By Michael Marus, Chief Information Officer and Director of Information Technology, FSC International
In 2021, FSC developed and piloted a Blockchain cloud-based IT platform. The pilot aimed towards gaining insights on how blockchain technology can support FSC in systematic compliance checks of certified organizations’ claims, but more importantly, how blockchain can provide those organizations with answers to their most important questions around the materials they are handling, transforming, and trading at any given moment.
I am delighted to share that pilot participants were not only keen to support achieving the pilot goals, but also that participants brought a high level of energy to share knowledge and expertise that highlight urgent needs related to supply chain traceability and proof of legality that demand secure, viable solutions.
About the Pilots
The pilot targeted two supply chains in Ukraine and China, and 10 companies were successfully onboarded, trained, and supported in signing up to start sharing their FSC-certified materials input and output transactions specific to the pilot-relevant supply chains. Pilot participant companies had three options to contribute their point-of-trade transaction data: via web interface, via spreadsheet bulk data template, or via API (Application Program Interface, a way to automate data contribution by connecting a company's existing materials accounting IT platforms to the FSC Blockchain).
While none of the participants chose to invest time and effort to connect their own existing IT platforms to use the FSC Blockchain API, the web interface and the spreadsheet bulk contribution template were adopted, and more than 10000 point-of-trade transactions were shared in the platform. Participants saw their contributed transaction data transform from “submitted”, to “being verified”, to “verified”.
Participants were encouraged to try out mock data dashboards, geared to inspire participants to consider and provide feedback on what real-time information could be conceived to answer fundamental questions like, “How many outstanding transactions are awaiting verification?”, “Which of my suppliers has outstanding transactions awaiting verification?”, for example.
Encouraging Results
The pilot program plan was to collect data from participants until December 2021. However, because a handful of participants had a late start and were not able to meet the deadline to submit transaction data, the FSC Blockchain pilot was extended into the first quarter of 2022.
It goes without saying that the pilot participants in Ukraine were affected by Russia’s aggression and invasion of Ukraine in February 2022. I am deeply heartened by the firm and adamant determination of FSC Ukraine colleagues and Ukrainian pilot participant companies to continue participation in the pilot.
Participant feedback was gathered and reviewed across three goal areas. First, the IT platform (sign-in and data contribution interfaces/usability, verification process, reporting and dashboards). While there was positive feedback regarding the responsiveness and accessibility of the FSC Blockchain IT platform, participants made it clear that the user experience needs improvements to be more friendly to use. IT developers and designers strive for excellence with User Experience (UX) to make the IT platforms they design and build, useful, usable, and accessible to those who use the platforms (the users)!
Second, we gathered information and feedback on participant companies’ ability to make their materials accounting data compatible with the FSC Blockchain. Certified companies are required to maintain up-to-date material accounting records of their certified material inputs and outputs. Making these records compatible with the FSC Blockchain signifies that participant companies made small modifications to standardize their existing data to be able to participate in the FSC Blockchain pilot. The feedback in this area was positive in terms of compatibility/formats and data availability, and pilot participants expressed less positive feedback with regards to data processing time. Regarding data processing time, the FSC Blockchain pilot platform does not notify pilot companies that transactions from their trading partners are awaiting verification, which means that days or weeks may pass until a trading partner submits data that assists in verifying claims.
Lastly, we gathered feedback on participant companies’ viewpoints on what was missing in the FSC Blockchain, and overall, what are the features and functions that would be indispensable to them. Participants were highly motivated and even passionate about sharing what kind of data should be added to the FSC Blockchain, and they were firm in relaying that “if you can trustworthily and securely connect supply chains from source to final product, then you must consider developing features that allow the essential data and information for traceability to ‘travel’ along the Blockchain starting from the source.”
These essential features were clear: verified claims vs. verified compliance of materials (down to the source), automatic materials mass balance calculations (outputs should be directly calculated based on inputs), and legality documentation about the origin of materials (when trading across borders, support legality documentation requirements).
Shaping Future Development of the FSC Blockchain
The pilot version of the FSC Blockchain assisted in verifying point-of-trade claims, it provided simple ways to contribute data without significant operational change by certified companies, and it opened the door to designing improvements to unleash the power of data to address a growing need to demonstrate compliance, traceability, and legality to trading partners, governments, and consumers.
Armed with the learnings and feedback from the pilot, we are designing the next generation FSC Blockchain IT Platform to cater for enhanced materials accounting and mass balance calculations, advanced analytics that can answer claim vs. compliance questions, and legality documentation support with privacy-enabled sharing and transmission amongst companies. Our plan is to develop the FSC Blockchain improvements and enhancements in 2023 with features and capabilities that allow for increased participation.
FSC International materials on https://fsc.org/en/newsfeed/10-steps-to-reduce-illegal-logging-in-ukraine