COHN: Good morning, everyone.
So, I'm going to talk very briefly about
Blockchain which is not an easy thing to do.
How many of you are familiar with Blockchain?
That helps.
Okay.
In my 35 years as a scientist here at
IBM, I have never seen anything come
from such obscurity -- this was developed,
technology developed to exchange money
by some young mathematicians
-- into such a center stage.
At its basis, Blockchain is a shared
cryptographically unalterable ledger
for recording the history of transactions.
That's the definition.
But like many things, it's really
interesting to say what it's not,
and what it's not is centralized.
It's not owned by any one party.
It is democratized, and that is
the important thing because that --
to kind of build on what our
previous panel was talking about --
it increases trust between
parties because no one is on top.
It increases accountability, and above all
transparency, which we just heard so much
about because with that kind of
transparency, you can enable lower friction.
If you look at what a current business
environment is like, almost any multiparty thing
where you have the producers, the finance,
regulatory, warehousing, transport, retail,
all of those right now use various
ERP systems, various internal systems
for maintaining their own records.
As things move across that,
people have different visions.
Each party has a different vision
of what the current state is.
And there can be disagreements.
Natural disagreements, et cetera.
Not only that, but there's a lot of friction.
Sometimes these are text messages or
e-mails or worse, paper documents.
So, there's a whole lot of inefficiency in this.
It's expensive and it's vulnerable,
anyone can change a record.
So, what Blockchain does is it's a single
database that everyone has an identical copy.
And when I say everyone, we're
talking about enterprises now.
We're not talking about,
you know, the wild west.
IBM has invested a lot of energy
in the last year and a half
on something we call Hyperledger.
It's a permissioned Blockchain,
but it's designed for enterprise.
And in that kind of environment, in this same
trade cycle, every one one of the parties
who agreed to be part of the consortium of
this permission chain, get visibility to all
of the data that they have
permission...you know, within this party.
That gives them the ability to
see where their shipments are,
what condition those shipments are in.
Everybody has to agree on
the current state of things.
So, no one...there's never
a chance of an argument.
There is one state of truth that
is distributed across every member.
No member has priority.
And there's permanence so that if there's ever
any sort of debate or regulatory oversight
or anything like that, there is a
permanent unalterable record of that.
Now, IBM has been one of the founding
partners of the Hyperledger movement
that we've done with the Apache organization.
We now have over 110 member
companies and hundreds and hundreds
of projects going on around the world.
Now, what's interesting is that most people
think about Blockchain around financial.
You know, mostly you'll hear about for retail
or trade or censuses and things like that.
But we at IBM believe that it is absolutely
going to transform IoT, and the reason I say
that is because I personally have been
working in this area for quite a long time.
For example, in something like shipping
and logistics where you have, you know,
one of those trade scenarios like this where
you have a producer, it goes to a warehouse
or it goes transport, et cetera, if you
want to monitor where your shipment is
and what condition it is, it's
incredibly important to be able to do it.
I'm pleased to say that we are now working
with a consortium of the Baltics and Finland
in a group called [Keno] out of
[Kovolo], and this is actually one
of the devices that we've built to help test.
This device is actually real time, talking
the last bit into the IBM Hyperledger region.
So, this allows us to be able to
track shipments all the way through,
and this is a pretty exciting kind of thing.
I do not suggest carrying this on an airplane
in your baggage though, hasn't worked.
But the similar thing, if you have
mechanical, we saw about digital twin.
When you have parts like an
airplane that has literally millions
of parts checking the provenance
and the version control mechanically
so that I can read the barcode off of every
little thing and allow that to participate
in a Blockchain transaction and
have a permanent record is very,
very good for version control and regulatory.
For metering and control, things like electric
meters or other devices that you want to be able
to transact directly with, you can use
Blockchain as directly in the hardware
where you have an unalterable ID in the hardware
and it allows you to make secure transaction.
And finally, in supply chain, this is
where we're going to hear from our guests.
