Case - IBM's Food Trust

This document is for the exclusive use of students at Unil’s Strategic Management course 2023-24, during that
academic year. This case’s content and its solution, whether in entirety or in part, cannot be reproduced or
circulated without the permission of the author (Articles 67 and 68 of the LDA law)
IBM’s Food Trust
Dr. Estefania Amer prepared this case with the sole purpose of providing material for class discussion and analysis. The author
does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised
certain names and other identifying information to protect confidentiality.
International Business Machines (IBM) is a major American multinational technology corporation

founded in 1911 by Charles Ranlet Flint. Its core activities are focused on IT technology and services. IBM
has been a pioneer in new technologies, and it has laid the foundations for many technological
innovations, such as the barcode and the credit card’s magnetic strip. Since the mid‐2010s, IBM has
become increasingly involved in the development of blockchain‐based technology solutions. One of these
products is Food Trust, which improves the traceability and transparency of food supply chains. How was
Food Trust developed? And why has it been successful with many food&beverage companies and
supermarket chains?
Food Supply Chain Traceability and Transparency

Consumers expect food and beverages to be safe for consumption, and food contamination by toxic
substances or pathogens can have devastating consequences on the consumers’ health, sometimes
resulting in death. As a result, any contamination incident results in retailers and food and beverage
companies launching massive product recalls. For example, no later than in October 2020, Walmart had
to remove a number of cut fruits from their shelves because of the presence of listeria.1
This type of incident is damaging not only for the consumers’ health, but they can also compromise
the company’s reputation and threaten its survival. Moreover, food recalls represent a large financial cost
for the companies that must carry them out. The average cost of a food recall is estimated at around 10
million dollars, but it can be higher depending on the characteristics of the company involved (e.g., its size)
and the damage inflicted on consumers. This average cost is determined by the cost of the recall itself, the
cost of the product that will never be sold, the lost future sales due to the reputational damage, legal fees,
lab fees, etc.
Moreover, many consumers care about sustainability. According to a recently published study, 65%
of consumers look for products that can help them live a more sustainable and socially responsible life,
and 60% buy products from companies that are socially and environmentally responsible. Consumers are
pressuring food and beverage giants not only to improve their environmental and social practices, but also
to promote these practices throughout the supply chain. As a result, companies are increasingly concerned
by the traceability and transparency of their supply chains.
According to the American FDA, food traceability is defined by “the ability to follow the movement of
a food product and its ingredients through all steps in the supply chain”. Current US regulations already
require most of the food products to establish and maintain baseline traceability. Food regulation has also
become stricter along time, to ensure customer safety. The FDA is working to promote more efficient and
rapid response to foodborne illness outbreaks. Many companies encourage policies that promote food
1
Listeria is a bacterium that causes listeriosis, which is a serious infection that can result in death. The infection is most likely to
harm pregnant women and their newborns, adults aged 65 or more, and immunocompromised people.
1
The reference list is available upon request
traceability because brands are expected to offer the highest standards regarding food safety by both
consumers and regulators.
Traceability is important for the implementation and verification of sustainable practices in the supply
chain. According to the United Nations Global Compact and the Business for Social Responsibility, a global
nonprofit organization, traceability is defined as “The ability to identify and trace the history, distribution,
location and application of products, parts and materials, to ensure the reliability of sustainability claims,
in the areas of human rights, labour (including health and safety), the environment and anti‐corruption.”
Besides traceability, supermarkets and food&beverage companies also have a strong incentive to
make their supply chains more transparent. Indeed, the 2020 report from the Food Industry Association
shows that 81% of the consumers consider transparency as being important or extremely important.
Transparency tends to strengthen trust between a company and its customers. Another study also shows
that customers are willing to pay a premium of 2% to 10% for greater supply chain transparency. Finally,
transparency also reduces the risk of supply disruption due to ports placing shipments on hold because of
missing documents. Supply chain transparency depends on (1) visibility, which depends on the data
availability, and (2) disclosure, which is a strategic choice on what is communicated and what is not. Finally,
visibility is related to traceability, and both depend on the extent to which a company has access to
information about what is happening in its supply chain.
Bringing Traceability and Transparency to the Supply Chain

