How Walmart uses blockchain to manage its supply chain

For decades, the transportation industry has faced the same problem: large data disparities in the invoice and payment process for freight carriers, leading to long payment delays and costly reconciliation efforts. Walmart, a leader in supply chain management, is now using blockchain to create an automated process for processing invoices and payments from its 70 third-party freight carriers.

Why does Walmart need blockchain?

Walmart Canada uses its own trucks and third-party carriers to deliver more than 500,000 shipments annually to fulfillment centers and stores across the country. More than 200 data points must be calculated and accounted for independently in each invoice. These include the locations of each load’s stops, the number of gallons of fuel consumed by the carriers, temperature updates, and more. As a result, data is riddled with discrepancies and 70% of invoices require reconciliation efforts.

The problem lies at the level of the application of several information systems which cannot communicate. Therefore, the reconciliation process has to be done manually, which is both laborious and time-consuming. Automating the process by creating a blockchain network solves the problem of incompatible business systems by introducing a single shared source of credible information for Walmart and its operators.

Pilot

To create the blockchain network, Walmart Canada approached DLT Labs, a leader in engineering and deploying imaginative business solutions using distributed ledger technology. Bison Transport, one of Walmart Canada’s carriers, was also roped off.

In January 2019, the pilot version went live after rigorous testing. The network, dubbed DL Freight, was rolled out to 69 other carriers in March 2021. It automatically collects and syncs data at every step and is only visible to the parties involved in the transaction. Since the introduction of DL Freight, less than 1% of invoices have discrepancies, significantly reducing the costs of reconciliation efforts and allowing carriers to be paid on time.

Advantages

Decentralized ledger records and protects transaction information shared between multiple parties. Cryptocurrencies like Bitcoin and Ethereum capitalize on this technology to allow unlimited, unspecified parties to participate in transactions without the need for an intermediary.

Conversely, in supply chain management, the focus is on using blockchain to allow a defined number of identified parties to administer transactions between them. Instead of coins, supply chain blockchains “mint” a range of transaction-related data, producing unique and easily verifiable identifiers for purchase orders, inventory units, and more.

Each blockchain participant has their own unique digital signature, which is used to authenticate tokens moving through the chain. In addition, everyone receives their copy of the chain and has access to an integrated audit trail that cannot be modified.

The potential of blockchain technology in supply chain management is exciting for the following reasons:

  • Greater supply chain transparency

Authorized Participants have received increased visibility into all supply chain activity, and there is a shared, undisputed version of the truth.

  • A more resilient supply chain

A single unforeseen event can trigger a domino effect of supply chain disruptions. Blockchain supply chain solutions counter this by issuing smart contracts that automatically activate when predefined business conditions are met. As a result, participants gain near real-time visibility into operations and can take action sooner when exceptions occur.

  • Simplified supplier integration

By providing a reliable and unalterable record of new supplier details, blockchain supply chain solutions can speed up the onboarding process for new suppliers.

Counterparts

FedEx has integrated blockchain into its chain of custody to help manage customer disputes. The organization is also part of the Blockchain in Transport Alliance and advocates the adoption of blockchain as an industry standard.

DeBeers uses blockchain to track the source and progress of every mined natural diamond, helping them address consumer concerns about ethical gemstone sourcing.