Now, all of you know what supply chain is
but one that you participate
in all the time is food safety.
And we are very, very lucky today to have a
guest who knows all about that from number one
in the Fortune 100, Fortune one, the world's
largest retailer, a company that serves
over 240 million patrons every week.
We are very, very lucky to have vice president
for worldwide food safety, Frank Yiannas.
Thank you very much.
[ APPLAUSE, MUSIC ]
YIANNAS: Well, good afternoon, it's
good to see each and every one of you.
I'd like to begin by thanking
IBM for the invitation.
At Wal-Mart, we get invited to do a lot of
events; and quite frankly, we usually say no.
But it was easy to say yes to this
one because of the partnership
and the value that we place on IBM.
And secondly, you know, we think we're in the
business of making the world a better place,
and so we were encouraged to be in a
room with so many people that are working
to make the world a better place and this
morning has delighted and inspired us.
So, thank you.
I'm here to talk about food.
So, I want to thank IBM because at
Wal-Mart, we have a humble culture.
But I came in here feeling a little bit, you
know, big headed, my go was feeling pretty good
because they're letting a food
safety guy talk right before lunch.
[ LAUGHTER ]
And I'm never allowed to talk before lunch,
but I promise not to tell any gross stories.
[LAUGHTER] If I asked everybody to raise your
hand if you eat food, 100 percent of you would.
But how many of you in your businesses in some
way, shape, or form are involved or touch food?
I'd like to see.
It's pretty significant.
It's pretty significant how many
companies are in here that in some way,
shape, or form are related to food.
So, I want to talk to you about
how food moves from farm to fork
and how we believe Blockchain could be a
disruptive technology to make that a safer,
more sustainable, more efficient system.
You've heard a lot today about
how the world is changing.
I mean, I was sitting there
thinking if there was one word
to describe this morning,
what would the one word be?
Speed?
For me, change would have been one of them.
Right?
The world is changing very rapidly,
and you have heard it in other sectors.
Well, I will tell you that
it's changing a lot in food.
The reality is the food system has been
changing since the beginning of time,
but it's still continuing to change.
I'm an adjunct professor at
Michigan State University so I
like to think a bit like an academic.
I'm going to give you a 60 second
history lesson on food production.
The beginning of time, men and women,
humans were mainly hunter gatherers.
Weren't too concerned about
supply chains, right?
Because you just went out there and
hunted your food, brought it back.
I doubt you were concerned about food safety.
This is real archeological evidence.
It's a cave painting in France.
Fast forward over time, men and women
started to domesticate plants and animals
around villages, mainly around water.
Primarily focused on food production.
You fast forward to the early 1900s, just a
mere hundred years ago, and what did you see?
The industrial farming revolution.
Farmers able to produce more food than
ever before to feed a growing population.
In the top left-hand corner, what you see
is a beef slaughter facility in Canada.
And in the bottom right-hand side, what I had
like to say, that's the first super center.
Not a Wal-Mart super center but it is a
retail shop in Chicago in the early 1900s.
Probably a couple hundred square feet,
probably a couple of dozen shelf staple foods.
You fast forward to today's
environment, what do you see?
This is a Wal-Mart super center, but
you see these all over the world.
The modern grocery store.
Thousands of food products frozen.
Fresh fruits and vegetables
from around the world.
I love blueberries.
When I was growing up, I got to
eat blueberries one time a year.
You know how many times I eat blueberries now?
Weekly, because we have a global food system.
Locally produced is important.
Fresh meat, seafood, poultry.
Home meal replacement solutions.
Your grocery store today is looking
a lot like food service, right?
In the 1980s, the typical grocery store
had about 15,000 food SKUs, food products.
Today, your typical grocery store,
how many foods to you think they have?
Anybody want to guess?
Greater than 50,000.
I hear people saying, wow.
And where do you think it's going?
With e-commerce, where you can got online,
order anything you want, anywhere, anytime.
The endless store.