The complexity of the supply chain limits traceability and the visibility of what is happening along this
chain, thus compromising transparency. For example, when there is a consumer safety issue, it is often
difficult for a company to trace a contaminated ingredient. Moreover, the output from one single supplier
can end up in thousands of different products in multiple stores. This, combined with the reputational risks
associated with environmentally and socially questionable practices in the supply chain, places traceability
and visibility at the top of the agenda of food&beverage companies and the retailers that sell their
products. However, the level of digitalization in the food supply chain is still weak compared to its
complexity, and many operations are still paper based. This makes the tracing of products and inputs
tedious, time‐consuming, costly, and limits the ability of companies and governments to react quickly
when there is a food safety issue.
Therefore, food&beverage companies and supermarket chains became increasingly interested in
blockchain technologies. And so did IBM, which saw an opportunity to develop a product for these
companies. The blockchain is a way to store data in a platform, and share it with the platform’s members,
that is useful to manage traceability along supply chains. In the case of food contamination, it allows
quickly tracing the origin of the contamination, determine which products have been affected, where they
are, and reduce the time and costs associated with product recalls. Moreover, all parties that participate
to a blockchain network have the same information, which has a positive impact on transparency. A
greater transparency in the supply chain also implies lower auditing costs overall as manual checks for
compliance are replaced by a simple search of information along the blockchain. Finally, an increased
visibility of what is happening in the supply chain also allows companies to identify weak nodes in this
chain, where certain types of problems tend to happen or repeat themselves. But what is exactly the
blockchain? And how do blockchain networks improve traceability and visibility along supply chains?
2
What Is a Blockchain?
A blockchain is a decentralized system of recording information and transactions in a way that makes
it impossible to hack or change. The transactions are time‐stamped and recorded one after the other in
the form of blocks, which are simultaneously duplicated to all participants in the system. Before a block of
transactions can be added to the blockchain, network participants must agree the transaction is valid
through a process called consensus. And, once a transaction is added, this and all the preceding ones are
visible to the other network members. These can check the chain of transactions at any time but are unable
to modify any of them. Records that have been validated (by consensus) are immutable because once
validated they cannot be altered or deleted.
The alteration of records by users once the transaction is recorded is prevented by the end‐to‐end
encryption and the fact that the data is stored across a network of computers. Indeed, data stored in
conventional computer systems and servers is more vulnerable to alteration and fraud than when it is in
a blockchain network. Large networks are particularly effective at preventing alterations, because the
more users there are in a blockchain network, the larger is the network of computers, and the more
difficult it is to modify records that are in the blockchain network. However, a higher number of users also
results in more transactions, which means that the processing time per transaction tends to be longer.
Blockchains can be permissionless, where any users can join the network with pseudo‐anonymity2,
or permissioned, where the system restricts the access to certain users and every user knows who the
other users are. Blockchains can also take four forms: public, private, consortium, or hybrid. Public
blockchains are always permissionless because anyone can join the network and the blockchain is
decentralized. Each user in the network has equal rights to access to the blockchain, to create new blocks
of data, and to validate blocks of data. Public blockchains have been used for cryptocurrencies such as
Bitcoin.
Private blockchain systems are permissioned blockchains that are controlled by a single organization.
The single organization acts as a central authority to determine who has access to the network, which
means that a private blockchain is only partially decentralized. Private networks are more prone to hacks
and data breaches and manipulation by ‘bad actors’ than public networks, because the latter are more
decentralized and have a high number of users, which makes it almost impossible for ‘bad actors’ to attack
the system and gain control over the consensus network. One example of a private blockchain is the Onyx
Blockchain Platform created by JP Morgan for financial transactions. To overcome the limitations of both
public and private blockchains, two additional types of blockchain have been created: consortium and
hybrid blockchains. A consortium blockchain is a permissioned blockchain governed by a group of
organizations instead of one single entity, as in the case of private blockchain. There are also hybrid
blockchains, which have characteristics of both public and private blockchains.
The most important feature of blockchain technology for the supply chain is the immutability of
recorded transactions, so that any information introduced by a network member and validated is
registered and cannot be changed or deleted. However, to introduce information into a blockchain system,
the information must be in a digital format. This is why companies that register transactions about their
operations in a blockchain network generally rely on Internet‐of‐Things (IoT) technology. For example,
data on processes collected through a monitoring device that relies on sensors and the adequate software
can be fed to a blockchain system. IoT can also be used, for example, to manage vehicle fleets that
2
Pseudo‐anonymity means that a user has an identifier that is not his/her real name, but that is consistent along
time.
3
transport goods and to track the location of items in transit, or to record the temperature of the containers
transporting items that require refrigeration. All this data can be introduced in a blockchain system that
traces the location and temperature of items while in transit and storage.
IBM, the Blockchain, and Food Trust

