The supply chain crisis is well documented, and there are of course a multitude of causal factors, none more so than a global pandemic. I can understand why a marooned container ship would make the news but, what surprises me is the lack of attention given to transparency in the modern supply chain. As a brand owner, wouldn’t I expect to know exactly what inventory I have on that ship? Why do we accept that this kind of information is not readily available?
At EVRYTHNG we believe that we should expect more. If I can track my Amazon shipment worth $4.99 surely, I should be able to track my container worth $499,000. Right?
First, let’s break down what we mean by supply chain transparency. Think of it as the final step in the supply chain digitization journey.
- Visibility, knowing where my inventory is and what state it is in.
- Traceability, the origin story of my products, where they came from and how they got here.
- Transparency, the sharing of traceability information. Whether that be telling a product item’s story to a consumer or the facilitation of trade with my business partners.
Resilience to disruption is one driving force for supply chain digitisation and certainly dominates the headlines, but there are other equally important forces at play.
What forces are driving change across supply chains?
- The influence of conscious consumerism
A new generation of consumers are buying products based on factors other than cost and necessity. They want to know the social, economic, and environmental impact of the product, too.
- The shift to ecommerce and DTC
In 2020, digital sales represented 21.3% of total retail in the US, and 27.% in the UK1. To capitalize on this seismic change in shopper behaviour, brands need to scale their ecommerce capabilities. In addition to overcoming challenges with inventory visibility and fulfillment, the shift to ecommerce also requires a more effective 1:1 connection with end consumers in order to grow direct-to-consumer (DTC) sales.
- The growing threat to supply chain and brand integrity
Fuelled by the ecommerce explosion, counterfeit and product diversion are growing. One in four consumers have unintentionally purchased non-genuine goods online2.To effectively tackle this problem brands need to both restrict supply of counterfeit goods in the market and restrict demand by enabling consumers to authenticate pre-purchase.
- Sustainability top of the agenda
The need for better sustainability measurement and tracking is acute. Supply chains are responsible for 90% of companies’ environmental impacts, but according to a recent study by The Sustainability Consortium (TSC), less than one-fifth of 1,700 respondents have a comprehensive view of their sustainability performance3. Sustainable long-term growth requires organizations to implement circular strategies into all aspects of their business. Investor, shareholder and consumer pressures demand it.
- Navigating the compliance minefield
For manufacturers operating across markets and categories, the regulatory landscape is ever more complex. Demand for healthier, eco-friendly, responsibly sourced products is driving governing bodies to introduce more regulations. Examples include new labelling requirements in Russia, a ban on products from China’s Xinjiang region, and the forthcoming US digital care label initiative for apparel. Developing bespoke compliance solutions on a reactive, country-by-country basis is neither scalable nor cost effective.
- The influence of conscious consumerism
So how do we create a pathway to supply chain transparency?
Sound like a pipe-dream? Well, I’m here to tell you that it’s not as treacherous as you might think. That’s not to say it’s easy, it is not. That’s not to say it won’t require investment, it will. However, we now have the technology and the standards to make sure that effort and investment is justly rewarded with scalable transparency solutions.
Step 1: connect
To provide transparency we need item-level traceability, each item manufactured has its own story to tell and in order to tell that story we need to distinguish one seemingly homogenous widget from another. The good news is that there is an industry standard for identifying and connecting items and it’s called the GS1 Digital Link. This is base camp, with unique identifiers on all your product items. From the point of manufacture, the product itself can become the storyteller. It’s not a trivial step, but it is a path well trodden, EVRYTHNG has been helping brands connect millions of items for the past 10 years – it’s what we do.
Step 2: collect
Without doubt the single most important factor for achieving transparency in the supply chain of tomorrow is interoperability. Quite simply, it has to work with your existing enterprise systems and work with the enterprise systems of your trade partners. A problem that is screaming out for an obvious solution of standardization. Any solution without standardization is by definition bespoke and even if the solution works for you right now, will that work for you tomorrow? New contract manufacturer, new bespoke integration requirements. New 3PL, new bespoke integration requirements… and so on. It’s a price that you will be continuing to pay for decades to come.
Finally, the industry standard we crave, we need, is here. A GS1 standard called EPCIS 2.0 (Electronic Product Code Information Services).
EVRYTHNG has already published an article on this standard, so I won’t repeat that detail here but one thing I would like to emphasise is that this standard wasn’t developed by any one technology pioneer. The development of EPCIS 2.0 has been a monumental effort over the past four years with contributions from more than 180 global experts, united by a common goal – to standardize the way in which supply chain information is captured and shared.
The standard is in the final stages of community review and due to be ratified in Spring 2022.
Due to EVRYTHNG’s involvement in the standard’s development we have been able to build EPCIS 2.0 native support into the EVRYTHNG Product Cloud® and it is open for beta right now. In fact, EVRYTHNG staked the claim for the world’s first EPCIS 2.0 integration, back in early 2020.
What does this look like in practical terms?
OK, so we have an industry standard to get behind, but does this mean you have to capture the serialised identities as they make their way through the chain? The simple answer is no. While this is possible with technologies like RFID (such as supply chain loss insights), we know that this is not feasible for all consumer goods brands. For this reason, when product items are packed, we capture the information for brands through aggregation events. Simply put, we need to know which items went in which cartons, and which cartons went in which pallets. This means brands do not have to change existing downstream business processes – serial shipping container codes (SSCCs) can be scanned into warehouses just as they are now – but now we know which serialised items are in a particular SSCC.
This is a good place to note that in an article such as this, I am using broad brush strokes. We have a team of professional services colleagues ready to understand your supply chain and help design the enabling business and technical changes.
Step 3: understand
EPCIS 2.0 is a gamechanger, (I think I have made my thoughts on this point quite clear!) but we must consider what it is, and what it is not.
What it is
- A protocol for standardising supply chain event data structure
- A protocol for capturing supply chain events
- A protocol for sharing supply chain events
What it is not
- An analytics layer, the standard does not define how you interpret or aggregate data for business insight
- A connection between supply chain data and other important data elements in your enterprise, for example unless you know all of your GTINs by heart, you will need your product attributes as well
- An application that business folks can use
In my next article I will explore some (of the many) use cases for supply chain transparency in greater detail. What were once difficult questions to answer, become simple table stakes.
- How much Autumn-Winter 2021 product do I have across all my distribution centers?
- Is my purchase order going to be shipped on time to execute my launch date?
- How much inventory do I have that was manufactured with materials from supplier A?
- I need to execute a recall, where are all the items that consumed a defective batch of materials?
- My shipment was short, where is the missing pallet?
- Is this shipment in the correct market?
- How can I prove provenance to my consumers?
- How can I share supply chain data with my trade partners?
- How can I prove product compliance and safeguard speed of chain?
To answer these questions, yes we need to capture supply chain events but we also need master data (e.g. products and locations). We need data analytics to piece together individual events to answer questions. We need a product cloud.
Can an off-the-shelf product answer these questions?
It can, and this is exactly why we built the EVRYTHNG Product Cloud® on a foundation of EPCIS 2.0 native support. We are able to capture supply chain data from your network so that we can make sense of it and provide simple user interfaces for insight and out-of-the box services for sharing information.
I’m not going to pretend otherwise, we have a vested interest in EPCIS 2.0 – not just as the vehicle that facilitates supply chain interoperability, but also as the foundation that enables us to offer supply chain transparency as a product, not bespoke software. We are able to interpret the data whether you work with cotton or coffee beans, and for you that means regular product releases and improvements without expensive version migrations. If you are ready to take those first steps on the pathway to supply chain transparency we would love to hear from you, contact us.