Traceability 2.0: How cloud services will change supply chains
There is no shortage of business services out there promising to help manage orders across complex webs of suppliers. But far fewer resources provide the degree of supply chain transparency or traceability data sought by corporate sustainability managers.
One obvious exception is Sourcemap — a company that started life as a research project at the Massachusetts Institute of Technology. The upstart has worked closely with companies such as Office Depot, which is pushing for more transparency regarding the source of paper supplies, and yogurt maker Stonyfield, a founding client.
For a vivid illustration of the work Sourcemap is doing, check out the company’s interactive maps. The underlying information about which products come from where is still pretty basic, but it gives you a sense of what’s possible when cloud-based data services meet supply chain sustainability efforts.
Mainstream adoption of cloud information services, along with emerging encryption software that prevents information from being altered, are giving rise to other new offerings in the space.
Two companies poised to capture more attention are EcoVadis, which just entered an intriguing alliance with supply chain information management company Tradeshift; and Project Provenance, experimenting with ways to share trusted origin data using “blockchain” — the security technology underlying the bitcoin digital currency.
One huge database
One reason the pact between EcoVadis and TradeShift is so important is that it ties scorecards tracking supplier risk and sustainable business policies with broader business metrics.
TradeShift serves the supply chains of more than 500,000 businesses with invoicing and management capabilities. Some of its customers include Archer Daniels Midland, CBRE and DHL. The company also recently paid $30 million for Merchantry, another cloud platform that serves companies such as apparel makers La Redoute and Modell’s Sporting Goods.
EcoVadis cultivates corporate social responsibility ratings for more than 21,000 suppliers that work with giant companies, including Alcatel-Lucent, Coca-Cola, Heineken, Johnson & Johnson, Nestle and Verizon. Information buyers help subsidize the cost of adding additional supplier data.
The pact unifies important risk metrics from this information, previously maintained in separate databases, said Tradeshift co-founder and CEO Christian Lanng.
“In the past, maybe five to 10 years ago, the risk was all about whether the supplier would go bankrupt,” Lanng said. “Now, it’s the risk of flooding, the red zone of terror and resource constraints, such access to clean water.”
Companies looking for more information about specific suppliers pay a subscription for data; suppliers get access for free. That’s not particularly groundbreaking, but the unified access to ratings information is a compelling addition — especially for companies looking to digitize procurement processes, collaboratively.
Aside from EcoVadis, another company to watch in this space is SupplyShift.
The name pretty much says it all. Her idea is to “tag” products with certified data identities about origin that both businesses and consumers can trust.
Central to this is blockchain, the secure transaction processing technology that underlies bitcoin.
You can think of blockchain as a digital footprint that keeps track of transactions or status changes along a path of relationships. It works across decentralized networks, which makes managing supply chain data one natural application, Baker said. Her idea: Every product has a story to tell.
“If products come with provenance data, it’s the ultimate market trust,” she said.
The Provenance team is testing its idea first within the food supply chain. For example, it might be used to verify that no allergens such as nuts are within a certain type of cookie. The London-based team has two pilot initiatives planned starting in November, Baker said. One involves tracing tuna from fisheries to store shelves. The other involves a supermarket chain.
As of earlier this summer, the project was working with several dozen makers and certification bodies to better define how the technology might be used in real-world applications. Early results are anticipated during the first half of 2016.
“We are innovating in plain sight,” she said.