It is often difficult for companies to trace each and every step in the journey of a given product. Some areas in a supply chain may be especially opaque and product physical proprieties can also be seen as a challenge when setting up value chain traceability system. In order to create more transparency alongside the supply chain, it is important to understand the concept behind and the different existing models. TEO explains in 2 minutes what you need to know about traceability.
1) How can we define traceability
Traceability can be defined as the ability to identify and trace the history, distribution, sustainability claims (human right, labor, environment, anti-corruption) and location of products, parts or materials.
The chain of custody refers to the process of tracing information in a supply chain.
2) Why is traceability important
Traceability can have multiple positive impacts for an industry:
- Have a better control of your supply chain. For example, in case of a product recall, you can know where your product units are faster.
- Promote more sustainable behaviors. Because traceability allows more transparency, it forces by extent to improve business practices towards more sustainability
- Provide evidence of good business practices
- Unite companies and stakeholders around a common purpose
- Allow valorization of effort in the field of transparency and sustainability
3) What are the main challenges when addressing the topic of traceability?
The complexity of the supply chain can be challenging when setting up a traceability methodology for a supply chain. Not only because actors may use different systems but also, because often, products are assembled with parts coming from multiple sources around the globe, where data availability can vary. The challenge of a chain of custody can be particularly tough for companies manufacturing complex products with multiple tiers of suppliers or numerous sources at any given tier. The data acquisition process can be time consuming, and in some cases, the systems needed can be onerous.
4) Traceability models
There are three main models in terms of how traceability schemes trace product attributes. These models offer different approaches to tracking a claim and assuring it at each point in the supply chain. It is important to have in mind what kind of information, or product you want to trace because this can influence the model that you will apply:
Product segregation
Certified and non-certified products can be physically separated and tracked along the value chain. The final customer knows the product is 100% certified and can claim so. Products can be segregated individually – it is what we call an identity preservation model- or in a batch mode -a bulk commodity model-.
Example : for luxury bags, each bag has its own serial number, that allows you to trace the bag’s origin individually. It is an identity preservation model because no other luxury bag has the same serial number.
Mass balance
Certified and non-certified products can be mixed together, and the corresponding volumes can be tracked along the value chain. The final user can claim that x% of his product is certified and x% non-certified.
Example: for fair trade coffee, you cannot trace coffee bean by coffee bean, but you can be sure that a certain % of certified coffee is in the batch.
Book and claim
This methodology is particularly suited for complex value chain where the implementation of another model would be too expensive, or for complex product you cannot physically track because of their physical proprieties. In a Book and claim mode, the physical flow of products this dissociated from the attributes flow: Attributes certificates are issued for the volumes of certified product produced at the beginning of the supply chain. There is no physical traceability along the supply chain for the physical, certified and not certified products can be mixed together. Producers can valorize their efforts by selling these certificates, that final users can purchase to claim the unique attributes of their supply and to support the sustainable efforts of their suppliers.
Example: once renewable power is injected in the grid, you cannot trace the atoms of the renewable power back to the source asset, but you know. Therefore, as a green power producer, you can offer energy attributes certificates for customers to purchase to support you in the generation of green power.
5) How is TEO supporting the implementation of traceability?
TEO-the energy origin blockchain-based solution is helping different ecosystems to promote more traceability alongside their value chain. Producers are able to valorize the origin of their product and all sustainability efforts they carry out. Clients can support those positive behaviors. Depending on the context of the industry, the TEO solution can adapt itself to fit the requirements of the products. Moreover, thanks to Blockchain, the final users are not only able to trace the attributes of their supply but, with no double counting possible, they are sure to be the only ones to claim the attributes of the specific products they got.