Supply chain mapping and n-tier visibility for sustainability: Wholechain — ‘There is a growing consumer focus on ESG claims’

It’s all very well claiming to have visibility along your supply chain, but you have to be able to validate that. And if you are going to claim it, then you need full-tier visibility, from first mile to last.

As we explained in the initial post in our series on what sustainability really means to heads of procurement and the supply chain, this summer Spend Matters is exploring the topic of ESG and sustainability and how it relates to sourcing, the supply market and procurement generally. Having talked to the people driving sustainability in their organizations, we are now talking to a number of experts who are facilitating those efforts through supply chain mapping (SCM) and n-tier visibility technology. Organizations engage supply chain visibility specialists usually as part of a larger supply chain mapping and risk-reduction effort.

In the big picture, connecting information across all sources of materials and supply chain stakeholders by mapping the entire supply chain means efficiency, communication and risk mitigation can be improved. This transparency enables a company to react quickly to events impacting the supply chain and gives the basis on which to improve supplier performance. But there’s another core reason to map out your supply chain — validation.

Tracing a product right back to its source and along any nodes of contact through to the consumer means a company can validate any claims it makes about provenance. This is focal to the ESG and sustainability agenda because it highlights all the hands that touched the product on its journey — but it doesn’t work unless all tiers of the supply chain can be made visible.

We talked to Jayson Berryhill, Partner and co-Founder of Wholechain, a blockchain-based traceability solution built to validate that trust in the origins of all parts of a finished product. We asked him what is driving demand for this visibility, how we get it and why it’s important.

The Wholechain solution sprang from work done by a sustainable seafood company, (en)visible, which has its origins in an industry where legislation over product source is stringent. Wholechain has been developed to become commodity-agnostic and is now used in other industries, including cosmetics. Like many innovations in the supply chain space it is an emerging tech, and so fairly young.

Demand for authentication

So what is driving the need for this kind of whole supply chain visibility? we asked him.

“One reason, and possibly the greatest, is that consumers are increasingly demanding more information about the food they buy, the ingredients they use and the source of what’s in their products. To do that, the market needs a solution that can transfer product data efficiently and reliably through the whole supply chain.

“Lack of data flow leads to fragmentation and inefficiency in the supply chain, and any claims of provenance, ethical sourcing and supply chain transparency/governance cannot be verified. So Wholechain does this by creating an immutable ledger of transactions, hence the use of blockchain, allowing all stakeholders to be held accountable for claims of authenticity, legality and sustainability.

“There is a growing consumer focus on ESG claims; people want to know that decent wages are being paid and that environmental standards are being upheld. And then there’s a growing interest from investors, and an increasing amount of lawsuits on claims that can’t be substantiated.”

Right now we have a proliferation of technology that is facilitating this knowledge and making visibility more accessible, like IoT sensors in the first mile of the supply chain. And these networks and capabilities are evolving, further fueling the demand for deeper supply chain transparency.

Another driver for n-tier visibility is of course brand reputation. But is that as important to the supply chain as it is to the buyer?

“I think it depends on the industry,” Berryhill said. “Some suppliers may not see the commodity necessarily as their brand, and are really just responding to the wants and needs of a procurement organization. So for them, protecting their brand isn’t really a driver, but protecting their sales is.

“For example, ESG in high-risk foods, like seafood, is becoming more and more regulated. So legislation is something they know they have to get ahead of. Take the Food Safety Modernization Act in the US, which was brought into law to give the FDA more authority to regulate the way foods are grown, harvested and processed. The proposed Rule 204, ‘Requirements for Additional Traceability Records for Certain Foods,’ when it comes to the whole gamut of seafood, some suppliers will see this as something they need to be doing now, others will see it as something they will need to deal with in the future — but when that day does come, there will be disparity between the two in terms of their capabilities.

“So mapping your supply chain is going to become more and more important, in fact, it will be essential, especially for high-risk categories that affect public health.”

If you are looking at a tech selection for your supply chain visibility needs, you can get a provider shortlist fast with TechMatch.

