerequisite for creating a blockchain-enabled system is to get the parties to agree to all the calculations and business rules that the network will employ.
For Walmart and its carriers, this meant working with each carrier’s unique data (vendor name, payment terms, contract duration, and general terms and conditions), which is combined with governing master tables of information such as fuel rates and tax rates. The parties should then jointly agree to the formulas that the blockchain will use to calculate each invoice.
The DL Freight blockchain synthesizes all the data points in real time throughout each unique delivery, taking into account information such as fuel costs, offroad milage, and delays at the delivery point. The system creates a running invoice that evolves in real time as costs accrue.
4. Build in checks and balances.
Automated checks and balances can and should be built into the blockchain system— both to prevent errors and to identify opportunities to enhance performance. For example, the carrier’s information about miles traveled and fuel consumed is automatically compared with Internet of Things (IoT) data reported from independent devices on the trucks and any discrepancy is immediately highlighted.
These checks and balances result in a self-learning system. As multiple carriers travel between identical start and end points over time, the history of the carriers’ performance is aggregated and automatically compared to each subsequent trip, helping both Walmart and the carriers optimize their operations.
The financial value of automated checks and balances goes beyond payments. For example, since the system automates all financial calculations and updates them continuously throughout the process, any financial service— such as carrier financing of the invoices due for payment— can also be automated because the blockchain system eliminates the need to determine if an invoice is accurate and valid. This makes possible highly efficient management of working capital and creates a market for financial institutions that can now provide financing at any stage of the supply chain.
5. Don’t try to replace legacy IT systems.
While legacy systems may be older and rigid, they almost always have unique strengths, and the data they hold is valuable. So rather than insisting the legacy systems be replaced, any blockchain system should rest on top of the parties’ legacy systems. Its ability to do so is one of its great benefits.
One of the biggest benefits of the blockchain platform is the unprecedented level of trust its end-to-end supply chain visibility has created between Walmart Canada and its carriers. The original goal of the initiative was to eliminate disputes and wasted resources. But the blockchain solution has also provided Walmart and its supply chain partners with insights that have led to major operational improvements.
For example, it is now possible to determine which specific routes are the safest or best in terms of time and fuel consumption and to optimize efficiency by vehicle, route, load weight, and even the optimal time to travel (i.e., day or night). The blockchain system has also helped handle the enormous challenge of juggling the arrival of so many loads: By constantly updating and automatically sharing trucks’ expected arrival times with the distribution centers or stores, deliveries can be better coordinated.
The success of Walmart Canada’s system has demonstrated the potential of blockchain. It has shown that the technology can generate significant operational and financial gains and improve supplier relations.
FAQs
The DL Freight blockchain synthesizes all the data points in real time throughout each unique delivery, taking into account information such as fuel costs, offroad milage, and delays at the delivery point. The system creates a running invoice that evolves in real time as costs accrue.
How Walmart uses blockchain to manage its supply chain? ›
With blockchain technology, Walmart can time-stamp every list at the point of origin and use these time-stamps to track it through the supply chain process, including back through its network of suppliers.
Is Walmart using blockchain for supply chain? ›
These situations raised two vital concerns for the food supply chain industry – food fraud and food traceability. Walmart came up with solutions rooted in Blockchain technology for the issue. When it comes to food traceability, it is vital to show where the food was sourced from and where it has been.
How can blockchain solve supply chain issues? ›
Blockchain makes global supply chains more efficient by allowing companies to complete transactions directly and without third parties. It also facilitates increased integration of financial and logistics services, enabling greater data collaboration between stakeholders.
What problems was Walmart Canada struggling with before the DL freight blockchain platform? ›
Before Walmart Canada deployed blockchain technology to pay trucking companies, the company and its carriers were often bogged down by invoice disputes. Up to 70% of invoices had some sort of issue where numbers didn't align with company expectations. The results were not good.
What is the Walmart strategy in Canada? ›
Walmart Canada's multi-pronged strategy aims to “generate significant growth” by enhancing its in-store and online shopping experiences and upgrading its distribution, using advanced technology as an enabler.
What supply chain strategy does Walmart use? ›
What is Walmart's supply chain strategy? Walmart's supply chain strategy is highly focused on direct, long-term relationships with manufacturers, distributors, and ecommerce businesses. The goal is to reduce the number of touchpoints within the supply chain to reduce lead times and speed up fulfillment.
Does Walmart have supply chain issues? ›
Size and Scale of Operations
One of the major challenges Walmart faces in its supply chain is the sheer scale and complexity of the company's operations.
Which company uses blockchain in supply chain? ›
IBM. To instill more confidence in supply chain data, IBM equips supply chain networks with blockchain technology. The IBM Blockchain initiative applies distributed ledgers to define company-specific rules, create smart contracts and develop immutable records of data.
