2024 Blog Series - When We Talk About Traceability

What We Talk About When We Talk About Traceability

When we talk about traceability in supply chains, the implications are wide and varied. We often say traceability is important without being specific about the different ways traceability enables companies to improve efficiency, reduce expenses, and more effectively meet their goals. Indeed, traceability is the starting point to addressing a wide range of supply chain concerns.

The LF Decentralized Trust Supply Chain and Trade Finance SIG has hosted presentations by many different supply chain-focused Blockchain as a Service (BaaS) platforms. They’ve shared with us the ways their solutions are designed to meet different stakeholder needs, and different ways data is collected – including IoT devices with temperature sensors and GPS location data, RFID tags, and of course human input, all cryptographically protected through the exchange of public and private keys.

Product provenance, or where a product originates from, is only one part of traceability. As we move further along a product supply chain, there are an increased number of inputs, which each need to be traced back to their source. Shipping conditions, such as temperatures, can be critical. So can information about where products were processed, who did the work, whether workers were fairly compensated, the environmental impact of each component and activity, and whether relevant taxes and duties were paid. Kevin Otto of GS1 US has shared with us how that organization is working with industry groups to develop standards that enable data sharing and interoperability across platforms.

Some platforms have a lot in common, like improving data sharing between different parties, and some fill specific niches that are not as widely discussed. Food supply chain traceability, especially as required by the U.S. FDA’s Food Safety Modernization Act, Section 204, or the European Union General Food Law, is a common focus for companies in the food and agriculture arena. Other drivers include the need for data related to environmental impact, pressures to shorten transit times, pressures to reduce costs of reconciliation, and the ability to segment pricing for premium products and knowledge. We’ve also learned about how BaaS platforms have enabled companies to improve logistics management, reducing related expenses, and enabling improved regulatory compliance across different industries.

Some companies that use BaaS platforms make it easy for consumers to see different information about products, their ingredients or components, and the entire supply chain, increasing transparency. Other companies leverage platforms to comply with regulations, or to improve supply chain and logistics management, but do not make the data available publicly. There are still challenges to their implementation, including the work needed to agree on standards across different companies or industries, and some companies’ reluctance to invest the necessary resources, but adoption continues to grow.

The intended use of each platform, and user needs, have a significant effect on platform design. What types of information is collected and how it is uploaded. Different types of data might be uploaded in real time or in batches at set times. Different participants will have permissions to access different information. Especially important questions include whether data is stored in a central server or system of servers (and thus not truly decentralized, with associated inherent risk) or if it is stored across a decentralized network (which is considered more secure, but can increase cost), or if different data points are stored on the blockchain itself or are stored off chain, with a hash on the chain pointing to their location.

In 2024, Leanne Kemp of Everledger shared how Everledger’s platform not only promotes product traceability, but also enables companies in the diamond industry to demonstrate that their products were not mined in countries where diamond profits are funding violence, or otherwise being mined or processed in regions that are sanctioned by the U.S. and other countries.

In 2023 we heard from Pete Gowanlock of KNNX, formerly DLT Labs, who shared how their platform combines track-and-trace capabilities with workflow and supply chain management, provenance and authentication, credentials and certifications, and other functions. Walmart Canada has used their platform to reduce their annual freight expenses by five percent, in part by leveraging fleet vehicle data to improve tracking and make smarter decisions.

Good traceability platforms are designed to ensure that the data they use is reliable and from trusted sources. They are built with measures to reduce the possibility of mistakes or fraud, and use the latest in cryptography to prevent data tampering. This can mean incorporating information about third party certifications for different product claims. IoT devices used to collect data, for information like temperature or humidity, have to be able to withstand a wide array of conditions so that they work reliably. GPS sensors can confirm locations and time, and upload that information to the system. Companies that manufacture products as varied as investment grade whiskey, luxury handbags, pharmaceuticals, and aerospace components are using these BaaS platforms to counter product fraud, and improve customer confidence in their products.

BaaS platforms for supply chain management and tracking continue to evolve as they are adopted more widely. Last year our SIG published the Supply Chain and Trade Finance ebook with profiles on a variety of different platforms which were built using Hyperledger blockchain projects. It is a great resource for anyone who wants to learn more.