Supply chain managers must embrace traceability; IBM’s double-down proves the tech and knowhow are readily available

IBM has spent a lot of time and money working on traceability in supply chains recently – citing examples that include fully traceable olive oil production, and building more transparent and collaborative connections between farmers, consumers, and the whole value chain. Supply chain managers now have more options on the table to meet the traceability and transparency that their customers and regulators demand: 

• IBM and Accenture provide two leading examples of directly connecting consumers to the supply chain; IBM’s latest announcement follows on from HFS’ previous analysis of Accenture’s Circular Supply Chain consortium, where consumers can not only trace but also tip the original farmer. 
• Transparency and reporting are well-established areas of the largely nascent “sustainability services” market, with a strong list of service and consulting giants playing. 
• Non-blockchain platforms, standards, and databases that utilize trackable barcodes or QR codes are achieving analogous connectivity for consumers, alongside traceability for some of the world’s biggest brands. 

Supply chain leaders and their brands can’t afford to be left behind using “black box” sourcing 

Rapidly and comprehensively tracing goods throughout supply chains is increasingly unavoidable for a brand image, and it is also increasingly enforced by regulators. Even in the early 2010s, connecting consumers to the supply chain through RFID tagging and smartphones was being discussed, but in the grand scheme of things, today’s consumers still aren’t totally engaged with their products’ origins and histories. A large portion of consumers will never be interested, but the number of those who are is on the rise: IBM’s Institute for Business Value reported in January 2020 that 73% of consumers would pay a premium for fully-transparent products. This is a massive jump up from CGS’ January 2019 survey results showing 47% were willing to fork-out for what they see as sustainable products. Allied Market Research predicts the global food traceability market will soar to $25 billion in 2025 from its 2017 baseline of $11 billion. 

IBM and Accenture look set to battle it out; both are pushing blockchain-connected consumers and farmers 

Blockchain has promised for a while to establish trust in supply chains with its unalterable digital chain of transactions; of course, validating the original recording of information on the blockchain remains a significant challenge . While the climate crisis pulls sustainability attention toward emissions, natural disasters, and resource consumption, social sustainability and ethical business cannot be ignored, especially along companies’ value chains.  

HFS discussed Accenture’s Circular Supply Chain consortium in mid-2019, where through blockchain and mobile innovation, consumers can trace and learn about the origin of their goods, and even send a tip to the original farmer. Around that time, IBM’s success with Walmart for bringing supply chain food traceability time down from 7 days to 2 seconds was a leading use case; now, IBM’s newest announcement and many other instances of retailers and consumer packaged goods (CPG) companies are presenting similar cases. Businesses are taking advantage of supply chain traceability to not only avoid regulatory clamp-down and media scrutiny but to also reinvent the way consumers engage with their brands to pull in new customers and keep existing ones. 

Simultaneously with announcing its “Thank my Farmer” application, IBM is also using its Food Trust blockchain network to guarantee the origin of a high-end Tunisian olive oil brand, Terra Delyssa. Consumers can now access the product’s full history including origin, travel, and production process, while the blockchain network itself aims to primarily improve the efficiency of interactions between growers, manufacturers, shippers, regulators, and consumers. 

At 2020’s Davos gathering, IBM and Yara, a digital farming solutions firm, invited stakeholders to join them in open collaboration to exchange “field and farm” data—and overcome the agriculture sectors’ dispersed, incompatible, and inaccessible data barriers.   

Delving deeper into blockchain-enhanced traceability: 

• Nestle and Carrefour (the French retailer) are collaborating to improve trust and traceability in their B2B supply chains.  
• Provenance, a blockchain vendor, boasts 200 retail clients with some impressive names, including Unilever and Coop.  
• iFinca focuses on the “first mile” of coffee production in Columbia via its blockchain platform-based mobile application. 

Blockchain is not the only answer to traceability in supply chains, but supply chain leaders have their eyes peeled…  

Ninety–eight percent (98%) of sandwich giant Subway’s products now have traceable barcodes, aligned with the GS1 (a non-profit) food traceability standards—although that does make you worry about what the other 2% of your meatball sub might be… Subway is not currently using blockchain, and it might be several years away for them, but its director of supply chain traceability is keeping a close eye on the technology’s development. “Garbage in, garbage out,” the common downfall of hasty blockchain initiatives, was cited alongside slower processing times and interoperability with current Subway systems as key barriers. 

On the vendor side, Mytrace is pushing its QR traceability solution across the agriculture, foods, automotive, pharma, and wider markets. Sourcemap, a supply chain mapping database, emphasizes the positive business effects of transparency, including trust and future-proofing supply chains and viral marketing opportunities with Reese’s peanut butter and Vans shoes as clients.  

The Bottom Line: Traceability, transparency, and reporting are a large part of the current “sustainability services” market—connecting consumers and farmers is just one part of a changing ecosystem. 

Nike’s manufacturing map and Apple’s supplier responsibility progress report are two larger examples of firms opening up their supply chains, highlighted by specialist sustainability consultancy BSR. BSR forms part of a range of consulting and services that exist in the market surrounding transparency, traceability, and reporting, for enterprises desperate to paint themselves with the sustainability brush, alongside KPMG, EY, Deloitte, Accenture, PWC, IBM, many pure consultancies, and other boutique sustainability consultants. 

HFS has well-documented the gap in wider sustainability services and the opportunities being missed by those not traditionally associated with blue-sky consulting. As sustainability continues to find its way into industries, technologies, and enterprise functions (as we’ve outlined here in retail, blockchain, and supply chain, respectively), more and more providers will double-down by bringing their complete skillsets into solutions like the ones we’ve seen from IBM and Accenture.