Please Note the Following:

1- Make sure to cite the references (both required readings and external sources, if any) you use. Proper citing (using, for example, APA style) of an article includes necessary information such as author name(s), journal title, year of publication, etc. Just referring to “Readings from Week 3” or “Harvard Business Review” is not proper citation. 

2- As always, quality outweighs quantity. While your answer needs enough length to conduct a thorough analysis, it is very important to offer a coherent and readable answer that is well organized and that has a smooth and logical flow. The answer must reflect a reasonable mastery of the required readings. Answers that are too generic and that can be provided by a layman with superficial knowledge of the material is not acceptable.

QUESTION 1

  1. You are traveling on a plane to San Francisco for an industry conference. Given that it is a long flight, the person seated next to you strikes up a conversation.  When the inevitable, so-what-do-you question arises, you mention you are an MBA/MCIS student studying the value of Information Technology. “Hah,” says an eaves dropper in the next row, “IT value! What a big bunch of malarkey!  I remember reading a few years back that a bunch of researchers found that there was no relationship between how well a business does and how much they spend on IT. Pretty soon, everyone is going to wake up to the notion that IT is just a cost center that doesn’t provide any competitive advantage and stop wasting their money.”
    Before this gentleman turns his back on you and starts reading a novel, suggest to him (politely) why he may be incorrect.  Summarize the evidence and opinions both for and against seeing IT as a source of competitive advantage.
    I am looking for a thorough analysis of this issue.  Be sure to summarize the main points and perspectives both for and against seeing IT as a source of competitive advantage.  Be sure to include material from the course readings in your answer, along with any additional references to support your positions. Be sure to provide citations in your answers to support your points and give a complete list of all references.

QUESTION 2

  1. Hilton Hotels (www.hilton.com) is a worldwide leader in the hospitality industry.  In order to thrive in this competitive environment Hilton must adjust to changes in the environment that impact competition.
     Provide an analysis of the competitive landscape for Hilton Hotels using Porter’s Five Competitive Forces.  Structure your answer around: 
    1. Each of the competitive forces and its impact on Hilton’s business model
    2. The role of information technology in changing the competitive environment for Hilton
    3. Ways that information technology could be incorporated into Hilton’s strategy to address the competitive forces
    4.  I am looking for a thorough analysis that reflects an understanding of the impact of information technology on competition.  You are free to use additional references to better understand the company and competitive environment.  Please provide full citations for any references you use (including course readings).
      I am NOT looking for a list of systems used by Hilton.  This is a question about strategy and competition and how IT, both internal and external, can impact this landscape.  I want you to think about the strategic implications of IT from the perspective of this particular company through the lens of the competitive forces.

QUESTION 3

  1. Cloud computing has become one of the hottest tech buzzwords.  Analyze the concept of cloud computing in terms of its impact on:
    1. Corporate IT infrastructure – How does cloud computing affect IT infrastructure?  How does it change how companies need to think about infrastructure?  What are key infrastructure considerations for cloud computing?
    2. Reliability and Security – How does cloud computing impact the risks faced by companies in managing their information resources? What considerations should companies make in dealing with these threats?
    3.  Some argue that cloud computing represents the commoditization of IT.  Do you agree? Is that a good or a bad thing? Provide support for your answers.

Ref:

week 1 readings

https://hbr.org/2003/05/it-doesnt-matter

https://hbr.org/2009/12/letters-to-the-editor

https://hbr.org/2008/07/investing-in-the-it-that-makes-a-competitive-difference

https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-cios-should-think-about-business-value

https://www.computerweekly.com/feature/Understanding-the-real-value-of-IT-and-proving-it-to-the-business

Weak 2 Readings

https://hbr.org/1985/07/how-information-gives-you-competitive-advantage

https://www.sciencedirect.com/science/article/pii/S0167923622000161?via%3Dihub

Week 3 Readings

https://www.researchgate.net/publication/309285232_The_Role_and_Value_of_a_Cloud_Service_Partner

