Christine Akselsen: 0:03

Will it be, compliance driving it? Will it be, sort of a consumer pull? I think all of the above and, and then also this drive internally from brands or from investors and employees of, increasing ESG efforts. But again, then you need, like we touched upon earlier, you need that insight. You need the data, to be able to measure and track and, and then eventually also act on, and prove that you are doing what you say you are doing. And that can only be done with, data I guess

Tom Raftery: 0:34

Good morning, good afternoon, or good evening, wherever you are in the world. This is the digital supply chain podcast the number one podcast focusing on the digitization of supply chain and I'm your host Tom Raftery Hi everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery and with me on this show today, I have my special guest Christine, Christine, welcome to the podcast. Would you like to introduce yourself?

Christine Akselsen: 0:58

Thank you, Tom. So my name is Christina Akselsen. I am the CEO of Kessler. We are a B2B managed. Fast platform. And, uh, we deliver an enterprise solution for product digitization and traceability. So with that, we digitize everyday products to gather and share data about the product and its value chain to enable safe, sustainable, and responsible consumption. So we already work with large global brands and food, FMCG, pharma, agri, and industrial goods. And we usually go to market through our, ecosystem of partners like Accenture, Rockwell automation, Amcor Microsoft etcetera. So, to date we've already digitized and accumulated 25 billion products. So that's a high number for you, right there.

Tom Raftery: 1:48

Wow. 25 billion. That's amazing. The term digitization though is quite broad. When you say you're digitizing products, what do you mean by that?

Christine Akselsen: 2:01

So, what we do is that we put unique digital identities on individual products or at your batch level. And we use, those identities to, associate data with products and share data back, to anyone in the supply chain or beyond the supply chain like consumers or recyclers who, are interested in that information.

Tom Raftery: 2:23

Okay. So you're creating a unique ID for whatever it is and, and that unique ID can be, can it be product level or is it batch level or SKU level or all of the above, depending on how it's rolled out?

Christine Akselsen: 2:38

All of the above, depending on how it's rolled out. Yes.

Tom Raftery: 2:42

Okay. And you're, you're across many industries and you've rolled out 25 billion to date. That's impressive. So if it's down to the individual product level, I mean, I assume these kind of things are price sensitive. So if it was a postcard, would it be economically viable or does it need to be something like a, a watch or something even more to make it viable? I mean, you, you see where I'm getting at there. There's, there's obviously a, a scale of where these, this becomes economically viable and roughly, where do you fall in there?

Christine Akselsen: 3:21

Oh, we could do, we could do anything. And, and I know, and obviously, the, uh, integration, uh, could theoretically be, be costly, but, I don't think there's a, I don't think there is nor will there be a sort of price sensitivity depending on why you're doing it. Right. Are you doing it to increase your sales? Are you doing it to protect your products from counterfeits? Are you doing to be able to measure and, and act upon, supply chain data to, to become more sustainable? Are you doing it for compliance? For compliance, it's a mere ticket to play. So, I think that's a, very big question. So it depends on why are you doing it?

Tom Raftery: 3:57

Like so many things, the answer is, it depends.

Christine Akselsen: 4:00

It depends.

Tom Raftery: 4:01

Okay. And your product it's software only, right? There's no hardware component.

Christine Akselsen: 4:06

There is no hardware component. And we, we typically partner with other players around us in the, in the ecosystem because there is, you know, manufacturing going on and, and we work very closely with our partner, Rockwell automation, uh, as an example, to integrate with, uh, the MES system and the factory software they have running at, at the manufacturing sites. And, and this is, you know, where we play. This super exciting place where the upstream meets the downstream. And we're able to take that data from the upstream and, and associate it with products or individual products or batches and, and then carry that data all the way throughout the product life cycle,

Tom Raftery: 4:43

Right down to the consumer. I mean, can consumers access the whole life cycle data of a product that they get, if it has your unique ID on it?.

