The current state
Globally, the paper and packaging industry is at a crossroads.
On one hand, factors such as exploding e-commerce and use of innovative production methods are accelerating growth, with the paper and packaging market projected to reach $463.4 billion by 2028. On the other, an ever-tightening enviro-regulatory landscape coupled with the highly fragmented nature of the industry and pressure from consumers to ensure responsible sourcing are complicating matters for manufacturers. To meet the growing demand for pulp and paper packaging products while ensuring compliance, the industry is pushing to adopt more sustainable material and production methods, and digitalize processes.
Meeting compliance requirements
Forward-looking companies increasingly want to ensure materials trade compliance verification and traceability across the supply chain.
Material certifications from international organizations such as the Forest Stewardship Council (FSC) and Program for the Endorsement of Forest certification (PEFC™) play an important role in demonstrating commitment to forests and providing sustainable products that modern consumers demand. The FSC’s Blockchain Beta program, for instance, allows real-time monitoring to identify non-conforming forest materials and ensure ‘know your materials’ compliance.
However, the program primarily focuses on the source of the materials and customer delivery. It does not track processes within the company or between subsidiaries of an organization. Nor does it include audit management. What’s more, the program does not address the geo-specific legal and forestry compliance that organizations with geographically dispersed manufacturing units must comply with.
As a result, organizations struggle to manage their forestry certifications, recycle data, and ensure tracking and traceability of semi-finished products. Most companies continue to rely on manual methods or use dynamic business rules in their ERP systems. This not only exposes organizations to error-prone data management practices, but any non-compliance also negatively affects their brand image, besides inviting financial penalties from legal authorities. Also, FSC’s audit in COVID-19 pandemic has highlighted that making the auditing procedures less interactional is not yet a sufficiently mature approach. There is a clear need for better procedures, building online tools usage capacity, better communicating the specificity of such procedures, and better balancing the online evaluations with on-site assessments.
Amid an increasingly strict regulatory landscape, it makes sense for organizations to establish their own blockchain reporting systems to ensure real-time monitoring, reporting, and compliance to statutory bodies and regulations.
How blockchain process mapping works
Blockchain allows paper and packaging companies to capture the end-to-end business process – without the need to login into individual systems.
At a foundational level, a typical paper and packaging process involves the ‘input, transformation, output’ cycle. The input process encompasses procurement, where inbound material forestry certification is validated. This is a point where blockchain can be deployed to create the ‘genesis block’ or the very first block of a blockchain. The first block is then designed to capture detailed information like purchase order quantity, forestry license number, and more. Any change in the purchase order quantity, or any of the other parameters, is reflected by adding new blocks. Once the raw material is received and processed in the manufacturing unit, additional blocks are added to cover various stages of manufacturing – from tracking semi-finished to finished goods. When the final product is created and assigned to a customer, a sales block is created to capture the relevant data. Additionally, inter and intra company transfer of materials can be easily captured for in-depth reporting through the addition of blocks. The result: real-time traceability, tracking, and reporting while eliminating manual errors and improving forestry compliance and auditing across the value chain.