MIS Quarterly Executive MIS Quarterly Executive

Volume 20 Issue 3 Article 5

September 2021

How Walmart Canada Used Blockchain Technology to Reimagine How Walmart Canada Used Blockchain Technology to Reimagine

Freight Invoice Processing Freight Invoice Processing

Mary C. Lacity

Remko Van Hoek

Follow this and additional works at: https://aisel.aisnet.org/misqe

Recommended Citation Recommended Citation Lacity, Mary C. and Van Hoek, Remko (2021) “How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing,” MIS Quarterly Executive: Vol. 20 : Iss. 3 , Article 5. Available at: https://aisel.aisnet.org/misqe/vol20/iss3/5

This material is brought to you by the AIS Journals at AIS Electronic Library (AISeL). It has been accepted for inclusion in MIS Quarterly Executive by an authorized administrator of AIS Electronic Library (AISeL). For more information, please contact [email protected]

September 2021 (20:3) MIS Quarterly Executive 219

Applying the Lessons from Intrafirm Process Innovation to Interfirm Processes with Blockchain Technology1,

Over the past four decades, IT management practices and technologies have aimed to create fast, inexpensive and accurate transaction processing systems that are based on a “single source of truth” within a firm’s boundary. These innovations were driven by business process reengineering (BPR), enterprise resource planning (ERP) and software-as-a-service (SaaS).

When deploying these practices and technologies, IT and business managers learned to reengineer work before automating it. Many CIOs may recall the legendary example of Ford.2 In the late 1980s, Ford had 400 people in its accounts payable department reconciling disparate records between its purchasing and receiving departments. Ford reengineered the process to reduce the need for accounts payable reconciliations. In the new process, the purchasing department posted purchase orders directly to a database shared with the receiving department. When goods arrived at the dock, the receiving department checked the database for a matching purchase order. If one was found, the receiving department clerk updated the database, which served as a single source of truth across Ford. (The clerk returned the goods if a matching purchase order was not found.) By reengineering the process before deploying IT, Ford eliminated 75% of accounts payable work. Other BPR success stories include Cigna, General Electric, Hewlett-Packard, Mutual Benefit Life, Sloan Valve Company and Walmart.3

1 William Kettinger is the accepting senior editor for this article. 2 Hammer, M. “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review, July-August 1990, available at https://hbr.org/1990/07/reengineering-work-dont-automate-obliterate. 3 See: 1) Davenport, T. H. Process Innovation: Reengineering Work Through Information Technology, Harvard Business School Press, 1992; 2) Hammer, M. and Champy, J. Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business, 1993; 3) Ranganathan, C., Balaji, S. and Coleman, T. “IT-Led Process Reengineering: How Sloan Valve Redesigned its New Product Development Process,” MIS Quarterly Executive (10:2), June 2011, pp. 81-92.

How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing Organizations have used business process reengineering, ERP and SaaS to create fast, inexpensive and accurate transaction processing systems within their own boundaries. Blockchains promise similar results for interfirm processes. We describe a blockchain- enabled invoice processing solution implemented by Walmart Canada and its freight carriers. Disputed invoices fell from 70% to under 2%, invoices are now finalized within 24 hours instead of days, weeks or longer, costs were reduced and relationships improved. Based on this case, we provide recommendations for using blockchains for interfirm process innovation.1

DOI: 10.17705/2msqe.00050

Mary C. Lacity University of Arkansas (U.S.)

Remko Van Hoek University of Arkansas (U.S.)

