4 Chain of Custody Models in Supply Chain Transparency

Supply chain transparency and sustainability have become increasingly critical in today’s global business landscape. Ensuring that products meet ethical and environmental standards requires robust tracking and documentation systems. Chain of custody models play a pivotal role in achieving supply chain transparency, allowing for the verification of the origin, quality, and sustainability of products. 

The presence of a Chain of Custody solution is of immeasurable value. It serves a dual purpose by enhancing supply chain transparency and fostering increased accountability among trading partners. 

 In this blog, we will explore four key chain of custody models: Single Certification, Segregation, Mass Balance, and Book and Claim. Each model offers unique advantages and considerations, making it essential for businesses to choose the right one to align with their transparency and sustainability goals. Join us as we delve into the intricacies of these models, their real-world applications, and the impact they can have on responsible sourcing and production. 

What is Chain of Custody? 

A chain of custody is a crucial system used to track and document the movement and handling of products and materials at various points within a supply chain. It serves as a comprehensive record-keeping method, ensuring that the origin, quality, and compliance of these products are accurately preserved and validated as they move from one stage to another. 

The primary purpose of a chain of custody in supply chains is to establish a transparent and unbroken trail of accountability. It enables businesses to confidently trace the lineage of their products and materials, from their source to their final destination. This documentation process involves recording key information such as when and where the products were obtained, who handled them, and how they were processed or transformed throughout their journey. 

What is the significance of Chain of Custody in Supply Chain Management? 

Having precise knowledge of the products’ location, the parties responsible, and maintaining a comprehensive audit trail holds immeasurable value in supply chains. It not only allows for improved overall supply chain management but also amplifies the capabilities of managers to make more informed and efficient decisions. With this level of clarity, they can proactively detect potential issues at an early stage and take prompt corrective actions. 

Benefits 

• To begin, it introduces an unparalleled degree of transparency into the supply chain, acting as a deterrent to theft and improper handling while promoting adherence to established protocols. 
• Moreover, in the event of a significant issue impacting customers, it frequently plays a pivotal role in identifying the origin of the problem and diagnosing its fundamental causes. 
• Furthermore, in the event that a recall becomes imperative, it empowers businesses to conduct highly precise recalls, minimizing customer inconvenience and expediting the efficient retrieval of affected products. 

By adopting a chain of custody approach, supply chain stakeholders can significantly enhance their ability to monitor and verify the authenticity and sustainability of their products. This level of transparency is invaluable in ensuring that ethical and environmental standards are met, which, in turn, builds trust among consumers and partners.

The Importance of Tracking and Documenting the Flow of Products and Materials 

The importance of tracking and documenting the flow of products and materials cannot be overstated in today’s complex and interconnected supply chains. Several key factors highlight its significance: 

Quality Assurance: Tracking the movement of products helps ensure that quality standards are maintained. Any deviations from specified conditions or requirements can be quickly identified and rectified. 

Verification of Ethical Sourcing: In an era where responsible and sustainable sourcing is a priority, tracking the chain of custody enables organizations to confirm that their products are sourced from reputable and sustainable origins. 

Environmental Responsibility: Documenting the flow of materials allows for monitoring of environmental impacts, such as carbon emissions or deforestation, which is crucial for sustainable and environmentally conscious practices. 

Compliance and Legal Obligations: Many industries are subject to regulatory requirements and standards. A chain of custody helps companies prove compliance with these standards and regulations. 

Consumer Trust: Transparent supply chains build consumer trust. When companies can provide clear documentation of a product’s journey, it reassures consumers about the quality and ethical considerations associated with their purchases. 

Conflict Resolution: In cases of disputes or recalls, having a well-maintained chain of custody can expedite the process of identifying and resolving issues. 

In conclusion, tracking and documenting the flow of products and materials through a chain of custody is an essential practice for ensuring accountability, transparency, and compliance in supply chains. It plays a pivotal role in meeting sustainability goals, ethical sourcing standards, and the quality assurance expectations of modern businesses and consumers alike. 

Identity Preservation 

The Identity Preservation (IP) model is one of the four primary Chain of Custody models used in supply chains to ensure the traceability and accountability of products. It is particularly important in industries where the integrity of a product’s identity is paramount, such as in organic agriculture, non-GMO (genetically modified organism) foods, 

• The Identity Preservation model, as the name suggests, focuses on preserving the identity of a product from its source or production through its entire supply chain journey. It’s all about maintaining the unique characteristics or attributes of a product, such as its genetic purity, organic certification, or other specific qualities that set it apart from other similar products. 
• In the Identity Preservation model, the emphasis is on products with distinctive attributes that need to be safeguarded. These attributes might include organic certification, non-GMO status, fair trade labeling, or specific geographical indications 
• To ensure identity preservation, meticulous documentation and record-keeping are essential. At each step of the supply chain, from production or sourcing to distribution, parties involved must maintain detailed records about the product’s identity. This includes information on its origin, processing, handling, and any changes it undergoes. 
• The Identity Preservation model often involves strict segregation measures. Products with distinct identities must be physically separated from other similar products at all times to prevent mixing or contamination. For example, in organic farming, organic crops must be segregated from conventionally grown crops to prevent cross-contamination. 
• External verification and certification from credible third-party organizations are integral to the Identity Preservation model. These organizations confirm that the product meets the specific criteria for identity preservation, whether it’s organic, non-GMO, or any other unique attribute. 
• Products subject to identity preservation are typically labeled to reflect their unique attributes. These labels may include certifications, logos, and specific information about the product’s origin and characteristics. Traceability is maintained to ensure that each product can be traced back to its source and verified at every stage of the supply chain. 
• To ensure the model’s effectiveness, regular audits are conducted to confirm that all parties in the supply chain are compliant with identity preservation requirements. Non-compliance can result in the loss of the product’s unique identity. 