Christine Akselsen: 4:52

Yes. If that's, if that's the aim of course, right? I mean, it's up to the brand or, uh, our customer to decide why are we tracing this individual product through the supply chain? And often, there is a massive return on investment by using also the same U I D for, for, uh, consumer engagement or, or an enhanced or augmented consumer experience. And, and one of the examples I wanted to touch upon, uh, today was, where one of our customers have, chosen to invest in tracking and tracing and traceability to give that end user experience of understanding where the product is coming from. And for them, it leads to increased sales, to increased loyalty and, and a completely new level of trust in their product.

Tom Raftery: 5:35

Okay. And what are, what are main use cases you're finding for this UID?

Christine Akselsen: 5:40

Oh, well, it could be anything. And then the example I just touched upon is, infant formula. As you know, infant formula is a, product that's associated with a range of challenges. There's been a lot of scandals and, and maybe the most familiar to people was that, infant formula scandal in, in China in 2008. Just imagine, right? Your child getting sick from the, the food that you, you gave them poison from the food you give them. Right? And this incident had 300,000 victims. Babies died, they had kidney damaged and it was, it considered one of the largest food safety events by the W H O and the scandal was caused by melamine. So it is a, a chemical used in plastic to boost the protein levels. And this was the backdrop for this, infant formula or dairy customer of ours, Royal Friesland company, the world's largest dairy cooperative, when they embraced the, idea of tracing or, um, started a traceability journey and they were facing a massive crisis of confidence, uh, among the Chinese consumers after this milk scandal. And even, you know, according to some of their service that they, that conducted by Nielsen, there was like 93% of moms in mainland China, finding information on product packaging, insufficient, and they claim that more information would help reassure them of, the products and allowing them to make the right choices. So the answer Friesland Campina chose was traceability giving them the visibility or the insights to be able to be transparent and build trust with their end consumers. So, um, they deployed our digitization and traceability solution and launched a frontend or landing page show an app called the Track Easy solution. That enables, the end consumers to scan a can of infant formula and, get that full product journey at their fingertips so they can, uh, scan the product with, uh, using their phone and, see the full grass to glass journey of the exact product that they're holding, in their hands. They can check authenticity and they can also be rewarded, with coupons or loyalty points for their, for their purchases. And this product, involves unique codes. So the application of unique, secure, and traceable codes to every single product item. and it supports the confidence in the Friesland brand and, and eliminates than any concerns they might have about fraudulent product in market and ensures them where this milk is coming from and, and they can visit the farms digitally. So in this case, the U IDs are generated by our encryption based serialization engine and they're printed and paired and activated on the production line of Friesland Campina in the Netherlands. And then we associate the upstream information. About the farm and the milk batch, and also other manufacturing data like the tin and, expiry date are associated with the products through these codes. And then addition, we're building hierarchies. So units, box, palette at the end of the manufacturing line and registering this in the cloud. And then also associating data about quality checks, times of quality checks, government certificates, and all of this is stored in our cloud based platform and, associated with the, the products and like I said, through these, unique codes. We also get notifications via integration to say, SAP systems about shipments notices of, you know, container is, shipped from, from a to b. And then again, upon receipt on China, import date is registered. clearance certificates are registered and then the product moves on to distributors, to retailers and eventually ends up in a retail store and in the hands of a, of a consumer. And then the consumer can, scan that product, get this nice, UX interface to, uh, see the entire journey of the exact product in hand because this, but the products, they start by having sharing, their entire product life cycle. And then they end up with a unique journey in the hands of one specific single consumers. There's also in this case, a second, unique ID as the QR code under the lid for authentication purposes and, for loyalty rewards. So there's a hidden coupon instead of a paper coupon it's, it's hidden and you can use it only once. So for Friesland Campina, this has, increased loyalty, increased sales, improved trust. But it's a, it's a bit of a job of course, to do the steps of, of tracing products through the supply chain. But, the ROI on it is massive not only for compliance or for internal purposes, increasing efficiency and visibility, but also towards the end consumer with building trust and, increasing sales.