220 MIS Quarterly Executive | September 2021 (20:3) misqe.org | © 2021 University of Minnesota

How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing

After the wave of business processing engineering, organizations deployed ERP systems, which became another major transaction processing innovation.4 Instead of bespoke reengineering and IT projects as at Ford, IT managers configured ERP systems, which ERP vendors claimed were designed with best practices and processes built in. Again, ERP aimed to create a single version of the truth within a firm’s boundary but in a less costly way than custom-built solutions. Then came ERP in the cloud using the software-as-a-service (SaaS) model.5 SaaS aims to reduce internal IT infrastructure costs.6

Implementation journeys for BPR, ERP and SaaS were (and still are) fraught with challenges.7 However, in adopting and deploying these practices and technologies, the IT practitioner community has learned some valuable lessons about using IT for intrafirm processes:

1. Reengineer processes before automation 2. Create single versions of the truth—every

department should be using the same data 3. Configuring is faster and less expensive

than building custom software 4. The SaaS model switches IT budgets from

capital investments to operating expenses. What if these lessons were applied across

organizational boundaries to address interfirm process issues at the ecosystem level? Walmart Canada and its freight carriers did just that with a solution called DL Freight, a blockchain- based platform built and operated by DLT Labs.

4 Successful ERP implementations require considerable manage- ment effort. See: 1) Brown, C. and Vessey, I. “Managing the Next Wave of Enterprise Systems: Leveraging Lessons from ERP,” MIS Quarterly Executive (2:1), March 2003, pp. 65-77; and 2) Davenport, T. “Putting the Enterprise into the Enterprise System,” Harvard Busi- ness Review (76:4), July-August 1998, pp. 121-131. 5 For the value proposition of ERP as SaaS, see: 1) Johansson, B. and Ruivo, P. “Exploring Factors for Adopting ERP as SaaS,” Pro- cedia Technology (9), December 2013, pp. 94-99; and 2) Linthicum, D. “It’s Time to Kick Your ERP System to the Curb and Go SaaS,” InfoWorld, January 15, 2019, available at https://www.infoworld. com/article/3336178/its-time-to-kick-your-erp-system-to-the-curb- and-go-saas.html. 6 Califf, C. Sarker, S. Sarker, S. and Skilton, M. “The Role and Value of a Cloud Service Partner,” MIS Quarterly Executive (15:3), September 2016, pp. 231-242. 7 For example, see Soh, C. and Sia, S. “The Challenges of Imple- menting “Vanilla” Versions of Enterprise Systems,” MIS Quarterly Executive (4:3), September 2005, pp. 361-372.

The DL Freight case is described in this article8 and shows that blockchain technology9 is a key enabler of interfirm process innovations.

Walmart Canada’s use of the DL Freight application is an illustration of a new way to approach broken processes at the ecosystem level. Any context where interfirm transactions are broken, where multiple writers update data, where updates need to be verified by another party and where business rules can be defined for automation is a potential use case for blockchain- enabled digital ecosystems.

Below, we describe the development of the DL Freight solution, highlight the changes in the freight invoicing process brought about by the solution, discuss governance issues, document the business value delivered and provide recommendations for deciding whether there is a business case for reimagining interfirm processes and, if so, for using blockchain technology for interfirm process innovation.

Overview of DL Freight, an Example of Interfirm Process

Innovation Walmart Canada is one of Canada’s top four

largest retailers by revenue10 and operates over 400 retail stores. (An overview of Walmart Canada, together with the senior executives involved in our case study, is provided in the text box below.)111213

8 Walmart is a founding member of the Blockchain Center of Excellence’s (BCoE’s) Executive Advisory Board and is an active participant in the University of Arkansas’ blockchain research and events. This case study is based on a Fall 2020 BCoE closed work- shop called “Practical Blockchain: Lessons learned from Walmart Canada,” and follow-up interviews, a demonstration of DL Freight and secondary sources. 9 A blockchain application is a peer-to-peer system for validat- ing, time-stamping and permanently storing transactions on a shared distributed ledger. For an overview of blockchains, public vs. permis- sioned networks and promised business value, see Lacity, M. C., Sabherwal, R. and Sørensen, C. “Special Issue Editorial: Delivering Business Value through Enterprise Blockchain Applications,” MIS Quarterly Executive (18:4), December 2019, pp. ix-xix. 10 Canada’s Top 100 Retailers, Retail Council of Canada, March 4, 2020, available at https://www.retailcouncil.org/community/store- operations/canadas-top-100-retailers/. 11 “Walmart Canada,” Wikipedia, available at https://en.wikipedia. org/wiki/Walmart_Canada. 12 All dollar amounts in this article are in U.S., not Canadian, dollars. 13 Walmart Inc, 2020 Annual Report, available at https://corporate. walmart.com/media-library/document/2020-walmart-annual-report/_ proxyDocument?id=00000171-a3ea-dfc0-af71-b3fea8490000.