A million food SKUs?
Yes, that's in our near future.
We heard about globalization.
I know some people say I'm prolocal.
The reality...did you drink coffee this morning?
Do you eat bananas?
It's hard to live on a strictly prolocal diet.
I think it's fine to be proglobal
and prolocal where all
of the world feeds the rest of the world.
Before joining Wal-Mart, I
worked at the Disney company.
I took a tiramisu desert served at one
of the theme parks and I asked our staff,
where did the ingredients come from?
Let me just show you where it came from.
Cocoa powder came from you Switzerland.
Chocolate from Belgium.
Cream from the United States.
Mascarpone cheese from Italy.
Kahlua from Mexico.
More products from the U.S., Colombia
and vanilla beans from Madagascar.
This relatively you would say complex but simple
dessert had the equivalent of 41,000 food miles.
This isn't anything strange.
I bet you if you did the same statistic
on products you have eaten here
today, it would be similar.
And so the world and the food
system is becoming more global.
The benefits of today's modern system,
I know you'll hear some people will be very
critical of today's modern food system.
The benefits of today's modern
food system are profound.
Fresh available products year round,
nutritious at a fraction of your own dollar.
Great thing.
If you were to fast forward
in time from the 1400s
to a grocery store today, you would be in awe.
You would think we all live like kings.
There are some risks, though.
In my view, the food system
today has a lot of benefits.
And those benefits outweigh the risks.
But it does have an Achille's Heel.
If you didn't gather, my last name is Yiannas.
I'm of Greek descent.
Greeks always have to sell something
Greek in their presentations.
So, it's a good way for me to work it in.
But we do have an Achilles
heel in the food system.
If you studied Greek mythology,
what did the stories say?
When the mighty warrior Achilles
was born, his parents grabbed him,
wanted to give him invincible powers.
They dipped him in the Styx River to give
him these mighty warrior invincible powers.
But they had to grab him by a certain point.
The Achille's Heel, and that
was his vulnerability.
And I would suggest it's a perfect analogy when
you think about today's modern food system.
There are big companies, big suppliers,
big countries that have an Achilles heel.
And their Achille's Heel is
traceability and transparency.
Let me give you two case studies to persuade
you and then I'll pivot and talk a little bit
about the work we're doing at IBM.
Spinach outbreak -- in 2006, in the
United States, we had a spinach outbreak.
You could see the numbers there reported by
the Centers for Disease Control and Prevention.
199 cases, documented cases.
For every documented case,
somebody had to be sick enough
to go get tested and confirmed with E. coli.
There were over 4,000 cases projected.
31 HUS -- HUS stands for Hemolytic
Uremic Syndrome, severe kidney failure.
Three deaths across 26 states.
About 50 percent of the cases
required hospitalization.
Epidemiologists or public health
professionals very early on said, hey,
everybody that's sick has consumed
bagged baby leaves of spinach.
We know it's spinach.
And we know it's a bacterium called E. coli 157.
I wanted to put this picture up here because as
we talk about food safety, I want you to know,
don't get lost in these statistics because I
know these statistics will not mean much to you.
Remember, every one of these
numbers have a face to them.
This is a little girl named Riley
who I met a couple of weeks ago.
Shortly after her ninth birthday,
pictured there in that photo,
she contracted E. coli from this spinach.
She progressively got worse.
Her kidneys failed.
I could have showed you photos
of her hooked up to machines
where they were doing kidney dialysis.
She fortunately recovered, but
some other patients didn't.
FDA came out on September 16
of 2006 and said Americans,
don't eat spinach, there's an outbreak going.
You know what retailers and food
service companies across the nation did?
All spinach was pulled nationwide.
You know how long it took FDA to trace back the
source of that spinach to the original farm?
Two weeks.
For two weeks, there was no spinach served.
And when it was all said and done, they
found out that it was one supplier,
one farm, one lot, one day production.
An entire industry killed
all the farmer's livelihood
because they weren't able to
trace and track efficiently.
