Source-Level vs. Aggregated Data: How to create a compliant & resilient supply chain
Source-Level vs. Aggregated Data
- Collecting diverse, primary information at raw material sourcing (e.g., crop quantity and quality, farm location, farmer wages, certifications) fortifies your supply chain against compliance and disruption risks when that data can be tied to your final product.
- Unlike source-level data, aggregated data lacks granularity and cannot tie your product’s chain of custody to the farm(s) where your commodities originated to meet sourcing compliance.
- You can keep your supply chain auditable and compliant by selecting a traceability solution that can tie geo-located, source-level data to the transaction and the asset.
In today’s global business landscape, where products travel through a complex web of suppliers, your need for supply chain traceability and visibility has never been more critical. With upcoming European Union (EU) due diligence regulations on the horizon, it's time for your business to explore the game-changing distinction between source-level and aggregated data.
How well do you know your product’s journey before it reaches the hands of your customers? Can you identify the plots of land where your commodities originate to prove deforestation-free to auditors? High-level shipping data, excel sheets, and spot audits will no longer cut it with rising regulatory and sustainability demands. The answer lies in source-level, primary data tied to your product’s chain of custody. This blog will explore how source-level data transcends the limitations of aggregated information so that you can revolutionize your approach to supply chain compliance. Let's dive in!
What is Source-Level Data?
Source-level data refers to primary, original data captured at raw material sourcing that has not been previously collected or published. It can be obtained directly on a data capture platform using forms, transaction information, IoT devices, or automation. Collecting diverse, primary information at raw material sourcing (e.g., crop quantity and quality, farm location, farmer wages, certifications) fortifies your supply chain against compliance and disruption risks when that data can be tied to your final product. Your source-level data should be maintained with your product’s chain of custody from the plot of land it originated to manufacturing to distribution, even after transformations.
What is Aggregated Data?
Aggregated data refers to secondary or compiled information collected and published outside your company by a partner or aggregator. Examples of aggregated data include public records or shipping data. Unlike source-level data, aggregated data cannot provide the evidence-based traceability needed to meet compliance with recent regulations like the EUDR. This is because aggregated data lacks granularity and cannot tie your product’s chain of custody to the farm(s) where your commodities originated.
Source-Level vs. Aggregated Data
Source-level data is king in building a responsible and resilient supply chain. It brings clarity to a realm of your supply chain often shrouded in ambiguity so you can confidently prove sourcing compliance. For instance, if your product falls under one of the seven high-risk commodities in the EUDR (palm oil, soy, wood, cocoa, rubber, coffee, cattle/leather), source-level data allows you to show the polygon plot of land where it originated to prove deforestation-free, safeguarding your access to the EU market (refer to Figure 1). Or, if you are a fashion brand creating a Digital Product Passport for your ethical clothing line, source-level data is necessary to prove each batch's origin, durability, sustainability, and recyclability. By tracking your product from the root of your supply chain and maintaining the chain of custody, you can eliminate uncertainties, boost resilience, and prove compliance in a way that aggregated data can never match.
It’s important to note that aggregated data can still be useful for supply chain analysis. For instance, you can aggregate primary data on carbon reduction initiatives to create reports on decarbonization progress. The crucial distinction is that source-level, raw data can back up your aggregated data to prove any sustainability claims. You risk non-compliance if you rely on high-level shipping information or public records that can’t be tied specifically to your product’s chain of custody from the source. The strongest leaders in data capture and reporting often use source-level and aggregated data to strengthen their insights, claims, and triangulate.
The Business Benefits of Source-Level Data
Leveraging source-level data provides your brand with numerous benefits to stay ahead of the curve, including:
Proof of Sourcing Compliance
Source-level data will be imperative to demonstrating sourcing compliance with upcoming global sustainability regulations. Capturing raw data from the farm or landfill where your ingredients and materials originate creates an audit trail of events and transactions so that you can monitor your social and environmental impacts in real-time. By capturing source-level, auditable data and maintaining the chain of custody from your product’s origin, you can safeguard against shipment seizures or costly fines. Additionally, source-level data facilitates effective risk assessment, allowing your business to identify potential compliance gaps and proactively address them before they escalate.
