How Can E-Provenance Transform Supply Chains Into Value Chains?

Article by Leanne Kemp

Provenance data, powered by blockchain and IoT technologies, is adding a new, digital dimension to the procurement and re-use of raw materials. How will these value chains benefit all stakeholders?

The celebrated French playwright Jean Racine once wrote: “There are no secrets that time does not reveal.” His words may have rung true in 17th century Paris, but within global supply chains, the facts can be harder to find. As goods and services are traded, the background information is often locked away or lost in translation. For centuries, the reliable passage of commodities and materials has mattered more than the accurate flow of data.

Of course, an interesting piece of provenance will raise the value of an item, especially in the hands of a skilled marketer. However, brands can show signs of ‘selective memory’ when it comes to sharing provenance with customers. At worst, this cherry-picked provenance can be used as a smoke screen for what’s really going on. Audiences are often happy to accept the back story on trust, because they want to buy into the sense of quality or nostalgia.

But what is provenance after all? In a global and complex marketplace, with often opaque supply chains, consumers are more and more interested to know exactly what is the source of the products they purchase. Are they sustainably sourced? How fair are their business practices towards local producers, and what is the impact on the environment of their supply chain? Who exactly has worked on my product throughout its life cycle, and where has it been? Where will it go after it leaves me? To address this lack of awareness, blockchain technology can be implemented in supply chains to increase awareness of an asset’s provenance.

For too long, provenance has offered a garnish rather than the main meal. Well, no more. The world of business is changing – and provenance is beefing up. Three key drivers are pushing it up the agenda.

The business imperative for provenance transparency

Firstly, we now care more, as a society, about where things come from. We have recognized the need to stamp out unethical practices and protect our planet. Provenance has grown a moral and environmental backbone.

It’s not enough for corporations and governments to pay lip service to fair working conditions, climate change or plastic waste. Targets and commitments from the Paris Agreement and the United Nations Sustainable Development Goals are just part of the equation. Customers and voters expect to see tangible progress or they will look for alternatives. Young people, in particular, won’t tolerate more of the same. This growing burden of evidence is fast becoming a business and political ultimatum: prove your credentials or step aside.

The second game-changer is that technology is making provenance real. Welcome to e-provenance. It’s now possible to surface and converge information from across a supply chain in ways that are both accessible and unalterable. Blockchain, in tandem with other technologies such as artificial intelligence, Internet of Things and nanotechnology, can help to turn knowledge and data from the supply chain into a force for good.

The final driver is that provenance adds a new stream of value. Companies like Everledger, for example, aim to help turn one-dimensional supply chains into vibrant value chains. What’s the difference? Traditional supply chains represent all the steps required to get the physical product to the customer. Modern value chains will grow the worth of raw materials by adding their digital twins and provenance data.

Instead of a static linear diagram on a page, companies can present customers (and regulators) with a textured story full of human and physical detail. Technology allows us to trace a mineral or material from extraction, refinement, first use, re-use and decommission, as needed. We can show the who, where and how in high definition. By making the past come alive, provenance can play a dynamic role in the present and also reach into the future, as the world evolves towards the circular economy.

From shareholders to stakeholders

E-provenance is not just the right thing to do – it’s good for business too. If, as many people predict, the global business model will shift from shareholder profits to stakeholder benefits, then the accepted notion of value will change too. Provenance will be bound into the bottom line. Government policy makers will incentivize corporations to act in a transparent way and collaborate openly with others, because that’s what their voters want to see happen. Those that resist this change risk finding themselves marginalized.

Data will be the life force of this brave new world. Businesses that can monitor, evaluate and demonstrate their positive impact to each other, governments and their customers are set to win. They will monetize the competitive advantages of provenance and transparency. Technology such as blockchain can also help to build trusted communities where rivals and unlikely trade partners are able to share knowledge about their respective value chains.

As traceability technologies help value chains to overlap and feed off each other, they will open new streams of innovation and unlock corners of the economy that haven’t yet been imagined. Just as access trumps ownership in the gig economy, sparking a $1 trillion industry, so value chains can trump supply chains, as more and more industries speak to the truths of their supply and activities.

The power of small-scale producers

Globally there are many known barriers to success for emerging economies and small-scale producers alike: lack of access to finance, lack of access to raw materials, lack of business knowledge and skills training, sourcing bottlenecks, prohibitive shipping costs, lack of access to local and global markets, and life/work imbalance, to name just a few. It is generally agreed that we must work to move the continuum of small-scale producers, such as artisanal miners, from subsistence labor force, up the value chain to makers and co-creators in the greater context of the creative economy.

Given all of the challenges, the key question is how do we drive change for small-scale producers? What type of focus is needed? How do we begin to understand the complexities of artisan value chains so that we may design innovations appropriate for small-scale stakeholders that ultimately bring greater opportunity, improve livelihoods, and increase the economic prosperity of local communities?

For years, corporations have built systems and trade mechanisms for the buying and selling of goods and services. But there was never a platform to enable, demonstrate and mobilize provenance. That needs to change. In fact, it’s already happening, with the help of blockchain technology. And the change is visible, for big corporations and for small-scale producers alike. It creates value and, most importantly, it changes lives for the better.

Jean Racine will be proved right, after all.

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