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How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing

Walmart Canada has its own fleet of 2,000 trailers used for shipments to the stores, but also relies on 70 third-party freight carriers— some large-sized and some small-sized—to move over 500,000 loads per year.14 Before DL Freight, Walmart Canada and its freight carriers disputed up to 70% of invoices. It took days, weeks and even months to settle them, resulting in administrative expenses rising to about 20% of transportation costs.15 Freight carriers were not getting paid in a timely manner and both sides were spending too much money on reconciliations. After DL Freight was implemented, Walmart Canada and its 70 freight carriers achieved the following outcomes within a year:

• Invoice finalization within 24 hours of final delivery

• Disputed invoices fell to under 2% • Walmart Canada achieved substantial cost

savings • Cash flows improved for freight carriers • Relationships between Walmart Canada

and freight carriers improved • New opportunities for revenue

generation and additional supply chain improvements.

As described below, the parties achieved these results by:

1. Reengineering invoice processing across firm boundaries—instead of freight

14 “Walmart Uses Blockchain to Fix “Broken” Freight Audit and Payment Process,” SupplyChainBrain, November 1, 2020, available at https://www.supplychainbrain.com/articles/32130-walmart-canada- fixing-a-broken-freight-audit-and-payment-process-with-blockchain. 15 Ibid.

carriers creating an invoice after final delivery, Walmart Canada and the freight carriers start building the invoice during the tender process and automatically update it from Internet of things (IoT) data feeds as charges are incurred during shipment. The automation is enabled by smart contracts,16 a key feature of blockchains.

2. Creating a single version of the invoice— Walmart Canada and the freight carrier share the same invoice on the blockchain’s distributed ledger.17 The permissioned18 blockchain ensures that only authorized parties can read/write on an invoice.

3. Configuring an existing platform rather than building custom software—DL Freight is a configurable solution, similar to ERP. The parties went from conception to live deployment with the first freight carriers in eight months.

4. Providing freight carriers with DL Freight as a SaaS application, which minimizes their IT investments costs.

Table 1 provides a high-level summary of invoice processing before and after implementing DL Freight.

16 For a blockchain, a smart contract is a piece of software that stores and executes rules agreed by trading partners on when and how to update the distributed ledger. 17 As a component of a blockchain application, a distributed ledger is a time-stamped, permanent record of all valid transactions that have occurred within the application. Each authorized node of the blockchain network has an identical copy; no node is in charge. 18 Permissioned blockchains provide additional security by maintaining an access control layer that allows certain actions to be performed only by certain identifiable participants. As such, they dif- fer from public blockchains.

Overview of Walmart Canada and Personnel Involved in our Case Study Walmart Canada, the Canadian division of Walmart, was founded in 1994 by acquiring 122 stores from Woolworth Canada.,11 Approximately 1.2 million customers visit one of Walmart Canada’s more than 400 retail stores each day. Net sales for 2020 were $18.4 billion, 12 or about 3.5% of Walmart’s overall revenues of $524 billion. 13 Walmart Canada employs 85,000 associates and the firm’s motto is “Save money. Live better.” The president and CEO of Walmart Canada is Horacio Barbeito. Senior executives involved in our case study were: John Bayliss, who was senior VP of Logistics and Supply Chain Management and is now executive VP chief transformation officer; Francis Lalonde, VP of Transportation; Alexey Shlykov, senior director of Information and Analytics; and Sergei Beliaev, who was chief information officer of Walmart Canada when blockchain technology was adopted but is now executive VP and chief strategy officer at DLT Labs, the firm that developed DL Freight.