IBM first considered the use of blockchain technology in its Autonomous Decentralized Peer‐to‐Peer
Telemetry (ADEPT) project, where it partnered with Samsung. This project was developed using the
Ethereum protocol, which is an open source blockchain platform that allows the creation of decentralized
applications. This and other experiences with the blockchain led the company managers to see the
blockchain’s technology potential. This ultimately led to the creation of the IBM Blockchain platform,
which allows operating blockchain networks on the IBM cloud. The service meets exceptional security
standards, including Federal Information Processing Standards (FIPS 140‐2) and Evaluation Assurance
Levels (EAL).
While IBM initially considered developing blockchain solutions of its own, it eventually decided to
join the Linux Foundation’s Hyperledger to develop, together with a network of other IT companies and
programmers, open‐source blockchain technologies. Within the Hyperledger effort, IBM and these other
actors developed Hyperledger Fabric, an open‐source software that is the basis for the development and
implementation of blockchain applications by companies.
The Hyperledger Foundation and Hyperledger Fabric

The Hyperledger Foundation is an open‐source community that, through global collaboration, aims
at developing enterprise‐grade blockchain software. This non‐profit foundation is hosted by The Linux
Foundation and adopts a modular approach to hosting projects. The Hyperledger Foundation takes care
of providing all the necessary support and infrastructure required for the development of these blockchain
software projects.
The Linux Foundation has a lot of experience in enabling the development and scalability of open‐
source projects. It was created in 2000 after the merger of Open Source Development Lab and the Free
Standard Group. The merger’s objective was to allow the new Linux Foundation to standardize and grow
its commercial adoption. The Foundation is supported by IT companies such as Facebook, Google or IBM.
The Linux Foundation is very active and behind many open source projects that rely on a large community
of developers. This foundation reports that its mission is to “help companies and developers identify and
contribute to the projects that matter. Working together, the Open Source Community is addressing the
challenges of industry and technology for the benefit of society. Code is power. Community is strength. We
are one.”
One of the Hyperledger Foundation’s projects is the Hyperledger Fabric, which is the software on
which IBM’s Food Trust solutions is built. According to the Hyperledger foundation, “Hyperledger Fabric is
intended as a foundation for developing applications or solutions with a modular architecture. Hyperledger
Fabric allows components, such as consensus and membership services, to be plug‐and‐play. Its modular
and versatile design satisfies a broad range of industry use cases. It offers a unique approach to consensus
that enables performance at scale while preserving privacy.”
Indeed, a key characteristic of the Hyperledger Fabric is its modular architecture with plug‐and‐play
components that allow applying it to a wide range of uses and provide its users with flexibility. Another
advantage of Hyperledger Fabric is the fact that it is a permissioned network, which means that its
participants are known. This is important when there is data protection regulation, and one needs to know
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who has access to the data. An additional advantage is that the network members are only exposed to the
data that other parties want to share with them. Indeed, due to business competition, protection laws,
and regulations on personal data confidentiality, some data elements cannot be shared with the entire
network. The privacy of sensitive data elements can be achieved through data partitioning. A fourth
advantage is its pluggable architecture, which makes Food Trust a tailorable rather than a one‐size‐fits‐all
solution. In other words, every company that joins the Food Trust network can adapt the software
configuration to its own needs.
IBM and has made a substantial contribution to the project by allocating entire teams to the
development of codes. More than 120’000 organizations and 15’000 engineers have contributed to the
development of the project. While it was started in 2015, the Hyperledger Fabric 1.0 was launched on July
11, 2017.
The IBM Blockchain Platform