What are the benefits of using blockchain in supply chain? ›
Blockchain builds communication between partners. This builds a streamlined process with shorter lead times, reduced redundancy, fewer delays, and ultimately a leaner supply chain. It also ensures that quality standards are met, giving the seller more control of the production of the product from A to Z.
Six Ways to Deal with Supply Chain Problems
- Use Tools to Boost Efficiency. Supply chain issues highlight a lack of efficiency in getting products into consumers' hands. ...
- Form Relationships with More Suppliers. ...
- Make Product Changes. ...
- Add to Inventory When You Can. ...
- Improve Customer Service. ...
- Communicate.
Blockchain increases trust, security, transparency, and the traceability of data shared across a business network — and delivers cost savings with new efficiencies. Blockchain for business uses a shared and immutable ledger that can only be accessed by members with permission.
Why is Walmart so successful in Canada? ›
And perhaps most importantly, Walmart runs its Canadian stores through its international division. Said Stern, “It is not a satellite of the U.S., but understood to be a different country.” In that same vein, Walmart brought its everyday low price strategy to Canadian shoppers with a consistent assortment.
How did Walmart improve its supply chain? ›
The Walmart supply chain relies on a streamlined supply chain network, efficient warehouse management and careful inventory planning. Through automated demand forecasting and inventory planning, Walmart has optimized its supply chain to fulfill customer demand while keeping operational costs low.
What are the challenges faced by Walmart company? ›
With over 2.2 million employees worldwide, Walmart has faced a torrent of lawsuits and issues with regards to its workforce. These issues involve low wages, poor working conditions, inadequate health care, as well as issues involving the company's strong anti-union policies.
What does Walmart Canada do? ›
Walmart Canada's flagship online store, Walmart.ca is visited by more than 600,000 customers daily. Customers can purchase a diverse selection of products including grocery items, electronics, and patio furniture on the site, from the comfort of their home or on the go.
Which type of global expansion strategy did Walmart use to enter the Canadian market? ›
Walmart employed the acquisition strategy to enter most foreign markets.
What is Walmart Canada mission statement? ›
In Canada, Walmart's mission is clear - we want to save Canadians money to help them live better. We believe Canadians deserve access to the quality products they need, at everyday low prices, in the ways they want to shop for them. That's our commitment to you.
What are the three areas of Walmart's supply chain management? ›
Components of Supply Chain Management (SCM)
Walmart's overall methods of supply chain management differ little from the main components of most supply chains: purchasing, operations, distribution, and integration.
What strategy does Walmart successfully follow? ›
Walmart is known for its superior procurement methods in negotiating prices to keep the costs low. Diversification makes sure that if one product doesn't get enough attention, other products that go well with it can help boost sales of other products.
ANSWER: Walmart works with suppliers to improve their sustainability practices, such as reducing packaging waste and sourcing renewable energy. Supplier Collaboration, which benefits both the company and suppliers by reducing cost and improving product quality.
What is blockchain best example? ›
Bitcoin and Ethereum are popular examples of blockchains. Everyone is allowed to connect to the blockchain and transact on them.
What is a simple example of how blockchain works? ›
Blockchains store information on monetary transactions using cryptocurrencies, but they also store other types of information, such as product tracking and other data. For example, food products can be tracked from the moment they are shipped out, all throughout their journey, and up until final delivery.
What is an example of using blockchain in business? ›
One example of this is Walmart using blockchain technology to trace their food sources. Tracing mangos to the source went from longer than six days to 2.2 seconds. As blockchain technology becomes more accessible, more businesses will use it to trace products and keep a secure record of their supply chain.
What is the biggest threat to Walmart? ›
Threats (External Strategic Factors)
The following external factors are threats to Walmart: Competitive threat from online and brick-and-mortar firms. Supply chain disruptions due to political, economic, and health factors. Labor market disruptions.
How does Walmart affect supply and demand? ›
Once a Walmart location opens, the lower prices, concentration, and selection of merchandise in its stores tend to draw consumers away from local retailers. With less foot traffic and declining sales, local retailers see their profits fall, forcing them to make cost-cutting decisions.
What countries does Walmart supply chain with? ›
The majority of its suppliers are in the United States. However, the supply chain for Walmart stores is global, with suppliers in the United Kingdom, Canada, China, Mexico, Taiwan, Hong Kong, France, and other countries. Here are five suppliers that generate portions of their revenues from Walmart.
How many companies use blockchain for supply chain? ›
Not all 100 companies are actively adopting blockchain technology, including Berkshire Hathaway and Texas Instruments. However, 86 firms are actively pursuing blockchain-related solutions for their business needs. Of these, only 44 have actively pursued blockchain strategies over the last 12 months.