An Achilles' Heel, a major Achilles' Heel.
Here another one.
You might have heard of an outbreak that
occurred in 2008 in the United States
by a company called Peanut
Corporation of America.
This company produced two percent
of the peanut paste, small volume,
two percent of the peanut
paste in the United States.
Peanut paste is an ingredient that's
used in a lot of other products.
It had a knockoff effect.
Because that ingredient was used in so many
other products, you can see the dominos
where the company started to fall.
What you saw is anything that had granulated
peanut from the supplier got recalled.
Crackers that had peanut butter in it.
Granola bars.
Ice cream treats.
Even pet food products had to be recalled.
Cookies.
Chocolate.
By the time the dust settled, there were 3,913
different food products that had to be recalled
because of a small manufacturer that
produced two percent of the peanut paste.
By the way, the big story with this one is
their CEO Stewart Parnell got 40 years in prison
for doing that, 40 years in prison.
But guess what?
Some of these recalls that you're
seeing trickled as long as two months
after they initial outbreak was detected.
Could you imagine?
For two months, contaminated products
sitting on shelves because people didn't know
that the ingredient was in their products.
An Achilles' Heel to the food system.
And this isn't unique to the United States.
I could have beginning you
examples here in Europe.
You had an outbreak with E. coli and it
was first assumed to be Spanish cucumbers
and then it turned out to be sprouts.
What are we doing about it?
Let's get on the solution side of this equation.
Wal-Mart and IBM are working on a pilot,
two pilots, one in the United States
and one in China where we're envisioning a fully
transparent 21st Century digitized food system.
It can be done, it needs to be done.
It will be done.
But to tell you about the pilot,
I want to tell you a story.
And it's the story about a life of a mango.
How many of you have eaten mangos?
Just very impressive.
Just about everyone.
And I want to tell you a story
about the life of a mango
and how it gets from that tree to our shelf.
This is a beautiful package of sliced
mangos that we sell in our stores
and clubs across the United States.
Mangos generally are grown...they
might start from seedlings or graphs,
but if it starts from a seedling,
it takes that mango tree five
to eight years to fully mature and bear fruit.
More than just five to eight years; a lot of
tender loving care, right soil conditions,
weather conditions, fertilization, irrigation.
But about five to eight years later that
mango tree produced beautiful fruit.
If you look to the right there, at a certain
period of time, those mangos will be harvested
by a harvest crew right before they have
fully ripened because once you pick a mango,
it can ripen within one to two weeks.
Those mangos are grown by very small Farmers
in our hemisphere either in
Central or South America.
They then get shipped to a packing house
and the mangos get washed and boxed.
If you look down, you can see then those
mangos get transported by air, land or sea.
And in our case, they cross the U.S.
custom border and enter the United States
where a processing facility in the U.S.
takes those mangos, further washes,
peels and slices them and
puts them into containers.
From those packages, those
mangos then get shipped
to a Wal-Mart distribution center
where they get refrigerated.
Wal-Mart distribution center, as stores
place the order, will transport them
across the country with our DCs
strategically located across the country
and enter the Wal-Mart store
where they'll be refrigerated.
At some point they'll be placed
out on a refrigerated display case,
because cut fruit has to be refrigerated.
We hope many customers walk by that display
case, pick up those mangos and put them
in the grocery cart and then take them
home and feed them to their loved ones.
It's a pretty complicated journey, isn't it?
When you pick up your mango, do you
think of this complicated journey?
More importantly, if you were to ask me,
Frank, where did those mangos come from?
And what if health officials said, hey,
there's a food safety scare with mangos.
Can you tell me where they come from?
Well, I just gave you two case studies
that to be able to trace those mangos
from that grocery cart or home back to the
farm generally takes days if not weeks.
Well, IBM and Wal-Mart are envisioning we
believe we can do that traceability in minutes,
maybe even seconds; not days and not weeks.
That's the goal.
