The increasing logistical complexity brought forth by globalisation is making supply chain visibility more important than ever before. According to research from Fictiv, 55% of business leaders surveyed stated that improving supply chain visibility was a top priority in 2023.
Supply chain visibility is an organisation’s capacity to track the movement of goods and products as they transit through the supply chain, from manufacture to end-of-life disposal, giving both a holistic and granular view into their supply chain operations.
This can help organisations meet increasing consumer demands, mitigate unforeseen logistical disruptions, increase operational speed, and solidify overall supply chain resilience. Poor supply chain visibility can lead to increased costs, decreased efficiency, and an inability to react to challenges quickly.
Alongside existing solutions, Digital Product Passports are helping to transform supply chain visibility by enabling the transparent sharing of real-time product information.
Supply Chain Visibility Solutions
A supply chain visibility solution can be built in-house or provided by an external SaaS platform. There are many existing solutions available to organisations at present which purport to help organisations achieve end-to-end supply chain visibility.
Many supply chain visibility solutions have started to use advanced data aggregation methods and leverage new technologies such as machine learning and AI to analyse the ever-increasing amount of raw data produced by large supply chains.
However, one of the core challenges to achieving supply chain visibility remains the transparency across the network and the validity of the data being received by these systems. To truly achieve supply chain visibility, data points need to be captured continuously at each available juncture, analysed, and shared with the relevant stakeholders.
Organisations currently deal with data from a disparate set of sources that are at varying stages of their digital transformation; some may have very modern practices, and some may still use many manual processes, and the data quality varies between them.
Implementing a successful, secure data-sharing regimen in complex supply chains requires not only significant technological investment but also a collaborative mindset and a trustworthy source of verifiable data.
Thankfully, Digital Product Passports help provide a basis to augment supply chain visibility efforts.
What are Digital Product Passports?
Accessible via QR code, RFID tag, NFC technology or other data carriers, Digital Product Passports (DPPs) provide a platform for collecting and sharing vital product data. They can be attached to physical products to give a holistic view of their lifecycle from manufacture to sale, through their eventual recycling, resale and beyond.
The data can include anything from product identity, manufacturing and raw material information to the various points on the product’s supply chain journey, updatable ownership records, and warranties. Importantly, DPPs can contain sustainability information and the individual product’s carbon footprint, as well as recycling and ethical disposal instructions.
Giving stakeholders reliable access to this data can drive sustainable decision-making within manufacturing and logistics processes, maximise product authenticity and integrity, and encourage supply chain circularity.
This is why the EU is looking to make DPPs mandatory across specified industries, such as textiles, by 2030 via the Ecodesign for Sustainable Products Regulation (ESPR) – with other industries to follow soon after.
The ESPR came into force on 18th July 2024. The first working plan for the regulation is set to be released in Spring 2025 and will outline the proposed timeline for delegated acts for priority industries.
DPPs and Supply Chain Visibility
When it comes to increasing visibility within supply chains, the information contained within DPPs and the collaborative nature of the technology provide a substantial set of benefits – from helping to maintain oversight of supplier operations to identifying and reducing unsustainable processes.
Transparency, Decentralisation & Collaboration
Many actors within a supply chain operate disparate, centralised storage systems which impede the transparent sharing of data and hinder supply chain visibility.
Having all data stored in a centralised database also comes with a high risk of data security breaches, as they can be a single point of failure, susceptible to network outages and data manipulation.
DPPs underpinned by blockchain technology offer a decentralised storage mechanism via a network perpetuated by several computing nodes to allow an organisation to store partial DPP data on-chain, combined with a centralised storage mechanism to house off-chain data creating a hybrid solution to balance speed, efficiency, and cost.
This increases transparency as participants on the blockchain network enjoy access to a record of each product lifecycle event that takes place, and it’s still possible to create a permissioned access structure for decentralised storage to manage critical data visibility within the supply chain where needed.
The additional data security that blockchain technology provides helps increase the capacity for secure collaboration between supply chain stakeholders such as suppliers, retailers, manufacturers and recycling companies.
Likewise, Data Space technology is also being utilised in DPP solutions to help the secure, transparent sharing of data. Encouraging collaboration between supply chain stakeholders helps to remove barriers and reduce friction amongst supply chain participants.