Which industry uses blockchain the most? ›
In the finance and banking sector, blockchain poses several benefits in terms of transparency, security, and improved record-keeping. It makes it a perfect solution for banking purposes such as Anti-Money laundering, client onboarding, or fraud prevention.
What is the future of blockchain in supply chain? ›
The future of blockchain in supply chain management must also reflect on the secondary benefits. Brands could enrich corporate reputation through transparency in the manufacturing of products. In addition, blockchain could improve credibility and gain the trust of the public through open access to supply chain data.
Here are the top five benefits of blockchain in the supply chain management
- Validate Provenance Along the Supply Chain. ...
- Create Transparency. ...
- Offer Quality Assurance. ...
- Provide Cost Savings. ...
- Boost Track and Trace.
Blockchain technology does not allow easy modification of data once recorded, and it requires rewriting the codes in all of the blocks, which is time-consuming and expensive. The downside of this feature is that it is hard to correct a mistake or make any necessary adjustments.
What are the five major challenges in the supply chain? ›
The strains on supply chains are far more intense, and management requires a strong plan and constant measuring for weak links.
- Customer Service. Customer service still remains the center of supply chain management. ...
- Cost Control. ...
- Planning & Risk Management. ...
- Supplier/Partner Relationship Management. ...
- Talent.
The key challenges faced in supply chain management include:
- • Rising risks in the supply chain. ...
- Unexpected delays. ...
- Cost control. ...
- Collaboration and syncing of data across the supply chain. ...
- Increasing freight prices. ...
- Difficult demand forecasting. ...
- Digital transformation. ...
- Port congestion.
Among the most common supply chain challenges in 2021 and 2022 were things like port congestion, manufacturing delays, and extreme weather events (including hurricanes, tornadoes, wildfires, and more).
What is the main advantage of blockchain over conventional ways to manage transactions across supply? ›
- Operations Management.
- Operations Management questions and answers.
- The main advantage of blockchain over conventional ways to manage transactions across supply chain partners is: Multiple Choice Unnecessary transactions are blocked from occurring There is no need for a central authority to validate transactions.
Economic Impact
The investment will generate approximately 4,200 jobs in stores, distribution centers and construction. Today, Walmart Canada does business with more than 6,600 Canadian suppliers and service providers to whom it pays more than CAD $19 billion (USD $13.5 billion) annually.
Is Walmart Canada different from Walmart USA? ›
Walmart Canada is a Canadian retail corporation and the subsidiary of U.S.-based multinational retail conglomerate Walmart. Headquartered in Mississauga, Ontario, it was founded on March 17, 1994, with the purchase of the Woolco Canada chain from the F. W. Woolworth Company.
What strategies is Walmart adopting to make its operations efficient? ›
Walmart maintains its cost leadership through bulk purchasing, a streamlined supply chain, strategic store locations, and minimal operating costs. These practices help the company achieve economies of scale and pass on the savings to the consumers, thus offering the most competitive prices in the market.
How does Walmart use Blockchain? ›
Every participant in the blockchain has their exclusive digital signature, which is used to authenticate the tokens moving through the chain. In addition, everyone receives their copy of the chain and is given access to a built-in audit trail that can't be meddled with.
In order to continue strengthening its competitive advantage, Walmart became the pioneer in information systems, logistics and human resources practises.
Who is the supply chain leader of Walmart? ›
Executive Vice President, Supply Chain Operations, Walmart U.S. David Guggina is executive vice president of supply chain operations for Walmart U.S. He has responsibility for leading the company's distribution centers, fulfillment centers and other areas in support of the Walmart fulfillment platform.
How does Walmart overcome challenges? ›
Walmart adapts a low-cost and high volume strategy (Roberts and Berg 45). The basic principle of the strategy is to satisfy customers by offering low prices and exceptional customer service. The retailer is able to offer low prices because its operating costs are lower than the standard industry costs.
What are 3 weaknesses of Walmart? ›
Walmart's Weaknesses – Internal Strategic Factors
Low wages, inadequate healthcare, and poor working conditions are few of the issues that have been publically criticized. Large span of control – Its highly extended size and massive span of control could leave Walmart weak in some areas.
How is blockchain used in supply chain management? ›
With blockchain, supply chain companies can document production updates to a single shared ledger, which provides complete data visibility and a single source of truth. Because transactions are always time-stamped and up to date, companies can query a product's status and location at any point in time.
What is an example of blockchain being used? ›
Blockchain is being implemented in almost every area of business including cryptocurrencies, supply chain, and logistics, intellectual property management, food safety, healthcare data management, fundraising and investment with security token offering, and notary.
What innovations has Walmart brought to supply chain management? ›
Walmart's supply chain innovations, including early adoption of barcode scanning technology, data-driven decision making, investment in new technologies like drones, and commitment to sustainability, have had a significant impact on the retail industry.
