Walmart on blockchain
We all know Walmart. It’s the place where even people trapped in a hostage situation will deny that they were shopping there. It’s also the largest company by revenue and by number of employees - and it has reported another successful year.
Walmart is rarely mentioned as an innovator. Usually, the glory for that goes to its rival Amazon. But Walmart has grown into a global behemoth by mastering logistics on a large scale. It has built over 10,500 locations since 1962. And it’s not stopping: while the world is focused on bitcoin and Ether and NFTs and Metaverse, Walmart decided to use the underlying blockchain technology to solve a big business problem.
In a pilot running in Canada, the objective is to automate processes for handling invoices and payments of its 70 third-party freight carriers. If there is one industry still run by paper and faxes, tracking is an example of it. Many startups have tried to solve various parts of the chain. But because there are so many independent companies involved, it is almost impossible to change anything. This is where Walmart has the clout to change things.
According to Walmart Canada’s research, 70% of all invoices required reconciliation. The amount of manual effort needed to make that happen, along with delayed payments resulted in unhappy suppliers and unnecessary costs. What was the cause of these issues? Too many incompatible systems not talking to each other.
The solution was a design of a private blockchain infrastructure, where each party can insert its information, where it is immediately visible to the rest of the partners. Because of blockchain, information can't be altered. That way, everyone has a copy of all the transactions and everything is very transparent. The concept of 'Smart Contracts' is then implemented with capturing all the business rules and clear understanding who gets paid when and under which conditions. I can only imagine while doing that how many processes were hugely improved just by reviewing the current ones.
When Walmart implemented this solution, disputed invoices dropped from 70% to less than 1%. It’s almost hard to believe! That has boosted trust between Walmart Canada and its carriers, and provided them with insights that have led to major operational improvements.
Bitcoin is only one, albeit famous but very small implementation of blockchain technology. The real value of blockchain is not in Bitcoin. It is in the technology which will help remove friction in transactions. This creates transparency, connecting incompatible systems and making it easier to exchange information. It is what TCP/IP did for connecting computers, which led to the birth of the Internet.
When reading about new shiny things, always try to separate the hype from understanding of the real innovation. It will serve you well and it is the recurrent pattern.