The open‐source Hyperledger Fabric code is only useful for a company if the latter is ready to build
its own software solutions based on the code. This is why IBM created the IBM Blockchain Platform, whose
goal was to develop blockchain services based on the Hyperledger Fabric codes and other IBM technology
services such as IBM Cloud. Initially, the approach that IBM decided to adopt is Blockchain‐as‐a‐service
(BaaS). IBM would offer fully integrated services to a client company, including a user‐friendly interface,
so that the company can create, operate, and manage an entirely new blockchain network very quickly
and easily based on the Hyperledger Fabric. According to IBM: “As you create new and advanced enterprise
blockchain solutions, Hyperledger Fabric open‐source code can be your tool of choice and you’ll want the
best “peace of mind” support. That’s where IBM comes in. We are a founder and premier member of the
Hyperledger open‐source community, using Hyperledger Fabric in our own solutions and working with the
community on your behalf to incorporate changes or fixes. No one else has IBM’s expertise.”
When IBM decided to invest massively in the development of blockchain applications and services
based on the Hyperledger Fabrics, industry analysts saw it as a risky move, because of the relative novelty
of the technology and the hype surrounding it. However, they acknowledged that IBM was also one of the
only companies that could be successful in its endeavor of providing this type of BaaS.
IBM has used its Hyperledger Fabric open source codes for the development and maintenance of
blockchain tools to manage the supply chain (e.g., Food Trust for the food industry and TradeLense for
container logistics), financial operations (e.g., the defunct we.trade), and healthcare systems. In 2008, IBM
had more than 1,000 employees working on more than 500 blockchain projects in these industries.
Finally, IBM has partnered with Columbia University to create The Columbia‐IBM Center for
Blockchain and Data Transparency, which “brings together cross‐disciplinary teams to advance innovation
in blockchain and data transparency”. One of the objectives of this center is to support cutting‐edge
research in the underlying technologies of the blockchain and secure data sharing, but it also supports
research on business models, policies, and regulation related to data sharing.
How Food Trust Works

Food Trust is a modular solution allowing participating retailers, food companies, their suppliers, and
growers to choose which modules to use for their activities. As of December 2022, there were eight
modules. There is, for example, the IBM Food Trust™ Data Entry Forms module, which allows members to
upload and manage data. It provides data entry fields for authorized users to submit event data (origin
location, packing date, input and output products, shipment details, etc.). There is also the IBM Food
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Trust™ Trace module, which allows a network member to view supply chain data, including products,
facilities, events, and transactions. It allows tracing products in seconds. A third example is the IBM Food
Trust™ Documents module, which enables network members to upload, view, and share documents.
When a company joins Food Trust, it goes through an onboarding process, which requires the IBM
Food Trust™ Onboarding module. This module allows new network members to get started uploading data
and sharing it with the network partners. This process has six steps. First, the organization joining the
network registers its users and assigns them to the Onboarding team role. The second step is to add the
organization to the network. This is followed by the registration of the organization’s products (inputs and
finished products) and facilities (e.g., farms, warehouses, and packaging plants) in the system. The next
step requires the organization to build its product scenarios and creating supply chain instances. All these
are saved as templates for uploading data. In this step, the organization defines, for each product, all the
details of a basic end‐to‐end scenario, which will include all key traceable data points. Finally, the
organization must select its data access control policy. Once the onboarding process is completed, the
organization can start using Food Trust by selecting the modules it needs.
According to IBM, Food Trust allows companies to make their supply chain more efficient and more
sustainable. It increases the company’s awareness of sustainability practices and opportunities in each
step of the food production chain, including the supply chain. It also allows monitoring food products along
the supply chain to accurately judge the shelf life and reduce the risk of consumer safety issues in general.
Notably, the record created by the blockchain can help retailers better manage the shelf life of products
in their stores. This also allows reducing food waste, a major problem in our societies that is costly for the
environment and companies. Food Trust allows not only tracking the product’s shelf life, but it also enables
the identification of food waste hot spots, where it is possible to intervene to reduce food waste. End‐to‐
end traceability also reduces the risk of errors and fraud.
Moreover, Food Trust increases the awareness of sustainability practices in each step of the
manufacturing processes of the food chain and can unveil opportunities to improve environmental and
social practices. A better transparency and traceability also tend to result in a greater brand trust and the
confidence that the company is complying with regulations.
Food Trust also allows end‐to‐end supply chain visibility for coffee, cocoa, palm oil, and other
commodities supplied by small producers located in less developed countries. Moreover, an improper
handling of fresh produce can lead to food waste and consumer safety concerns. Food Trust allows
reducing these risks. End‐to‐end supply traceability is also key with seafood, which shares the same
concerns as fresh produce. Food producers also face important challenges related to procurement,
production, and shipping, and so do food logistic companies, which can benefit from having a real‐time
overview on the product’s location and additional information such as the storage temperature.
Walmart and IBM’s Partnership to Develop a Blockchain‐based Tracing System