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How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing

Invoicing and payment problems are not unique to Walmart Canada and its freight carriers. Across the U.S. transportation industry, an average of $140 billion worth of invoices are in dispute on any given day while partners attempt to reconcile disparate accounting records across firm boundaries.19 Up to 38% of invoices are overpaid because it’s sometimes cheaper for enterprises to simply pay the invoices than to investigate unexpected charges.20

The DL Freight Adoption Journey

For Walmart Canada and its freight carriers, the processing of freight invoices for load shipments reached a breaking point in 2018. The fragmented and complex process was not working well for anyone in the supply chain. A single invoice can have up to 200 data elements from various partners in the supply chain. With up to 70% of those invoices being disputed, the effort and time required to investigate was considerable. Walmart Canada used both internal

19 “DLT Labs™ & Walmart Canada Transform Freight Invoice Management with Hyperledger Fabric,” Hyperledger, 2020, available at https://www.hyperledger.org/wp-content/uploads/2020/10/Hy- perledgerCaseStudy_DLTLabsWalmart.pdf. 20 Ibid.

resources and a business process outsourcing (BPO) firm to work on reconciliations. Payment terms—such as paying the invoice within 30 days—could not be triggered until agreement was reached, which led to slow payments to freight carriers. One of Walmart Canada’s largest carriers was threatening to sever its relationship because it took weeks, and sometimes months, to get paid. Sergei Beliaev, who was Walmart Canada’s CIO, explained:

For each invoice that was in dispute, a small army of people on both sides chased down facts. Payments were outstanding, which was a significant strain on the financial stability within the carrier community. Relationships were strained, as well. It involved a back and forth on who’s right, who’s wrong. It was taking too much of management’s time to resolve.

In summer 2018, Walmart Canada’s supply chain and logistics team asked the technology organization to assess whether IT could help improve freight invoicing. This team created a business case for the project. Francis Lalonde, VP of Transportation for Walmart Canada, explained that the firm set three objectives: 1) resolve carrier payment issues, 2) improve the efficiency

Table 1: Overview of Invoice Processing Before and After DL Freight Number

of Process Steps

Percentage of Invoices Disputed

Time Needed to Agree Upon an

Invoice Business Outcomes

Process Before DL Freight

11 steps Up to 70% Day, weeks, months after delivery

• High cost of reconciliations for all parties • Late payments to freight carriers • Poor carrier relationships

Process After DL Freight

Five steps Less than 2% Within 24 hours of final delivery

• Transparency among authorized parties about shipping events and costs

• Near real-time invoicing and processing • Total cost savings delivered to Walmart

Canada • Cash flows improved for freight carriers • Relationships improved • Opportunities for revenue generation by

offering discounts for early payments • Opportunities for additional supply chain

improvements through better business intelligence

September 2021 (20:3) MIS Quarterly Executive 223

How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing

of how Walmart works with freight carriers, and 3) create visibility to establish trust with carriers.21 The business case estimated a one-year financial return on investment.22

The initial thought was to improve freight invoicing, but John Bayliss, Walmart Canada’s senior VP of Logistics Supply Chain (currently executive VP, chief transformation officer) asked the CIO this provocative question: Instead of reducing reconciliations, can we remove them altogether? This idea came from the business team, which realized that Walmart Canada was overpaying the BPO provider for a service that didn’t meet the transportation team’s requirements.