Tom Raftery: 10:25

I was gonna ask you a question, but I think you've already answered it, but I'll go ahead and ask it anyway. So the question I was gonna ask is if I was a bad actor and I was making counterfeit formula what's to stop me scanning the code on the outside of the tin on, on, on a genuine tin and then copying and pasting that onto all these counterfeit tins. Now you mentioned that there's one inside the tin as well, so I'm guessing that's what stops it is. Are there any other measures apart from that?

Christine Akselsen: 10:52

Now in this case, their main problem is not counterfeit but the authentication happens inside the sealed lid with a second code.

Tom Raftery: 11:01

Ah,

Christine Akselsen: 11:02

So for authentication purposes, that's the one you need to break the seal, get in there. And, and, well, we have some cases where the, QR code is on the outside of the pack, but then there's a two factor authentication. There's a little, and this is, we do this for, um, Pfizer and, on some of their products, there's a, uh, what do you call a scratch off gray field where there's a second code. That's paired with the first code in our system. And then you get an authentication. If, if that scratch off is, has been already scratched off, you get a notification that it seems like a genuine product, but it has been verified before, so if that was not you, you should be very careful.

Tom Raftery: 11:40

Nice. Nice. Nice, interesting. Fascinating fascinating. And, you released a Forrester report recently, talking about supply chain transparency. The report was called increased brand loyalty and generate ROI with improved traceability. So that was a survey of supply chain decision makers. Can you tell me a little bit about that survey and what the findings of that were?

Christine Akselsen: 12:06

Yes. so this was actually a survey, commissioned by our partner, Rockwell automation. And they asked 307 supply chain executives about product digitization, serialisation, and traceability. And what I find really interesting is to actually get some data, get some hard facts about ROI, about the challenges that they're facing, you know, why are they doing these kind of investments? And, one of the interesting findings was that, consumer engagement, which I, I just addressed is top of mind. 60% of the respondents are prioritizing digital transformation strategies that can make traceability data more accessible to their customers. So to the end consumers. And it's interesting that this also varies a little bit by geography. Whereas the north America respondent, they are doing it to improve the consumer experience. So the traceability journey they embark on is, is driven by, by that. Whereas EMEA countries are, prioritizing, measuring and reporting on ESG standards. For, for digitally transforming. So there seems to be a little bit of a difference, between those regions. APAC customers seem to align more with, the European, audience with, yeah, 62% focusing on, on digital transformation for the visibility of the supply chain. They also say that one of the highest drivers for traceability is improved marketability initiatives. Where they are doing this, to, improve the customer experience or the consumer experience. And, and also saying that 55% said that they wanna make use traceability data to make better use of their marketing resources. But the good news is that 83% said that proper traceability is critical to staying competitive in the market. So I think a lot of brands are looking ahead and seeing how, you know, like, like you've touched upon on your podcast before, how, product or supply chain digitization, and supply chain sustainability go hand in hand. Right? And, from our perspective, what the, companies are lacking is granular enough insights, granular enough data, to be able to act upon ESG, goals or initiatives, and also to measure, because there's just simply not, enough, insights into what's actually going on in, within a supply chain. And now, we see, and particularly from what's going on in Europe, that this will become also, something you have to do to be able to sell your products in, in the market, with these, EU digital product passports coming up as a requirement to, to put products within certain market verticals onto the European markets.

Tom Raftery: 15:00

Okay. So for people who are outside the EU and might be unaware of that legislation, or for even people who are inside the EU and might not have come across that legislation, could you give us a little bit of context to that?

