Microsoft Touts Blockchain as Boon for Retail Industry

At this week's National Retail Federation (NRF) show in New York, Microsoft pitched its Azure blockchain-as-a-service technology as a way to help retailers streamline their supply chain operations.

Microsoft hosted a demo of a solution from partner Mojix, best known for its RFID hardware and data analytics software, at its NRF booth. The Mojix solution 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 radio frequency 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 at Microsoft's booth, Mojix Vice President 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 and arrive within five days, as well as be 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 Inventory Service and ViZix IoT Software Platform, which provides location-based, near-real-time inventory management information and performance data.

Almost all major banks and financial services companies are conducting extensive pilots using blockchain, which is the technology that Bitcoin currency is based on. Microsoft has made an aggressive push to offer blockchain services for the past year. Microsoft has said it believes blockchain has applications in many other industries, as well. Yorke Rhodes, blockchain business strategist at Microsoft, 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 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 the session.

With several traditional retailers reporting slower in-store sales than their online counterparts during last quarter's peak holiday season, they will need all the help they can get.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.