Supported Sustainability Claims
In today's world, greenwashing simply won't cut it. Consumers and investors want to support brands that prioritize the well-being of individuals and our planet and have the evidence to prove it. To meet rising sustainability demands such as the IFRS’s recent global disclosure standards, it's crucial to provide source-level data for increased transparency and accountability. By backing up your claims with verifiable data and showcasing your sustainability progress to consumers - for instance, through a Digital Product Passport - you can boost customer loyalty and solidify your brand's reputation.
Source-level data provides granular visibility into your supply chain so that you can eliminate uncertainty. By understanding where your product originates from to the farmer or the waste collector, you can mitigate risks to your supply and boost resilience. With access to detailed information directly from the source, you can proactively address potential threats, such as quality issues or delays, before they escalate into larger problems. In the event of a disruption, such as natural disasters or geopolitical challenges, real-time, source-level data enhances the ability to respond swiftly.
Your brand can gain real-time visibility into your raw materials' volume, quality, and location with source-level data. This detailed information empowers you to make data-driven decisions for accurate forecasting and inventory tracking. With precise data, you can reduce your environmental footprint by minimizing waste and monitoring material efficiency. Access to accurate and reliable source-level data allows your company to make informed decisions to streamline processes and boost productivity, such as monitoring regenerative farming practices.
How to Select the Right Traceability Partner to Capture Verifiable, Source-Level Data
With the plethora of traceability software available making similar claims, selecting the right solution for your brand can feel overwhelming. The criteria below will guide you in sifting through your options to pick a traceability partner that can gather verifiable, source-level data:
Data Capture From The Ground Up
Many traceability solutions are built product backward. Meaning they take, for example, a batch of shirts and ask your suppliers to provide data on it, who then push the request further down your supply chain. This type of data collection is not reliable. Instead, your traceability system should be built from the ground up. It should start from the source, gathering primary data from the raw materials and moving upward along your product’s chain of custody. This approach ensures accuracy and reliability, reducing inconsistencies and maintaining data integrity.
To prove ethical and responsible sourcing, your traceability partner must be able to tie data on raw material sourcing to your final product. For instance, if your shipment were to be audited, you must identify the batch's exact origin (e.g., farm location). This is done by connecting relevant compliance information (e.g., the polygon plot of land, farmer wages, etc.) to the transactions at the source and maintaining the chain of custody from seed to shelf. By doing this, you gain a comprehensive understanding of your product’s social and environmental impact down to the farm or landfill it originated. You can keep your supply chain auditable and compliant by tying geo-located data to the transaction and the asset.
Ensuring the safety of confidential information, such as farmer profiles, is essential to encouraging supplier engagement and meeting GDPR compliance. Additionally, reliable data requires a tamper-proof platform to reduce the risk of data manipulation or unauthorized access. Selecting a blockchain-based traceability system will solidify the safety of your source-level data with immutable records on a decentralized platform. Unlike traditional centralized databases, blockchain stores data across a network of nodes. This makes it challenging for malicious actors to compromise the entire system and reduces data vulnerability.
Reliable traceability software must be built with the end user in mind. Your traceability solution should be completely device agnostic and accessible in remote areas – meaning no apps or smartphones are required! For example, if the farmers sourcing your commodities do not have smartphones, SMS messaging can be used for notifications and payment confirmations. Additionally, ensure the traceability partner you choose can provide in-field implementation and continued user and product support to maximize success.
Your traceability partner must have real-time tracking capabilities to keep your supply chain auditable and optimized. They should be able to track and trace your materials and ingredients as they move throughout your supply chain. Spot audits or high-level satellite imagery cannot provide up-to-date, granular information tied to your product, so you can monitor quality and sustainability requirements to avoid recalls and seizures. Choose a traceability partner who can proficiently provide your brand with real-time procurement and ESG data and reports at your fingertips.
Source-Level Data Conclusion
Source-level data is the key to keeping your supply chain compliant and resilient. The distinction between source-level and aggregated data is crucial, as source-level data provides the evidence-based traceability and granularity needed to protect your supply chain. You can confidently prove sustainability claims and compliance by capturing primary data directly from raw material sourcing and connecting it with your product’s chain of custody. Your business no longer has to live in uncertainty of your supply chain’s origins. Source-level data can unlock opportunities to grow your business while safeguarding people and our planet.
BanQu is an advanced, multi-industry supply chain traceability platform enabling brands to achieve audit-proof compliance. Our blockchain-based platform is built from the ground up, equipping brands with unaggregated, source-level data to comply with upcoming EU due diligence regulations, secure their supply, and prove sustainability claims. Set up a discovery call with our expert team today!