360 Degree Overview & Compliance
When managing a large and complex supply chain, having efficient access to accurate data from various touch points throughout the supply chain is key to success. DPPs can be updated at each stage of the product’s lifecycle – from initial manufacture to distribution, sale to resale, and eventually the product’s recycling or end-of-life disposal.
These real-time insights into individual product movements and status provided by DPPs can reduce reliance on predictive measurements of supply and demand, allowing brands to make informed decisions around stock availability at an individual or product line level.
Some of the more comprehensive DPP solutions can even feed this data back into the organisation’s ERP or data aggregation system and be extrapolated to give a comprehensive view of the whole supply chain, vastly increasing overall supply chain visibility.
DPPs can also keep a record of product composition and raw material data, quality assurance, manufacturing locations and processes, and both holistic and granular perspectives on the supply chain’s carbon footprint – all valuable information to possess when faced with increasingly stringent compliance requirements with legislation such as the EU Green Deal, the CSRD, and the ESPR.
When DPPs are combined with blockchain technology, which provides immutability and inherent data security, the supply chain becomes instantly more transparent and the data verifiable, creating a tamper-proof audit trail that can be shared with auditors and regulators to enable better and more verifiable audits.
Sustainability & Circularity
Oftentimes, most of a company’s environmental and social impact occurs within its supply chain – for consumer product providers, supply chain activities can account for as much as 80% of their overall GHG emissions.
DPPs can both inform and include data from product Life Cycle Assessments (LCAs) to help organisations identify sections of their supply chain where emissions can be reduced and act to do so, as well as help maintain oversight of supplier operations to make sure they comply with labour laws, and aid in transparent, accurate ESG reporting.
As well as carbon footprint information, DPPs can also contain other information related to sustainable practices such as recyclability, ethical disposal, and waste management instructions, helping businesses foster circularity and sustainability within their supply chains with greater effect.
This can assist in the management of products at the end of their lifecycle by furnishing waste management and recycling companies with important product information such as specific instructions for the disposal of potentially hazardous materials or components the product may contain.
Equally, customers are becoming more conscious of the environmental impact of their purchases. Therefore, sharing sustainability and circularity information within a DPP helps them make more informed decisions about which products and brands align with their morals.
For example, the information DPPs gather can help customers understand how and where the products they buy can be recycled and what product takeback schemes are in place.
As customers recycle their used products, the data this generates can be fed back to the producer, giving them a better understanding of the number of recycled products, helping prove organisational sustainability claims and benefiting the business from a reputational perspective.
Operational Effectiveness
The access to verifiable product data in real-time and secure historical data storage that DPPs provide can help organisations be proactive in their supply chain management and improve overall operational effectiveness.
For instance, real-time product data helps businesses keep track of product demand levels, predict demand influx, enable more efficient and targeted product recalls, and respond quickly to unexpected events. DPP data can provide crucial insights and detailed reporting, which can help to identify and anticipate supply chain bottlenecks.
Ultimately, this enables supply chain operators to save on costs and improve end-user satisfaction.
Conclusion
Digital Product Passports, a revolutionary mechanism for sharing product data. They provide several opportunities for organisations to heighten their supply chain visibility.
DPPs can help organisations gain both a holistic and granular view of their supply chains, enable organisations to make more informed decisions in relation to their supply chain management, and increase the overall efficiency within their supply chain through transparency and collaboration.
Beyond the fact that regulations such as the ESPR are mandating the implementation of DPPs across many physical product categories in the coming years, forward-thinking organisations should already be preparing for Digital Product Passports.
Protokol’s Digital Product Passport solutions enable organisations to collect and share product data to improve supply chain traceability, facilitate sustainability and comply with upcoming DPP regulations. Our custom DPP solutions are adaptable, interoperable, and designed to work in conjunction with not just your organisation’s infrastructure, but that of your suppliers, partners and stakeholders too.
We provide a comprehensive DPP solution that improves supply chain transparency, supports circularity, enhances customer experiences, and unlocks new growth opportunities. Get in touch with our DPP Consultants to discover how a DPP solution could benefit your organization.