GreenToken by SAP – A new way to add raw material supply chain transparency to your network
Manufactured goods such as consumer products, processed food items, cars and phones are produced in batches and have high degrees of traceability back to the factory they were made it – often with bar or QR codes that identify the exact date of manufacture and link to other interesting information.
But what about the raw materials that are used in the manufacture of these goods?
Raw materials, or commodities, tend to be procured on 2 criteria – quality and price. Think of filling up your car with fuel – you choose a service station with the right quality (Diesel/petrol) and then find the service station with the cheapest price as any fuel of the right quality will work in your car. But that leads to a problem. A lot of interesting information about the raw material such as is it sustainable? Is it made with child labour? Does it have a low carbon footprint? Is it circular? Is lost if we just buy raw materials on quality and price.
Companies today need to know this information for many reasons – they need to report to their shareholders how sustainable they are against a whole raft of ESG legislation and board level KPIs, their customers want to buy their products knowing that they are not harmful to the environment so proving these facts can enhance your brand value and share price (and likewise, not being able to prove your ESG claims can have a negative affect).
Raw materials ship in bulk, are commingled with like raw materials from many sources and have many stages of conversion from origin to semi-finished product – so they are really hard to track back to a single source. Also, in today’s take-make-waste linear economy, how can we prove that out waste outputs can become our raw material inputs to drive us towards a more sustainable circular economy?
So how do we address this? – GreenToken by SAP is providing supply chain transparency to previously opaque commingled raw material supply chains – ultimately, supporting the transition to increased sustainable material usage.
GreenToken uses a unique application of digital twin tokens on a blockchain coupled with mass balance principles to provide an immutable chain of custody record for any raw materials.
Mass balance is a principle by which all the input volumes into a raw material system (say metal ore from a mine) must account for all the output volumes in a given time period (say metal ingots) including any volumes of wastage (such as production losses, conversion of mass to energy etc). GreenToken uses mass balance to be sure of enabling full traceability of all input raw material volumes to output materials.
Furthermore, tokens on a blockchain are assigned to the finished good end products with each token giving an audit history from the blockchain ledger to provide full provenance back to origin.
On 24th January, James Veale, CoFounder of GreenToken, will explain how the system has been applied to answer some of the most pressing raw material sourcing questions in the world’s raw material supply chain, as diverse as palm and soya (e.g., proving no deforestation etc), metals and rare earth ores (e.g., proving no child-labor minerals), fashion (e.g., proving ethical and fair wage practices), and hydrogen (e.g., proving low carbon green energy).
Later this month, GreenToken will publish a white paper detailing the results of 3 POCs with chemical companies making the shift from linear products to new plastics with a very high degree of recycled circular content by mass.
Finally, I invite you to join our Community Call where Gloria and I will discuss how GreenToken works and the value to any company engaged in sourcing and processing raw and semi finished materials: https://www.youtube.com/watch?v=3xH4boSi9fs
Also, you can listen to my SAP Experts podcast recorded in January 2022 called “Embedding Sustainability & Visibility into supply chains” on one of the following channels –>
Your Voice Matters
If you want to learn more and actively engage with SAP subject matter experts on SAP for Sustainability Suite of products, follow SAP for Sustainability Community by “following” us by selecting the blue follow button. This platform which is available to all SAP customers and partners has a clear objective and mission scope: deliver an interactive community to engage with one another around best practices and SAP for Sustainability Strategy on our Product and Solutions for our sustainable future.