Segregation Model 

The Segregation model is one of the key Chain of Custody models used in supply chains to ensure the traceability and accountability of products, especially those with distinct characteristics or certifications. It is used when maintaining the physical separation of products is essential to prevent mixing or contamination. 

• This model is primarily applied to products with unique attributes that need to be preserved. These attributes could include organic certification, non-GMO status, fair trade labelling, geographical indications, or any other characteristic that sets a product apart. 
• The core principle of the Segregation model is the physical separation of products at all stages of the supply chain. This means that products with unique attributes are kept separate from other similar products from the point of production or sourcing through processing and distribution.
• Products subject to the Segregation model are typically labelled with information about their unique attributes. This could include certifications, logos, or specific information about the product’s origin and characteristics. Certification is often required to confirm that the product meets the specified criteria for its unique attributes.
• Meticulous documentation and record-keeping are crucial in the Segregation model. At each stage of the supply chain, parties involved must maintain detailed records about the product’s identity, its origin, the handling procedures it undergoes, and any changes.
• External verification and regular audits by credible third-party organizations are integral to the Segregation model. These audits ensure that the physical separation of products is maintained and that products meet the criteria for their unique attributes.

Mass Balance Model 

The Mass Balance model involves the mixing of certified or uniquely attributed products with non-certified products, but the quantity and proportion of the certified or special attributes are maintained throughout the supply chain. It is used when physical segregation is challenging or costly. 

• This model is primarily applied to products with special attributes, certifications, or labels that must be preserved, but complete physical separation is impractical. Such attributes could include organic certification, non-GMO status, or other unique qualities.
• Under the Mass Balance model, certified or uniquely attributed products are mixed with non-certified products. The key is that the proportion of certified or uniquely attributed products remains constant and is tracked throughout the supply chain. 
• Meticulous documentation and record-keeping are still crucial in the Mass Balance model. At each stage of the supply chain, parties involved must maintain detailed records about the quantity and proportion of certified or uniquely attributed products, their origin, handling, and any changes.
• External verification and regular audits by credible third-party organizations are integral to the Mass Balance model. These audits ensure that the quantity and proportion of certified or uniquely attributed products remain consistent and meet the specified criteria.
• Products subject to the Mass Balance model are typically labelled with information about their unique attributes and certification. This can include logos, specific details about the product’s origin, and the specific criteria they meet.

Book & Claim Model 

The Book and Claim model involves the trade of certificates representing certified or uniquely attributed products independently from the physical products themselves. It allows companies to support and invest in the production of such products without the need for direct physical segregation. 

• This model is applied to products with special attributes, certifications, or labels, such as organic certification, non-GMO status, fair trade labels, or other unique qualities, which companies want to support or promote. 
• In the Book and Claim model, companies purchase certificates that represent a specific quantity of certified or uniquely attributed products. These certificates can be traded on dedicated platforms, and the certificate holders can claim the associated attributes without physically handling the products. 
• Meticulous documentation and record-keeping are still important in the Book and Claim model. Companies involved must maintain detailed records about the certificates they own and the products they represent. 
• External verification and certification for the products are still necessary. These external organizations ensure that the certified or uniquely attributed products meet the specified criteria and produce the certificates that can be traded. 
• The Book and Claim model is often used to support and invest in sustainable practices or to encourage the production of certified products, even when it’s not feasible to directly source them.

Technology Solutions 

Blockchain technology allows for secure, unalterable records of product movement and attributes. It enhances transparency by providing a single, shared ledger that can be accessed by authorized stakeholders. This ensures the authenticity of product claims and simplifies traceability. 

By combining the principles of blockchain technology with advanced traceability features, TraceX blockchain traceability solutions provides a comprehensive solution that satisfies the chain of custody requirements in supply chains, fostering transparency, accountability, and reliability throughout the entire process. 

• Immutable Ledger 
• End to end visibility 
• Authentication and Verification 
• Permissioned Access 
• Real-time updates 
• Compliance with Standards 

Conclusion 

In conclusion, the four Chain of Custody (CoC) models are powerful tools in the pursuit of enhanced supply chain transparency. By choosing the right model to align with specific product attributes, logistical constraints, and sustainability goals, businesses can not only meet consumer demands for authentic, sustainable, and ethically sourced products but also streamline their operations. Whether it’s the Identity Preservation model for clear attribution, the Segregation model for physical separation, the Mass Balance model for proportional tracking, or the Book and Claim model for flexible support, these CoC models empower businesses to achieve their transparency and sustainability objectives. The evolving landscape of ethical sourcing and environmental responsibility further underscores the importance of adopting these models, ensuring that supply chains of the future are characterized by accountability, integrity, and trust.