Walmart's new attempt to use blockchain to help it contact buyers of recalled, dangerous products faces up to a long-neglected reality. That reality is that almost any meaningful improvement in how quickly and completely retailers contact impacted customers and retrieve recalled products — an act that can literally save lives — will deliver the best ROI of any technology change.
Let's set aside, for the moment, that the ability to use CRM to quickly tell shoppers, "Don't eat those mushrooms! They'll give you botulism," is about the best way to generate rock-solid customer loyalty. It will also give shoppers an unbelievably powerful reason to sign up for your loyalty program and use it every time they shop.
Setting all of that increased revenue and good will aside, those steps will slash your recall costs and dramatically improve your legal position if anyone does get hurt. In other words, you'll be able to prove that you really did everything you possibly could to retrieve the dangerous product back before anyone was harmed. Put more candidly, you'll be able to say, "When Shopper 1234 paid with cash and didn't use a loyalty card and kept her phone turned off during her trip, she made it far more difficult for us to know who she was and to contact her."
But there's far more. These steps will also improve supply-chain visibility, which will deliver 20 other benefits, from cost-cutting to getting fresher produce to customers to knowing far better when SKUs will arrive.
As for what Walmart is doing, details are thin, but Bloomberg was able to shed a little light. "Wal-Mart will be able to obtain crucial data from a single receipt, including suppliers, details on how and where food was grown and who inspected it. The database extends information from the pallet to the individual package," the Bloomberg story said.
The piece also quoted Frank Yiannas, Walmart's VP of food safety, saying that this database effort could mean "the difference between pulling a few tainted packages and yanking all the spinach from hundreds of stores. With blockchain, you can do strategic removals, and let consumers and companies have confidence. We believe that enhanced traceability is good for other aspects of the food systems. We hope you could capture other important attributes that would inform decisions around food flows and even get more efficient at it.”
The challenge with all of this is that it depends on security mechanisms within the database, which is problematic, because so many participants may have a strong (albeit shortsighted) incentive to manipulate the data. One of the products being tested, for example, is pork from China, according to the Bloomberg story.
The system depends on every step in the supply chain being accurately documented as products move through it. What if a Chinese distributor is cutting costs and purchasing from a farm that is known to cut corners? Let's say that this cheap pork provider is also on a "do not use" list from Walmart. What's to stop that vendor from telling the system the product was instead secured from a more reputable source, one that Walmart approves of? If he's lucky, no one would ever know and the records would indicate that he's buying from farms that Walmart likes.
And if something does go wrong? Evidence would point elsewhere, unless Chinese authorities contact that "good supplier" and discover the ruse. Would China's laws, known to be lax in this area, even punish a supplier for falsifying data in a retailer database? Walmart would certainly fire that supplier, but is that a risk the supplier might be willing to take?
A lot of the security claims with blockchain involve limits — very impressive limits, I grant you — on changing data after it's been entered. But it clearly has no means to detect initial falsehoods.
Still, any move by the world's largest retailer to improve its speed on alerting customers that they may be poisoned — or have a toy that could maim their child — is certainly something to be encouraged.
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