In 2016, Walmart had mostly a paper‐based supply chain monitoring system. Tracking data down was
slow and inefficient. This was a problem with foodborne disease outbreaks, which require traceability and
the ability to quickly locate the source of the problem. Walmart had also identified that transparency was
a key element to secure consumer trust. Moreover, activists and society were increasingly concerned
about sustainability, and since the beginning of the 2000s Walmart had made efforts to improve the
environmental sustainability of its products and practices. This effort included working with suppliers to
improve the supply chain’s environmental performance. According to Walmart’s Global Responsibility
6
Report from 2017, “Simplification and standardization of sustainability metrics is a key prerequisite for
transparency as well as collective action in product value chains.”
As a result, in 2016, Frank Yiannas, Walmart’s Vice President for food safety at the time, started
getting interested in the blockchain technology. However, within Walmart, the novelty of this technology
generated a certain amount of skepticism. To overcome this skepticism, Yiannas decided that Walmart
should partner with IBM to develop and test the blockchain technology applied to the supply chain through
two Proof‐of‐Concepts (POC) projects.
The first POC project was focused on Chinese pork. In 2011, Walmart had to close temporarily 13 of
its stores in the Chongqing region, and 27 employees had been detained, because of a mislabeling incident
advertising regular pork meat as organic. This was not an isolated incident, as Chinese pork has had its
share of food safety and quality scandals. In October 2016, IBM, Walmart and Tsinghua University
announced a joint effort to track the movement of food products in China using blockchain technology to
improve food safety in this country. At the time, Walmart said it would be using the IBM Blockchain, based
on Hyperledger software. Tsinghua University, located in Beijing, adopted an advisory role.
The second POC project tracked Central and South American sliced mangoes sold in US Walmart
stores. Yiannas chose this project because mangoes are highly susceptible to Listeria and Salmonella
contamination, and the project could demonstrate the efficiency of blockchain solutions for cross‐border
transfer and accountability.
The blockchain‐based system based on Hyperledger Fabric was successfully applied to both Chinese
pork and sliced mangoes. The results for the Chinese pork were initially disappointing, due to the system’s
initial lack of credibility. This was solved by allowing the upload of certificates of authenticity to the
blockchain system. The POC to track the mangoes along the supply chain was successful. At the beginning
of the project, Yiannas bought a box of sliced mangoes at a nearby Walmart store and asked his team to
identify the farm they had come from as fast as possible. The team used the classical approach, which
consisted in tracking the mangoes’ origin by calling and e‐mailing distributors and suppliers. It took the
team almost seven days. With the Hyperledger Fabric blockchain‐based food traceability system, the same
result was obtained in 2.2 seconds.
The Food Trust Initiative and the launch of IBM’s Food Trust platform
After these two successful POCs, Walmart, fearful that other supermarkets and food&beverage
companies could develop their own blockchain systems and invite their suppliers to use these systems,
decided that it was necessary to reach out to the giant retailers and food&beverage companies and invite
them to join the Food Trust initiative. These companies tend to source from the same suppliers, and it is
costly for anyone to manage several blockchain‐based traceability systems.
IBM reached out to these large companies in the hope that they would join its existing partnership
with Walmart, and managed to get many of them on the blockchain‐based food traceability network that
they had developed through the two POCs. Experts attribute this success to two factors. First, the strong
technical considerations that the platform developers had given to the data privacy aspects. Indeed, the
fact that the blockchain used by IBM is permissioned (i.e., actors have control over their data and can
choose who has access to it) is one of the key strengths of the platform. The second factor is related to