The key ingredients of supply chain transparency

The most important ingredient of full-tier visibility is to make the technology that facilitates it not just accessible to the supplier, wherever or whoever that might be, but easy to use.

“What we don’t need is another buzzword added to the mix,” he said. “We need tech that can be used in a functional way. This is why we focused on a mobile app, something that people have in their hands.”

The only real way to get a true reflection of the source in some industries is to get primary data collected at that source, so a mobile handset makes data submission easier for people harvesting, mining or farming in the deeper tiers — even where they may not be fully internet-enabled.

“Our initial learnings on this came from our time spent in Indonesia, where we worked with the US Department of State capturing first-mile data from fisheries,” Berryhill explained. “We looked at the real circumstances that the people in that supply chain were dealing with. Those people are handling huge quantities of raw fish, for example. They are wearing protective gloves, so the last thing they need is a requirement to enter lots of data at various touch points. Yet you still need to digitize your records and connect them with physical goods and share that data to confirm ethical and responsible practices were in place. So what we’ve developed is an app that is built for those circumstances. Because suppliers use ID cards, scanning and QR capture, we can trace data right down to the lot level, the farmer, the feed, and even the animal or source it came from.”

But are there any real incentives for the supplier to use it? Clearly, in some cases it is mandated by the buyer as part of their risk mitigation, and in some cases legally mandated for imports, exports and general food safety.

“The biggest incentive for any supplier is always market access,” he said. “More and more traceability is becoming a big differentiator, because that’s what the buyers want.”

Is blockchain the answer to capturing full traceability?

Blockchain has been heralded as the revolutionary technology that will shake up the supply chain. But while its strengths clearly lie in joining all the hands that touch all the links in the supply chain, it can’t reveal the best or bad practices within those hands. So why is blockchain a key ingredient for Wholechain?

“It’s important to remember,” Berryhill said, “that blockchain is a tool, and it will not solve all problems on its own. But it can provide an indisputable record in time to verify a claim. So used as part of a toolset, and connecting it with certification or other evidence, it is very effective in helping to substantiate claims of ESG practices. Any claim that was made at a certain point in time, around a particular lot or during a change of hands between stakeholders, can thus be substantiated. That’s the value, because while certification is essential, alone it isn’t enough.”

The differentiating factor for n-tier visibility technology

There’s a multitude of software in the market for organizations to choose from, so what differentiators should a buyer be looking for?

“This depends on your aim,” he said. “Some technologies might focus on a specific area of the supply chain, like downstream, or it may trace only the Tier 1 or Tier 2, which might be enough for some industries. Some technologies might focus on parts of the commodity journey, like processing, but again, that doesn’t see the whole picture if that’s what you want. So, for us, the most important thing about our technology is that it can be used for the whole supply chain — hence the name! It maps the supply chain right down to the lot level to substantiate where individual products came from.

“It’s also important that we use industry standards, not our own, for how the data is captured. We use GS1 (which doesn’t mean everyone in the supply chain has to be a GS1 member). We conform to those standards and are part of various working groups to support that, which is important so that we can have interoperability with other systems. Because we put a lot of focus on the first mile, it often means connecting with other technologies to make that simpler.”

He captures that with a real example.

“We are working with a group to do satellite monitoring of shrimp farms. So when we think about first-mile data capture, we’re talking about a great deal of information, including pond size, how often the aerators come on, and so on, so that you can tell what the production should be from that facility. That’s the level of detail we capture, then we are able to trace from that point forward. We have an integration with a large-scale agricultural best practices body in real time, so that, alongside the farm-level monitoring, is a very strong proposition.

“These are the types of scenarios we are able to apply to other industries, to get a real understanding of what’s going on deep in the supply chain and have that substantiated by a number of different data inputs. So while built initially for the seafood industry, we have applied our learnings across other industries and sectors, and that’s important.”

What’s the future for n-tier visibility?

“The standards that organizations have today are not those they had five years ago, and they won’t be the same in five years’ time either. They evolve,” Berryhill said. “So given that we have to source responsibly, for some industries certification alone will simply not be enough in another five years’ time, for other industries, that time has already come.”

Read more in our ESG summer series here.