The CIO and his technology team thought that blockchain technology could possibly eliminate the need for reconciliations. A blockchain solution would establish a near real-time, single shared version of an invoice. The technology team considered blockchain technologies to have advantages over traditional solutions. Compared to conventional applications, blockchain applications: 1) provide a real-time, single version of the truth to eliminate (or significantly reduce) disputes, 2) create a tamper-resistant, traceable history of events to simplify workflow and compliance, and 3) automate execution with tamper-resistant smart contracts to accelerate business processes. A blockchain solution could work if it could be integrated with all of the partners’ existing technologies. The solution would need to allow each carrier to continue using its own internal systems yet share reliable, standardized information with Walmart Canada.23

Choosing a Configurable Solution over a Custom-Built Application

Walmart Canada decided to seek out a technology partner specializing in blockchain- enabled solutions so it could focus on its core business capabilities. The firm wanted a technology partner that could deploy a solution quickly, knowing that business associates and

21 “Walmart and DLT Labs Disrupt Freight Invoicing with 97% Reduction in Disputes,” DLT Labs, August 18, 2020, available at https://www.youtube.com/watch?v=trwQOeZLpkw. 22 Hyperledger, op. cit., 2020. 23 “Walmart Canada and DLT Labs Recognized for Supply Chain Innovation,” Walmart press release, September 1, 2020, available at https://www.walmartcanada.ca/newsroom/2020/09/01/walmart-cana- da-and-dlt-labs-recognized-for-supply-chain-innovation.

partners—not only within Walmart Canada, but also those of freight carriers—have limited time, limited funds, and many competing priorities.

Most potential technology providers pitched to build a customized solution from scratch in about 18 months. However, DLT Labs, a rapidly growing boutique technology platform developer, suggested using a configurable platform that could deploy a solution more quickly than a custom-built application. The platform configuration would need to be validated, but validation would be faster than coding and testing a new application. The modules of DLT Lab’s platform are built on Hyperledger Fabric, an open sourced permissioned blockchain codebase.24 Walmart Canada selected DLT Labs as its technology partner.

Developing a Production Pilot with a Major Freight Carrier

While deployments of a new technology often begin with a proof of concept to test the technology’s efficacy in a sandbox environment, Walmart Canada made the crucial decision to proceed directly to a production pilot of DL Freight. The firm already knew that blockchain technologies worked; in the U.S., Walmart was using the IBM Food Trust to trace leafy greens and in China had tested a blockchain platform built by PwC and VeChain to trace food from farm to store. Moreover, DLT Labs had successfully implemented other blockchain solutions.

The DL Freight production pilot included the full set of internal business, compliance and technology that stakeholders needed for live deployment. Walmart Canada invited one of its major freight carriers, Bison Transport, to participate in the production pilot to ensure that the solution worked for freight carriers as well as for Walmart Canada.

24 Hyperledger Fabric is one of the projects sponsored by the Hyperledger Project, a nonprofit organization launched by the Linux Foundation in December 2015 to advance the application of enterprise-grade blockchains across industries. Hyperledger Fabric’s ledger is structured as a chain of blocks and has two subsystems: “the world state” and the “transaction log” of all the transactions that led up to the current world state. Hyperledger Fabric uses the concept of channels within the blockchain network so that all information remains private. Only authorized individuals within authorized chan- nels have read and write access to the data. It also has a smart con- tracting feature called Chaincode, which is used to automate transac- tions and to connect outside applications to the world state ledger. For more information, see https://www.hyperledger.org/use/fabric.

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How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing

The configuration, testing and compliance cycle for the production pilot took only eight months from conception to live deployment. The first two months were spent specifying requirements. Walmart Canada then spent a further two months configuring and testing DLT Labs’ platform to ensure it could meet the requirement, and rigorously reviewed DLT Labs and its platform. As Loudon Owen, CEO of DLT Labs, stated: “Walmart is renowned for its rigorous security and compliance reviews. We went through and passed nine extensive security audits by Walmart Canada and its parent company, Walmart, Inc., to be confirmed in this role, and are subject to ongoing periodic reviews.”

Reengineering Invoice Processing The production pilot involved significant

business process redesign. Before DL Freight, freight carriers generated an invoice after the final delivery of a shipment, which is when Walmart Canada saw the invoice for the first time. Walmart had to investigate all of the unexpected “accessorial” charges (i.e., fees added to a freight bill for additional services provided by the carrier) that appeared on an invoice.