We also believe that we can move beyond
traceability to what's called transparency.
A word that you have heard here today.
I think it's...the words we use are important so
it's worth talking about, what is transparency.
Traceability in the classic sense
is one step up, one step back.
This is the mango, where did it go?
Where did I get it from?
It defines attributes that
are what, where and when?
It was the mango, where was it?
And on these dates, it was moved.
And today, the way this is done in the food
system and I suspect in a lot of supply chains,
by disparate methods, mainly on paper and food.
So, you can never have a
long view of the food system.
You can never have a long view;
you have to piece it together.
What we envision with transparency is
that you can have an entire
interconnected view of that system.
You'll know the traceability attributes
that we've just defined are important --
not that they're not important, but you can
know more than just what where and when.
More importantly, how was it produced?
Was it organically grown?
Was it sustainably grown?
Was it responsibly sourced?
What are the labor source that you use?
Other attributes that any customer might know.
Mangos today are not of a genetic
modified variety, but what if they were?
Is it a GMO product?
Did you use pesticides in
the growing of that product?
And you could have interrelated insights
that could yield to new information
that would enhance how you produced food.
This is an Infographic of the pilot we're
doing in the United States with mangos and IBM.
You can see that with Blockchain, we're
collecting information at the farm.
And today, we can do this.
I will tell you, we've been
pursuing the holy grail
of traceability and transparency for 20 years.
But with Blockchain and with smart devices
in every farmer's hand, it can be done today.
Ten years ago, it was an idea before its time.
But it's totally doable today.
Information captured at the packing house,
transportation along that entire flow.
And please note on the bottom left-hand
corner, even sharing or communicating
that information to the customer.
Customer being able to scan a code on a
package and know where that product came from,
temperature conditions and any
other attributes that they choose
if they're interested in organic production.
And so, that's the vision
of the Blockchain pilot.
What will that do?
It will today we're after transparency.
That's the goal.
What's the opposite of transparency?
Darkness, opaqueness.
My favorite definition is anonymity.
We've heard transparency used at
least five times this morning.
The opposite of transparency is anonymity.
And is anonymity a good thing?
When people are operating
in an anonymous behavior,
they disinhibit under desirable
behaviors, right?
Why do you want an ATM or
teller machine in the dark?
You don't, because that's
anonymous; you want it lit up.
We believe that Blockchain has the potential
of shining a light on the food system,
bearing transparency and that transparency
driving appropriate self-desired behaviors.
So, let me close real quickly
with what we see the benefits
of the Blockchain solution
in the food system to be.
Number one, enhanced food safety.
For every one percent reduction of
foodborne disease in the United States,
it saves the U.S. economy $700 million.
Fresher food.
Everybody is after fresher food, right?
Reduced food waste.
Hasn't come up, a big social issue.
A third of all food that's produced
on the planet goes to waste.
We've got to feed nine billion
people by the year 2050.
We can't produce our way out of this.
We got to reduce food waste.
And if you can optimize supply chain and
reduce waste, that's a good thing for society.
Deter food fraud.
How many remember the horse meat scandal
here in Europe a couple years ago?
There were some frozen meals that said a
hundred percent beef lasagna and guess what.
There was no beef whatsoever; it
was one hundred percent horse meat.
Do you think that might be deterred
with a solution like Blockchain
where you have clear visibility
and people get tracked and caught?
Promote responsibility -- there's a difference
between accountability and responsibility.
We believe that shining the light
on the food system will cause people
to self-govern their behaviors.
And lastly, this has come up.
It will build consumer trust.
Consumers today are less trusting.
We're living in a global trust bust -- the
less trusting of institutions, governments,
politicians and the food system because
they're so far removed from food production.
Traceability and transparency in our
view are two sides of the same coin.
And so, with that, we want to thank
IBM and all of you, ask you to join us
in working towards a safer, more
affordable sustainable food system
so people can live better.
Thank you very much.
[ APPLAUSE ]