food safety and consumers’ expectations regarding environmental and social practices.
As a result, in August 2017, IBM and Walmart launched the Food Trust Initiative, whose objective was
to develop a product ready for commercialization, with nine other founding partners (Dole, Driscoll’s,
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Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestlé, Tyson Foods, and
Unilever). The initiative’s mission was to “achieve blockchain food traceability from farm to plate.” Soon
these companies were using a blockchain‐based food traceability platform built on the Hyperledger Fabric
that was named Food Trust, and to that end reached out to their suppliers and other trading partners.
Indeed, the goal of the Food Trust platform is to connect retailers, wholesalers, and their suppliers.
To reach this goal, and get wholesalers, farmers and other suppliers on board, supermarket and food
giants placed pressure on their suppliers. For example, in September 2018, Walmart sent a letter to its
leafy greens’ suppliers requiring them to “capture digital, end‐to‐end traceability event information using
the IBM Food Trust network” starting in 2019. Knowing that this project was a massive one, Walmart split
it into two phases. During the first phase, in January 2019, Walmart’s direct suppliers needed to conform
to the one‐step‐back traceability on the blockchain network. Suppliers were subsequently expected, in a
second phase, to work with all their suppliers to enable end‐to‐end traceability back to farms. This second
phase had to be completed by September 30, 2019. On that same year, Dole used the platform to work
with a grower‐owned partner called Centricity so that the audit data could be introduced into the
blockchain.
However, IBM knew that, to incentivize suppliers to join the platform, this process had to be easy and
access had to be provided free of charge. In a 2019 interview, Ramesh Gopinath, IBM’s VP of Blockchain
Solutions for Supply Chain, reported that “if you want to upload information to, and be part of the
ecosystem and connect with partners, it’s free. There is no charge,” and added, “So, you know when
Walmart said ‘Dear leafy green supplier, please join IBM Food Trust’, they knew full well that we’re not
going to be charging the ones who don’t want to buy specific applications on IBM Food Trust.”
Even if recording information into the system can be time‐consuming for suppliers, and small
suppliers are frequently resource‐limited, IBM’s Gopinath also mentioned that small suppliers can benefit
from joining Food Trust. “When recalls happen the farmers and the little suppliers, they get significantly
affected.” Although upfront small suppliers may think that it is extra work, sharing data with their clients
can prevent blanket product bans. Gopinath continued: “They may benefit tremendously because if you’re
not the one that had a problem, you would be left out during the surgical recall, it won’t touch you.”
Additionally, Food Trust’s network is designed to be compatible with GS1 ‐ a standards' framework
prevalent in the food industry. The objective is to guarantee maximum interoperability in Food Trust’s
traceability systems.
In October 2018, one year and two months after unveiling the Food Trust initiative to the public, IBM
officially launched the Food Trust platform, which became accessible to everyone. The French giant retailer
Carrefour immediately joined this platform, as well as some of its major suppliers. Carrefour’s decision to
join was consistent with its Act for Food, a world program of initiatives that aim at helping its customers
and employees eat better at affordable prices. Carrefour also intended to promote the use of blockchain‐
based approaches to supply chain management within the food industry.
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This document is for the exclusive use of students at Unil’s Strategic Management course 2023-24, during that

IBM’s Food Trust

International Business Machines (IBM) is a major American multinational technology corporation

Food Supply Chain Traceability and Transparency

Bringing Traceability and Transparency to the Supply Chain

IBM, the Blockchain, and Food Trust

The Hyperledger Foundation and Hyperledger Fabric

The IBM Blockchain Platform

How Food Trust Works

Walmart and IBM’s Partnership to Develop a Blockchain‐based Tracing System

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