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Speaker 1: Hi, everyone. We've hit a small milestone here at Switched

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Speaker 1: on fifty episodes. It continues to be our goal to

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Speaker 1: bring you smart but accessible insights from being Anaist on

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Speaker 1: a range of topics relating to the transition to a

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Speaker 1: low carbon future. Hopefully at this point you've heard something

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Speaker 1: new from the show or a new angle on something

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Speaker 1: you knew already. If you get a minute, please rate

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Speaker 1: and review us on Apple Podcasts or wherever you listen.

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Speaker 1: If you have any suggestions for the show or topics

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Speaker 1: you'd like to hear, find Danta and me on Twitter.

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Speaker 1: We'd love to hear from you, and of course thanks

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Speaker 1: for listening. Okay, onto the show. Today, we're going to

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Speaker 1: talk about supply chains. To keep up the regulations around

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Speaker 1: ethically source products, greenhouse gas emissions, products, safety and consumers

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Speaker 1: who want to understand more about the things they buy,

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Speaker 1: companies need a lot more visibility on their supply chains.

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Speaker 1: This weekend the show, we've got Curtie fasta digital industry

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Speaker 1: analysts for BENF She'll tell us about new developments and

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Speaker 1: track and trace and how implementing advanced technologies and systems

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Speaker 1: to more deeply understand their supply chain can make a

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Speaker 1: company's operations safer, more efficient, and competitive. Our discussion is

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Speaker 1: based on report titled track and Trace Digitalizing Supply Chains

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Speaker 1: being if. Users can get this report on benif dot com,

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Speaker 1: the benof mobile app, and the Bloomberg terminal. Oh and

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Speaker 1: near the end of the show, Courage mentioned another report

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Speaker 1: she's working on. It's called ben IF National Industrial Digitalization Ranking.

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Speaker 1: Well that's out now you can go read that too.

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Speaker 1: As a reminder of BENO does not provide investment or

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Speaker 1: strategy advice, and you can hear the full disclaimer at

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Speaker 1: the end of the show. Him Mark Taylor here with

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Speaker 1: Danna Perkins, and you're listening to switch On. Hi, care tee,

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Speaker 1: Thank you for joining Mark and I today. Thanks for

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Speaker 1: having me on the show. So we're here today to

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Speaker 1: talk about track and trace. And I must admit the

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Speaker 1: first time that I heard that phrase was in response

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Speaker 1: to actually tracking of people in COVID, But there is

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Speaker 1: a much bigger application at the industry level. So I

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Speaker 1: want to understand today why did you begin writing a

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Speaker 1: research note about track and trace technology. The idea behind

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Speaker 1: track and trace is really to help companies gain full

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Speaker 1: transparency and visibility of the goods that they're buying and

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Speaker 1: selling within their supply chains. Track and tracing products isn't

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Speaker 1: necessarily a new thing. Supermarkets retailers have been using bar codes,

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Speaker 1: r f I d s to track their products for decades.

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Speaker 1: But the reason why we're writing about this now is

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Speaker 1: because we've found that companies just don't know enough about

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Speaker 1: the products that they're buying and selling to satisfying new

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Speaker 1: regulations around safety and quality of goods, or even just

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Speaker 1: meet customer demands for more sustainable, ethically sourced goods. And

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Speaker 1: so we recognize this issue and we're trying to help

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Speaker 1: companies get ahead of it and really think a bit

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Speaker 1: more about tracking and trace. So, Curtie, it seems that companies,

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Speaker 1: when consumers and regulators are pushing for this track and

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Speaker 1: trace in the products, but it seems that you know,

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Speaker 1: when companies are asked where their products are coming from

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Speaker 1: or where their supplies are coming from, it seems to

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Speaker 1: be a kind of a generalized shrub. Is that the case,

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Speaker 1: and if companies want to start to get a handle

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Speaker 1: on it, what are the options available to them. So

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Speaker 1: what we're finding is just to meet these new regulations

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Speaker 1: and these new customer demands, you know a shift towards

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Speaker 1: organic sustainable products. You're right, customers don't often know enough

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Speaker 1: about where their products are coming from, how they were

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Speaker 1: mind the components used to make these products. But there

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Speaker 1: are solutions in place and technologies. Some of them have

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Speaker 1: been used for years, so bar codes, for example, they're

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Speaker 1: often used on batch levels on food products, so supermarkets

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Speaker 1: commonly use them, and you know, they provide a basic

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Speaker 1: level of identification of goods. And as we try and

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Speaker 1: collect more detailed information, r f I D tags are

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Speaker 1: being used, often in combination with sensors to track more

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Speaker 1: information to things like location as well as temperature, shock

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Speaker 1: tilt of goods. And this information is really useful for

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Speaker 1: things like high value assets such as let's say wind

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Speaker 1: turbines or machinery that are being transported long distances. And

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Speaker 1: then customers can actually go even further and collect more

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Speaker 1: data if they track end to end across their supply chain.

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Speaker 1: And more recently we've seen examples of blockchain being used

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Speaker 1: so like a Ledger based system to really track this

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Speaker 1: data and habit on a trusted, reliable platform and then

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Speaker 1: it can then be shared amongst their other stakeholders within

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Speaker 1: their supply chain. So there's a kind of a range

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Speaker 1: of technologies out there that customers can use to use

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Speaker 1: track and trace. Which industries employ this technology the most

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Speaker 1: right now? Initially because of government regulation, it was the

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Speaker 1: pharmaceutical sector that really drove the uptake of things like barcodes,

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Speaker 1: r F I D serialization on products. But if we

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Speaker 1: think about more of our BNF relevant sectors, so the

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Speaker 1: mining industry is a good example. So asset provenance STATA

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Speaker 1: is understanding where a product comes from is really crucial.

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Speaker 1: Often metals, precious jams, extremely valuable materials originate from these

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Speaker 1: countries that face challenges when it comes to responsible labor,

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Speaker 1: health and safety, and so you know, supply chain transparency

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Speaker 1: helps companies make sure that the goods that they're using,

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Speaker 1: the raw materials they're using are indeed ethical and they

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Speaker 1: align with the standards that the company wants to abide by.

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Speaker 1: So recently we've seen automakers like BMW, Volkswagen, Ford but

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Speaker 1: in place ethically sourcing initiatives for cobalt, which is used

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Speaker 1: in e V batteries. And I think that's like a

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Speaker 1: really interesting example given that it's the companies themselves that

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Speaker 1: are trying to like build these platforms and find solutions

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Speaker 1: to this problem. We've talked about where products come from,

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Speaker 1: but are there other applications of track and trace? I

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Speaker 1: guess I mean like real time tracking. Yeah, so when

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Speaker 1: it comes to real time tracking, track and trace generally

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Speaker 1: go hand in hand. The tracking element is also really

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Speaker 1: portant and often you know, barcodes, sensors, r f I

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Speaker 1: d s do this really well for logistics companies, manufacturers, retailers,

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Speaker 1: and it's just like when you buy something online, you know,

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Speaker 1: you can track your parcel into it reaches your doorstep.

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Speaker 1: In the same way, companies are being encouraged to share

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Speaker 1: their logistics information for their stakeholders to understand where their

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Speaker 1: inventories are in their supply chain, and this has been

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Speaker 1: really helpful for companies to manage their inventories, cut their

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Speaker 1: operational costs, and eventually kind of make their supply chain

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Speaker 1: so efficient that it becomes a competitive advantage for their business.

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Speaker 1: So yeah, tracking is equally as important as understanding the

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Speaker 1: assets provenance of the tracing Part two security. When we

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Speaker 1: talk about the various different forms of track and trace

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Speaker 1: technology that's available out there, how reliable is track and

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Speaker 1: trace technology? When I think about it. I really think

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Speaker 1: about things that you know, we receive as end consumers,

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Speaker 1: and the first one comes to mind, or something like

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Speaker 1: a diamond engagement ring, where it's more than likely very

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Speaker 1: important to the end consumer that they know that it

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Speaker 1: is conflict free and more importantly, you know, did not

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Speaker 1: involve any human suffering. That said, there have been various

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Speaker 1: journalists who have uncovered that really what you're end up

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Speaker 1: getting at the end of the line, that's not necessarily

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Speaker 1: the case. And I know that this technology isn't always

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Speaker 1: applied to individuals like ourselves, and it's not designed necessarily

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Speaker 1: to give the end consumer visibility, and it's more for

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Speaker 1: companies to have visibility regarding their supply chains. But how

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Speaker 1: reliable are track and trace technology for us? That's a

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Speaker 1: great question. And immediately the technology that comes to mind

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Speaker 1: is blockchain. So blockchain has attracted a lot of attention

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Speaker 1: as the technology for end to end track and trace,

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Speaker 1: and just to take a step back, what it is

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Speaker 1: is it's a type of data system that maintains records

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Speaker 1: of data to enable multiple stakeholders to really access the

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Speaker 1: same information confidentially. And it's come up is one of

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Speaker 1: the most reliable, secure platforms of track and trace, because

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Speaker 1: it's encrypted and it's tamper proof, and any attempts to

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Speaker 1: change information on a blockchain would be flagged and inspected.

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Speaker 1: And so in the case of you know, diamonds or

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Speaker 1: precious metals, as you mentioned, it has been commonly used,

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Speaker 1: and I think in mining as well, we're likely to

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Speaker 1: see it used more. But of course there is this

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Speaker 1: element of skepticism I guess with blockchain, given that good

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Speaker 1: data practices might not always be in place, particularly upstream

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Speaker 1: in the supply chain. Companies might not necessarily upload information immediately,

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Speaker 1: or it might not be automatically uploaded, which is ideal,

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Speaker 1: is the ideal way that blockchain data should be tracked, right,

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Speaker 1: because if people have the ability to put in information themselves,

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Speaker 1: there's chances that there's potential fraud or information that's uploaded

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Speaker 1: that isn't necessarily true. And so a company that we

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Speaker 1: spoke to called Treum has a platform that can be

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Speaker 1: configured in a way to analyze data and detect potential

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Speaker 1: fraud and counterfeit products, and and so there are there

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Speaker 1: are ways of overcoming this challenge, but like you say,

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Speaker 1: it's a relatively new technology. It's yet to mature, and

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Speaker 1: there is a bit of skepticism around how it's being used.

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Speaker 1: So Curtius, seems like you're saying that it's good data in,

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Speaker 1: good data out and vice versa. Right, And this, at

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Speaker 1: least this one startup is trying to be a police

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Speaker 1: of that. Is there really just a risk of using

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Speaker 1: blockchain that people just won't upload the data and it

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Speaker 1: won't get up taken that way, Yeah, so upstream in

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Speaker 1: the supply chain, particularly where things are mined in agriculture

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Speaker 1: as well. These these countries are not necessarily don't necessarily

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Speaker 1: have high levels of connectivity Internet access to you know,

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Speaker 1: automatically have tracking tags to submit data onto a blockchain,

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Speaker 1: so you'd want it to be done immediately, right right, right,

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Speaker 1: And so where tracking tags are used, you know, it's

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Speaker 1: a lot more reliable and that can consider you know,

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Speaker 1: data that's been captured to be true and trustworthy. Assuming

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Speaker 1: that there are a lot of benefits to the companies

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Speaker 1: that participate in track and trace, what are the barriers

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Speaker 1: right now to this being more widely spread In terms

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Speaker 1: of the challenges for track and trace, there are a

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Speaker 1: number of them, and one of the main ones is

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Speaker 1: into operability. So a lot of times when companies digitalize

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Speaker 1: their supply chain, they often go with this system without

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Speaker 1: really collaborating with their stakeholders and their partners, And what

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Speaker 1: kind of ended up with is multiple companies using lots

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Speaker 1: of different systems, and it turns out that like logistics,

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Speaker 1: companies end up having multiple platforms that they then need

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Speaker 1: to configure with to update data and track and trace

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Speaker 1: the collectrack and trace information. So this is really quite

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Speaker 1: a challenge. And more recently, what we've seen is that

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Speaker 1: blockchain appears to be a potential solution to this give

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Speaker 1: and that it offers a single trustworthy database where all

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Speaker 1: supply chain stakeholders can update upload their data. So a

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Speaker 1: likely solution to that could be blockchain. If people upload

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Speaker 1: their data, right, that's kind of the robin all of it. Yeah, yeah,

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Speaker 1: so if if companies are willing to share their data,

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Speaker 1: and so that's the next kind of challenge that I

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Speaker 1: wanted to talk about is that data sharing and data

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Speaker 1: privacy is another thing. In order for track and trace

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Speaker 1: to really work, stakeholders need to work together and collaborate

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Speaker 1: in share data. But there is this general reluctance among

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Speaker 1: companies to share data with their peers and partners despite

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Speaker 1: the potential benefits of you know, efficiencies, gains, operational improvements,

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Speaker 1: costs that they would say, So, even where data is anonymized,

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Speaker 1: there's I guess a risk that peers or competitors may

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Speaker 1: deduce any operating advantages or strategies that the company has

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Speaker 1: built from that data. And so that creates this general

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Speaker 1: reluctance to share data. And then where they do share data,

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Speaker 1: data primacy is a real challenge, so you know, companies,

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Speaker 1: particularly where data protection laws and regulations might differ across countries,

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Speaker 1: companies really need to be on track of that and

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Speaker 1: make sure that they know what where they stand with that.

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Speaker 1: And that adds another layer of complexity as well. So

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Speaker 1: if I am a company interested in getting a handle

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Speaker 1: on this or getting into this, like it seems kind

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Speaker 1: of daunting, right where should I start? I mean, we

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Speaker 1: did mention all the different technologies available, but how would

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Speaker 1: I go about being a responsible company in this uh,

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Speaker 1: in this space Because there's so much cooperation required, right, Like,

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Speaker 1: so many companies have to be involved in the same

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Speaker 1: chain in order for it to work, right, it sounds

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Speaker 1: like it's kind of almost a nonstarter. Like maybe that's

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Speaker 1: why people haven't been doing it as much as because

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Speaker 1: it just sounds really hard to get going. I think

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Speaker 1: when companies approach track and trace, there really needs to

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Speaker 1: be a driving force for them to want to collect

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Speaker 1: more information, have this visibility and transparency within their supply chain.

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Speaker 1: And an example in the agricultural sector is where safety

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Speaker 1: is really a key priority and you know, food traceability,

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Speaker 1: being able to trace back batches of certain products and

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Speaker 1: where they were were farmed really helps in cases where

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Speaker 1: there's eco light outbreaks or food born illnesses and then

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Speaker 1: results and recalls. So an example is with Walmart who

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Speaker 1: put in place a food traceability initiative, and what they

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Speaker 1: did was they required all of their suppliers of leafy

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Speaker 1: greens to join this blockchain based traceability system. And given

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Speaker 1: that they are such a large organization, they have the

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Speaker 1: power to really encourage their suppliers to get on board

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Speaker 1: and start tracking and tracing where their products are coming from.

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Speaker 1: They enabled this system to work and has actually been

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Speaker 1: in place for a couple of years now. So I

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Speaker 1: think that's one way in which in order to get arted.

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Speaker 1: If there's this driving force and you know there's a

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Speaker 1: stakeholder within your supply chain that's really pushing this to

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Speaker 1: kind of happen. Then it's it's certainly doable. Now. One

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Speaker 1: thing that Walmart was able to do was actually make

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Speaker 1: sure that the adoption costs that farmers were we're having

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Speaker 1: to pay to kind of get on board with the

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Speaker 1: blotchain based system and were kept quite low and they

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Speaker 1: didn't really incur much costs in order to do this.

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Speaker 1: So I think in that sense it kind of helped

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Speaker 1: suppliers of leafy greens to kind of get on board.

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Speaker 1: But otherwise it is it is a challenge, and yet

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Speaker 1: there really needs to be this driving force or some

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Speaker 1: sort of motivation that companies need to start tracking and tracing.

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Speaker 1: And you're talking about where people really want and need

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Speaker 1: this implementation to come from. So one that immediately comes

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Speaker 1: to mind is the necessity around well, so the potential

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Speaker 1: necessity around Scope three emissions. And that's really where my

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Speaker 1: question lies is how critical is it to have this

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Speaker 1: track and trace to technology in place across the entire

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Speaker 1: supply chain of particular industries. As more companies are coming

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Speaker 1: to the table saying that they are going to have,

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Speaker 1: you know, potentially net zero Scope three emissions targets. And

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Speaker 1: by scope three emissions, I mean the emissions that will

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Speaker 1: be associated with all of your in this case and

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Speaker 1: consumers and all of the suppliers that are actually selling

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Speaker 1: items to you. Yeah, So, like you said, scope through

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Speaker 1: emissions refers to understanding our stakeholders emissions and making sure

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Speaker 1: that they're thinking about reducing their emissions as well. And

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Speaker 1: so the track and trace definitely helps in this area too.

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Speaker 1: Given that track and trace gives visibility, it gives transparency,

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Speaker 1: It allows customers just to understand where their products are

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Speaker 1: coming from. So you know, in relation to this, we've

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Speaker 1: seen oil and gas companies recently announced a number of

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Speaker 1: ambitious targets around corbon reduction, so shall Hotel, BP in

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Speaker 1: the last six months have all made these sort of targets.

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Speaker 1: And while they are interested in track and trace, I

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Speaker 1: think they are also thinking about their supply chains. So

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Speaker 1: add Nock was an example that we looked at in

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Speaker 1: our research note who basically implemented a blockchain based system

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Speaker 1: just to manage the data that they were collecting on

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Speaker 1: their individual business units. And I think that was really

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Speaker 1: successful for them, and I think in this way, by

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Speaker 1: collecting data, they're also conscious of carbon emissions and other

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Speaker 1: sort of E s G related metrics. Thinking about emissions

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Speaker 1: and an asset providence and consumer preferences and regulation, Which

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Speaker 1: do you think is going to be the biggest driver?

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Speaker 1: I really lashed onto big companies being the instigators or

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Speaker 1: pushers or drivers for this track and trace movement, But

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Speaker 1: what reason do you think will be their biggest one

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Speaker 1: for for doing it? Again? It comes back to the

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Speaker 1: motivations and the driving forces that companies have to to

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Speaker 1: really adopt track and trace. I think consumers demanding greater

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Speaker 1: transparency is probably the one that particularly for consumer goods

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Speaker 1: in agriculture, food, even healthcare, we're going to see companies

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Speaker 1: adopted because because of consumers, there's been a growing proportion

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Speaker 1: of millennials, particularly who are a little bit skeptical when

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Speaker 1: products are sourced as ethical, organic, and what we're familiar

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Speaker 1: with is like fair trade and sort of certifications that

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Speaker 1: might have been used in the past no longer kind

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Speaker 1: of being as important, and customers want to be able

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Speaker 1: to actually find out exactly where there products are sourced from.

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Speaker 1: So I think consumers shifting in this way would would

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Speaker 1: actually be a driving force. At the same time, you know,

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Speaker 1: there is regulations and governments actually thinking about being able

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Speaker 1: to understand more about products as well. So an example

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Speaker 1: actually is in Russia. The government there have put in

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Speaker 1: place a system where they actually want to understand more

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Speaker 1: about products across all sectors, including dairy, including footwear and apparel,

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Speaker 1: including bicycle tires. So they want to implement a track

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Speaker 1: and trace system across all these sectors, and they're really

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Speaker 1: pushing companies to do that. Similarly, in the EU, actually

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Speaker 1: they announced a green deal earlier this year, and as

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Speaker 1: part of that there was a mention around circular economy

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Speaker 1: or sustainability initiatives to have potential product passports attached to

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Speaker 1: certain types of goods like textiles, electronics, and this would

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Speaker 1: allow companies to track things like emissions, track their carbon footprints,

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Speaker 1: understand the components that are being used, maybe even push

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Speaker 1: industries to be a bit more cop conscious of the

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Speaker 1: materials that they're using, given that now it's actually accountable

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Speaker 1: through the track and trace data. So I think there's

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Speaker 1: a number of driving forces there, and those are two

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Speaker 1: which I think will be probably the most impactful. I

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Speaker 1: started the podcast talking about how the first time I

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Speaker 1: heard about track and trace, as in regard to COVID,

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Speaker 1: and there's another element that is actually extremely relevant right now.

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Speaker 1: One of the things that we noticed when people first

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Speaker 1: originally started to go into more restrictive lockdown measures was

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Speaker 1: that supply chains started to break down. And there's some

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Speaker 1: conversation right now around relocalization of supply chains. How critical

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Speaker 1: is track and trace to supply chains in terms of

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Speaker 1: the localization or globalization and how it interplaces with kind

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Speaker 1: of both of those ways of doing business. There's been

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Speaker 1: this broadest speculation among companies who might start thinking about

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Speaker 1: reassuring their supply chain. Personally, I think that it's a

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Speaker 1: lot easier said than done. In reality, on showing a

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Speaker 1: supply chain, particularly for a large multinational company, would be

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Speaker 1: incredibly complicated and create cost and efficiencies as well. I

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Speaker 1: think if it made economic sense to do so, then

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Speaker 1: it's arguable that companies would have probably done that already.

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Speaker 1: It wouldn't have take a pandemic to actually realize that

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Speaker 1: that's that's the case. I mean, I think although there

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Speaker 1: is this kind of conversation around it, I'm not sure

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Speaker 1: companies will really think about it seriously. However, this is

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Speaker 1: where I think track and trace can really make a

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Speaker 1: big impact because it's a smart way for companies to

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Speaker 1: gain the control and visibility that they need. And actually

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Speaker 1: it's probably a lot easier to implement just by using

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Speaker 1: technologies instead of moving all of your relationships and your

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Speaker 1: complex network of suppliers around. So this links actually to

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Speaker 1: a research note that I'm currently working on, which is

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Speaker 1: looking at digital policies and initiatives that countries are announcing

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Speaker 1: for a ranking that we put together of national digital strategies,

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Speaker 1: and some countries like France, for example, have also started

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Speaker 1: thinking about bringing manufacturing facilities and research projects around, particularly

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Speaker 1: around healthcare pharmaceuticals, closer to home. So while companies are

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Speaker 1: thinking about this, I think governments are also thinking about

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Speaker 1: reassuring supply chains, and so it is an interesting conversation topic. Yeah,

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Speaker 1: we're likely to see where that goes. I realized that

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Speaker 1: this probably sounds conflicting because we've got governments on one

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Speaker 1: side thinking about it and then potentially companies talking about it.

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Speaker 1: But it's not looking likely to happen. In my opinion,

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Speaker 1: I think it makes economic sense to have geographically dispersed

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Speaker 1: supply chain networks, and I think it will probably stay

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Speaker 1: that way for a while despite COVID and the potential

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Speaker 1: issues around supply chains that we've seen, and track and

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Speaker 1: trace as a critical part of larger supply chains that

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Speaker 1: are more global. Correct exactly, Yes, well, CERTI thank you

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Speaker 1: so much for joining us today. Thank you for having me.

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Speaker 1: Today's episode of Switch John was edited by Rex Warner

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Speaker 1: of Great Stoke Media. Bloomberginia is a service provided by

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Speaker 1: Bloomberg Finance LP. And it's a bit is. This recording

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Speaker 1: investment advice, investment recommendations, or a recommendation as to an

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Speaker 1: investment or other strategy Bloomberg. Any should not be considered

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Speaker 1: as information sufficient upon which to base an investment decision.

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Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes

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