As shown in Figure 1, the freight invoice process prior to the adoption of DL Freight required 11 steps. The value-adding steps are the ones that process data about the shipment, including confirming shipment details (Step 1), dispatching (Step 2) accepting or rejecting delivery (Step 3), issuing a correct invoice (Step 7) and paying the invoice (Step 11). All the other steps involved reviewing data and reconciling any discrepancies within the freight carrier’s data.

After DL Freight was implemented, the invoice was jointly built in near real time with data from Walmart Canada and the freight carrier. The “happy path” of the reengineered freight invoice process requires just five steps—i.e., the flow that triggers no exceptions or error conditions (see Figure 2).

In Step 1 of the revised process, Walmart Canada’s transportation management system (TMS) serves as the source of truth for the tender and contracting data. The TMS uploads the shipment tender (using the EDI 204 data standard) to the DL Freight platform to initially populate the invoice with shipment details, load details and delivery instructions. Known charges are added to the invoice, including fuel, planned stops and hazardous materials handling charges.

Figure 1: Freight Invoice Process Before the DL Freight Solution

Source: reproduced with permission from Walmart Canada and DLT Labs

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How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing

Carriers interact with DL Freight—either directly through APIs or through a portal—for tender approvals. DL Freight sends a tender-acceptance notification to the TMS (using the EDI 990 data standard). The connections between freight carriers’ systems and DL Freight are depicted in Figure 3.

During Step 2, IoT devices that track temperatures, GPS locations and times are read and posted in near real time to DL Freight as the shipment moves along the transportation route. The automatic uploads are done via FourKites, a system that collects and consolidates data from the IoT devices. Some smaller carriers without sophisticated IoT device systems enter their data manually. IoT data triggers variable accessorial charges that are added to the invoice along the way, such as charges for wait times and layovers. Most transaction approvals are automated using smart contracts.

In Step 3, Walmart Canada’s distribution centers connect to DL Freight to verify receipt of goods via proof of delivery. GPS reads confirm delivery to the final destination.

During Step 4, the freight carrier validates the shipment details and proof of delivery and completes the invoice by adding any

final accessorial charges. Since payments are preapproved, the invoice is issued to Walmart Canada and is paid according to payment terms recorded in the smart contract. The countdown clock for payment terms, such as “pay the invoice in net 35 days,” does not start until the parties have agreed upon the final invoice. With DL Freight, invoices are validated soon after final delivery, ensuring that carriers get paid the right amount within the predetermined timeframe. In short, carriers have certainty about the amount they will be paid and receive the payments faster.25

Launching DL Freight as an SaaS Application

DL Freight went live with the production- level pilot on January 1, 2019, with Walmart Canada and Bison Transport on the platform. Next, Walmart Canada had to convince other freight carriers to join DL Freight. Some were understandably suspicious at first—wondering if the solution would benefit Walmart Canada

25 Hamilton, S. “MOBI Community Innovation Lecture: The part- nership between DLT Labs and Walmart Canada,” MOBI, September 24, 2020, available at https://dlt.mobi/mobi-community-innovation- lecture-the-partnership-between-dlt-labs-and-walmart-canada/.

Figure 2: Freight Invoice Process After Implementing the DL Freight Solution

Source: reproduced with permission from Walmart Canada and DLT Labs

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How Walmart Canada Used Blockchain Technology to Reimagine Freight Invoice Processing

to their detriment. To alleviate their concerns, Walmart Canada met with the carriers to explain the business value to them. According to Alexey Shlykov:

Some of the carriers were hesitant, and our conversations were never in a form of an ultimatum. It was always in the form, ‘Let’s talk to help you understand why this is a better solution.’ Walmart Canada’s IoT team helped with those conversations because, as subject matter experts, they were able to spell it out to carriers.

DLT Labs also talked with freight carriers. Before going live on DL Freight, a carrier

reviews all its business rules and master data governing the relationship with Walmart Canada. All decisions about transaction workflows involve multiple approval steps on both sides. There is also a dispute mechanism for escalating any issues concerning assessorial charges or deliveries.

Walmart Canada and DLT Labs co



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