DSC Green Thursday: Ensure Trust in Brand Sustainability with Material Traceability solutions from SAP
Digital Supply Chain Green Thursday – SAP Logistics Business Network material traceability
Thank you very much for sharing the interest that lead to this article of the Digital Supply Chain Green Thursday blog series. Every Thursday we will together take a closer look at one of the SAP Digital Supply Chain solutions and how they contribute to sustainability in supply chains all over the world. Have fun in following the blog, we invite you to get in touch with us and feel free to share the blog posts among your peers. Here you can find last week’s article about how to address sustainable warehousing processes with SAP Extended Warehouse Management
Modern products are the result of complex value networks
Have you ever held a product in your hand and asked yourself where all the different ingredients come from? Modern consumer products usually consist of many ingredients and are produced by immense value networks, where companies cooperate to fulfill the consumer need. Therefore, the manufacturer or producer of the final product needs to organize the material flow from many different suppliers – and as well the material flow to many customers!
Regulatory bodies demand transparency to ensure customer well-being
For a manufacturer of a final product it is very important to be aware of all this and especially in the food or the pharmaceutical industry regulatory bodies demand companies to have this transparency. They mainly have the well-being of customers in mind. Everyone has heard news of products that had to be recalled due to several reasons. As soon as the consumers’ safety is put in danger by a product, measures need to be taken and in worst case the product has to be recalled. To be able to do so, a company obviously needs to know: (1) which material or ingredient caused the defect? (2) in which products is the defect to be expected? (3) where have those products been delivered to? The key competencies for companies facing a recall scenario are the ability to quickly get and distribute the necessary information and the knowledge of affected materials and end products to recall with surgical precision.
Customers want to make informed decisions
The customers demand transparency of the supply chain as well, especially as sustainability becomes more and more important in the buying decision. When a company knows exactly where the ingredients used in each product come from – why not fulfilling this customer wish? Like this, customers see right away, where the raw material was sourced from and what happened to them along the way to the finished product. This information empowers customers to base their buying decision on information such as whether a product is sourced regionally, or whether the supplier has sufficient sustainability certificates. Sounds too futuristic?
Blockchain-technology enables trustworthy sharing of information
Actually, it isn’t! SAP Logistics Business Network material traceability is an SAP solution supporting the transparency along the entire supply chain using the SAP Cloud Platform Blockchain service (read here about Blockchain-technology). To do so, the focal company of a supply chain, usually the company producing the final product, hosts a permissioned blockchain and becomes the “Network owner”. Any supplier can be on-boarded as well and submit information into the blockchain. Like this, key information for every production, transformation and delivery/receive event can be written into the supply chain while the consensus algorithm ensures data consistency. The information can either be inserted via an SAP system-integration or via an open API to ensure everyone in the network can participate and contribute.
Storing material provenance information in a blockchain
for maximum trust and availability; Source: SAP
Creating benefits for every stakeholder
Contributing and having access to all the information of this blockchain provides benefits to every stakeholder in the value creating network. Raw Material suppliers can forward information about certification in a very simple way and show themselves as quality suppliers who can sell their products at best price. Producing/ Manufacturing Companies can share their brand promise with high integrity as they can ensure and prove that standards of quality and process behavior were maintained along the whole supply chain also proving compliance. Governments and regulatory bodies can assure the safety for consumer well-being, as information is visibly and unchangeably available and accountability is ensured. Retailers can include the additional insights into promotion campaigns and use product characteristics for marketing purposes which have not deemed feasible because of integrity issues or risk for brand reputation as standards cannot easily be ensured in complex value networks. Finally, consumers can make empowered decisions and be sure that their personal values are reflected in the purchases they make as they have the information to test the supply chains of everyday products against these beliefs. Additionally, the whole value creation network has full visibility about material provenance and has the easy possibility to quickly inform all supply chain partners in case of any issues with ingredients or finished products. This helps to protect the brand reputation, allows surgical recalls and ensures consumer safety.
Cross-company alerting capabilities ensure every supply chain partner
is quickly informed when necessary; Source: SAP
Integrity as a differentiator
Using SAP LBN material traceability on the SAP Cloud Platform information can be distributed within the value creation network in a trustworthy and simple manner. It streamlines business processes and information transfer between network participants and enables retailers or manufacturers to quickly and efficiently take action whenever something goes wrong. Businesses can use these capabilities to enhance their reputation and integrity when interacting with the customer and take values and beliefs on the customer into consideration. Consumers can hold brands up to standards of sustainability and quality and only choose whom they trust most.
Visualization of the Value Creation Network with the SAP Logistics Business Network material traceability Network Graph; Source: SAP
Trust is the basis of collaboration
In times of global supply chains and outsourcing, collaboration is a key competence in the skillset of a successful company. Material Traceability is one of the capabilities of the SAP Logistics Business Network, which is aiming for simplifying and supporting the collaboration within logistic networks. If you’d like additional information on how SAP LBN material traceability can support your business, reach out to your SAP contact or have a look at the solution website. Additionally, you can have a look at this feature from the recent SAPPHIRE.
Give consumers the information they need for a sustainable buying decision – with SAP Logistics Business Network material traceability
I hope you found this blog post helpful and interesting. Please make sure you follow me to not miss any future blog posts in this series and stay informed about how a Sustainable Supply Chain is supported by SAP Digital Supply Chain solutions! Please have a look at my earlier posts as well: