The core task of CSR (Corporate Social Responsibility) consists of sustainable management within the supply network. The focus is primarily on environmental and social standards. However, there are various reasons why CSR standards and guidelines are violated, especially in emerging markets. This also affects the textile industry.
In the past, various CSR quality seals have been introduced and compliance with them is regularly audited by the respective clients. Since suppliers are not published for reasons of procurement strategy, supply networks are currently without transparency. In order to check compliance with CSR standards, a large number of audits are carried out at each individual supplier, for which each brand is responsible. The consequences are high audit costs for the brands and a heavy burden on the individual suppliers.
The common objective of the textile brands and the regulatory authorities is to demonstrate compliance with CSR standards throughout the supply chain, down to the individual product. The secondary objective is to reduce the effort and costs of auditing and to create the possibility of sharing audits already carried out with partners.
What can blockchain technology contribute to product traceability?
An essential solution component for achieving the goal is the possibility of tracking the certification status of the suppliers involved in the order-related supply chain. For reasons of efficiency, this can only be done digitally. To do this
- the certificates are digitally issued to the individual suppliers by independent, trustworthy auditors,
- the certificate data are stored in a tamper-proof manner and
- the certificate chains are made available to the customers without any doubt.
Such certified companies can store information, including their certificates, in a digital delivery order. The information as to which company is involved is only visible to the direct customer. Other participants in the supply chain see only the participation of a certified company in the digital supply order. The second solution module is thus the preservation of the anonymity of the suppliers without weakening the trustworthy traceability of the certificates.
Last year, kik initiated and implemented a pilot project, in which blockchain technology was used. A solution was created in which
- independent certifiers can issue a digital certificate to a company after an audit has been carried out
- the certificates can be used by the company to confirm participation in an order as a certified company without having to disclose identity data beyond the certificate
Due to the trust in the independent certifier, the certificate itself can be trusted. The blockchain technology secures digitally issued certificates against manipulation, and verification services enable continuous verification of certificate issuers in a multi-level network (supply chain) on a simple and trustworthy way.
A concrete supply chain for the production of t-shirts was mapped in the pilot. Digital certificates were assigned to various suppliers via the evan.network Verification Service. Based on a specific order, these certificates were combined into a batch-related digital quality seal and called up anonymously directly on the t-shirt via a QR code.
On this basis, a trustworthy certificate is created in the supply chain, even though the network partners do not know each other. The trust is established on the basis of independent auditors (e.g. TÜV, BMZ), who confirm the corresponding CSR certificates of the seal clarity list.
Further development in the textile alliance
Brands in the textile industry largely use the same supplier structures and are subject to the same regulations. kik is striving for a joint initiative of various textile alliance members to set up a cross-company certification and verification service for textile supply networks. The technological basis is a marketable blockchain and the created pilot. Various advantages can be generated on this basis:
- regulatory (legal) requirements in the field of CSR are fulfilled
- audits can be implemented strategically on the basis of information about expired or non-existent certificates
- costs for audits can be reduced at the auditing company and at the supplier, because the audits can be trusted by market participants or independent auditors (higher efficiency and effectiveness)
- risks in the area of CSR can be minimized for the supplier
Such a solution is considered innovative in the textile environment. Thus, participating companies can position themselves positively as innovators with end customers. For the first time, end customers can now obtain information on the basis of a batch regarding the subject of sustainability in the supply chain. The customer can see in which countries and under which quality criteria a garment has been manufactured. All the customer needs is a QR scanner on his smartphone or tablet.
kik presented this pilot to the public at a workshop in Bönen on May 22nd, 2019. Interested representatives of brands, certifiers, the German government and NGOs were cordially invited. The head of the CSR department of kik will continue to present his project at the Blockchain Enterprise Days 2019 and will plead for a common approach of all brands.
Here it is visible that the frequently asked question “What can I use the blockchain for?” can be answered with a clear statement: “You alone have no added value”. The added value of this technology is only created through digital, cross-company cooperation. But these digital networks need time to develop and grow. This requires strong initiators who go ahead innovatively and want to let the idea of a real industry 4.0 live in the future.