- SAP Managed Tags:
The business world is exponentially shifting from linear businesses to circular businesses and at the same time, there is a great emphasis on tracking and tracing of raw materials in the value chain and tagging them back to the source such that, there is visibility into various sustainability aspects like sustainable sourcing practices and product carbon footprints. Apart from the voluntary drive from the businesses, the regulations, for example, EU Deforestation Regulations (companies need to demonstrate that the products are deforestation free) for the companies operating within EU, has brought up keen interest from the investors and the business stakeholders such that businesses are compelled to take necessary actions to be complaint towards the regulations and at the same time attracting investors by getting into limelight for taking such sustainability actions.
Along with tracking and tracing, for industries like metals and mining, and chemicals, chain of custody of the raw materials has been a greater hurdle to achieve the required visibility into production processes and tracing and analyzing the product sources and footprints.
The need for transparency and traceability in Supply Chains
To tackle these challenges, SAP has come up with a solution called Green Token, which is a chain of custody accounting tool, which emphasizes on mass balancing and segregated accounting. Green Token helps the customers in tracing and tracking back the raw materials and analyzing the mass balances of the raw materials with the help of Tokenization. Tokenization simply refers as the creation of Tokens whenever any circular/recycled content enters the production process and transfer of those tokens across the production processes whenever the recycled content gets transferred/transformed from one process to another.
TCS team has envisaged a use case for metal and mining industry (Aluminum) on how SAP Green Token helps in mitigating the challenges pertaining to the industry. To depict this, TCS has taken an end-to-end value chain of aluminum production and carved out the phases at which Tokenization is likely to take place and how the tokens are transferred across the value chain.
Use Case: Green Token for Aluminum Industry
- Initiation of Green Tokens (creation of tokens): At this stage, the recycled content from the recycler enters the production process and to record this transaction there is creation of tokens according to the volume of recycled content entering the process.
- Material mass balance: Across the production processes, the mass balance is maintained through transfer of tokens and at each phase the volumes are recorded such that there are no discrepancies.
- Final product with Green Tokens: The final product would have the total details about the virgin and recycled content within the form of tokens, which would help the manufacturer to get certified and various material certification agencies.
Apart from metal industry, this additional information would help various industries in better understanding their products’ footprint and would help them in identifying and mitigating any risks pertaining to the auditability of the products origin. The segregated accounting would help manufacturers in enabling the transparency required for the materials which are under the regulations radar across the supply chains. Additional information about the product help customers in choosing the right product and in return increases brand value and customer trust towards the product.
Conclusion
As manufacturers are gearing up to tackle these challenges, TCS, which is a strategic partner of SAP, could help them in tackle these challenges with the help of SAP Green Token. TCS, which is a technology consulting firm, would help manufacturers in setting up the systems, enabling the required data transfers into the systems through data genealogies. Apart from that, TCS team, which has rich experience in sustainability strategy consulting would help the manufacturers in pinpointing the various pain areas and solving out through required use cases and technology enablement.
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