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IBM Signs Blockchain Agreement With Global Food Suppliers

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International Business Machines Corp. (IBM - Free Report) has taken another major step to strengthen its foothold in the blockchain market. The company recently announced a major blockchain collaboration with a consortium of food suppliers including Dole, Driscoll’s, Golden State Foods, Kroger (KR - Free Report) , McCormick, McLane, Nestlé, Tyson Foods (TSN - Free Report) , Unilever and Wal-mart (WMT - Free Report) .

The setup is aimed at providing unaltered information to all members of the food supply ecosystem regarding the origin and the state of the food. This is anticipated to help members of the ecosystem quickly identify contaminated food products and their sources, thereby enabling the removal of products from store shelves faster and lowering the spread of illness due to food contamination.

The consortium along with IBM will work together for the betterment of blockchain applications in the global food supply industry. Apart from consumer non-durables industry, blockchain technology is also finding takers in the finance, education, insurance and medical services industry.

We believe IBM’s blockchain initiatives coupled with the rapid adoption of the company’s artificial intelligence (AI) platform Watson will help the stock perform better. IBM has lost 12.6% of its value year to date compared with 11.5% loss of its industry.

Blockchain Technology and Its Applications

Alex Tapscott, co-author of the book Blockchain Revolution, compares it to the emergence of internet in 1993. He explains the entire system as “a vast, globally distributed ledger where anyone, anywhere can move, store and manage any kind of asset, from money and securities to intellectual property and votes”.

Blockchain is a kind of a distributed database and works as an online ledger that cannot be altered or breached easily. Each block of information has its own timestamp and a link to an earlier block in the chain, which enables all the parties to have easy access to information via a secure network. Originally used for cryptocurrency transactions, the system is transparent and incorruptible.

Wal-mart, which is also a member of the consortium, has been working with IBM since October for the purpose of tracking food movement. Per Reuters, in June, Wal-mart had stated that blockchain trials helped the company to cut down the tracing time of mango shipments from seven days to 2.2 seconds.

We believe the emergence of this technology as an integrated enterprise level platform for the food supply chain will enhance the concept of food safety and traceability. This in turn will form a strong supply chain, with lower instances of monetary losses due to faster action in case of discrepancies.

Zacks Rank

IBM currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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