Microsoft Pitches Blockchain To Help Troubled Retail Supply Chains

Microsoft has set its sights on retail as an industry that could benefit from Blockchain technology. The company hosted a demo at its booth during this week's annual National Retail Federation (NRF) show in New York that aims to help retailers streamline their supply chain operations by creating smart contracts based on Blockchain.

A solution developed by Microsoft partner Mojix, best known for its RFID hardware and data analytics software, lets retailers automate their supply chains to enable smart contracts, making the delivery of goods more reliable with less overhead, according to officials at both companies. While RFID, which uses RF signals to track the whereabouts of high-value inventory and pallets, has gained major inroads among certain segments of the retail industry, notably apparel, retailers that have adopted it still lack holistic visibility and control over their entire supply chains.

The solution developed by Mojix allows for Blockchain-based smart contracts between retailers, suppliers and logistics providers. During a discussion in Microsoft's booth at NRF, Mojix VP of Products Scot Stelter explained how a grocery chain implementing a smart contract could stipulate that an order of blueberries had to be picked on a certain day, arrive within five days and stored within a specific temperature range throughout the logistics and shipping processes.

"At each step of the way, that's a smart contract, where effectively a box gets checked, cryptographically locked and published to the Blockchain," he said. "When I am at the end of the chain, I see it so I can track the prominence of those berries so when they arrive I know if they are fresh. All parties to a contract have to agree that all the boxes that are checkable. Once they are checkable, the contract gets locked and it fulfills itself."

The smart contracts are based on Microsoft's Azure Blockchain-as-a-service, code-named Project Bletchley, consisting of a distributed ledger that's an immutable and unchangeable database record of every transaction, where specific values can be shared as desired, ensuring that even competitors in the chain can't access or compromise data not applicable to them.

For Mojix, offering smart contracts using Blockchain is a natural extension of its OmniSenseRF Intentory Service and ViZix IoT Software Platform, which provides location-based near real-time inventory management information and performance data. Microsoft has made an aggressive push to offer Blockchain services for the past year, as reported last summer. Almost all major banks and financial service companies are conducting extensive pilots using Blockchain, which is the technology that bitcoin currency is based on.

Microsoft has said it believes Blockchain has applications in many other industries as well and Yorke Rhodes said the company is working with Mojix and other partners to help automate supply chains. "In a typical supply chain, you have 10 or more legal entities that are disparate from each other," Rhodes said during a session at NRF. "[The supply chain] is a prime example of where Blockchain technology comes into play. The nature of the shared distributed ledger actually allows all parties to be contributing to the same ledger without one party owning the ledger. And all parties agree on what is actually the one state of truth. So, there's huge benefits here, across industries."

Merrill Lynch and mining operator BHB Billiton are among those that are using Microsoft's Blockchain service, and Rhodes believes automating retail makes sense as well. "What we are trying to do is pick use cases across sectors to be leading-light use cases," he said, in a brief interview following yesterday's session.

Traditional retailers will need all of the help they can get with several reporting slower in-store sales than their online counterparts during last quarter's peak holiday season. Since the beginning of the month, Macy's and Sears announced that they will close hundreds of stores, and Target today said in-store sales fell 3%, though its online sales surged 30%.

Posted by Jeffrey Schwartz on 01/18/2017 at 11:26 AM