Christine Akselsen: 15:14

Yes. So the, European or the EU green deal is, how the european union sort of plans to transition into a circular economy. Like that's kind of the overarching umbrella. And as part of that, they have new legislation on, sustainable products. So essentially, the European union wants to make sure that all products that are put on the European markets are either repairable, reusable or recyclable. And as part of that, they're introducing this idea of digital product passports and they describe a digital product passport as a, a QR code that is placed on a product item, where you can get information about everything, about a product and its value chain. and, and this will obviously vary from product category to product category, but they are putting, you know, much more responsibility on the manufacturer or the brand. Who's actually putting the product on the market, cuz you will be, you will be responsible for what goes on in the upstream, which I think has received. A lot of attention over the last decade, but you will also be responsible for what happens in the, the downstreaming and their recyclability, reusability, and repairability of, of the product that you put on the market. So there are certain, categories that they're looking at and, and it looks like batteries, textile, toys are the ones that are, are, um, and the requirements will, is being laid out as we speak. Right. And, and in some cases, information required will be on product level or SKU level. Some will have to be on batch level because it concerns, ingredients that you have to report on and some will have to also be on, on a individual level. So, uh, product, item level. So it's quite the, it's quite the, I would say brave, initiatives from the, European union. And, uh, it will influence all brands globally who are placing products on the European market. And we see now that uh, a lot of companies are already starting to prepare for, for this. There might be that this data already exists in, in siloed systems within, the organization. Do you have something in your material handling platform? You have some in your ERP, but what our role or Kessler's role in this is, collecting this silo of data and, uh, data and building that digital thread, that, eventually can end up as a product passport towards, governments where you, which, or legislators EU in this case that will, uh, require some pieces of that information. And then, end consumers might be wanting a different data set, on the product.

Tom Raftery: 17:55

Okay. And when is that legislation due to come into effect?

Christine Akselsen: 18:00

Well, it's being rolled out and, and we should do a separate podcast on, E U D P because it's super interesting, right? it's, being rolled out, starting with forming the, specifics, for some of these categories already this year, and then also next year, but I think enforcement is, a few years in, but as you know, it's not done in a, second to, uh, digitally transform your supply chain or, or even start, getting that, traceability in place. So, uh, we see now a lot of, brands are moving and, and starting to see how they're gonna deal with this when it comes.

Tom Raftery: 19:08

Okay. So, this obviously addresses the, requirement for compliance. you, you also mentioned that other reasons can be things like ESG sustainability, and traceability, which, if you have a more digital supply chain, you get more visibility down the supply chain, which leads to, greater resilience when you get supply chain shocks. What's your feeling there on how it breaks out or maybe from the report in terms of resilience, versus ESG slash sustainability, versus compliance?

Christine Akselsen: 19:46

So, this is where I think the conclusion or Forrester consulting's reclusion is, that to maximize our ROI is a matter of combining traceability use cases. So it's a must have for compliance. But it could add so much value for other reasons as well. And, and just me just looking at this gray market or diversion, uh, which I think most of, brands are experienced to think to some extent, in fact, in that report, 90% of brands surveyed, reported experiencing counterfeiting and or gray market diversions. So products ending up in, in, in markets where they're not supposed to be very high number it's, it's much higher than I would've, you know, guessed. And they even say that, things like diversion, right? 56% of companies globally lose between 11 and 60% of sales income annually to gray market diversion. So products ending up in the wrong market. And this could be your ROI just there, right? And if you add that element, we talked upon earlier on building loyalty and, and consumer trust. And I, I think consumers are just, you know, becoming much more picky. There are lots of surveys talking about how millennials, I wanna know what goes into the products, how they're willing to pay more for sustainable products, but how are you gonna verify that? How, you know, you need to prove that to the end consumers, they will become more demanding on, on the data you put in front of them. Right. So, so back to your question on, what's driving, the investment decision, it seems to be a mix. And like I touched upon it it's also some variation as to what hits them the most. APAC region is more, exposed to counterfeit diversion, North America region seems to be more driven by consumer experience, user interface, that kind of, things. And then the EMEA region seems to be prioritizing the measuring and reporting on ESG standards. We see, from our customer base that sometimes there is a compliance play. Uh, it is a ticket if it, you know, in, in a region where there's a ticket to play. So for instance, for organic infant formula in China, there is a compliance regime the Chinese authorities come and check your, production line and verify that it is organic. And then you get issued these codes that we also put, on the product. But at the same time, they see this increased value in telling the traceability journey, building loyalty and, and also, uh, we have a, customer buyer in, agri, smallholder of farmers where they are running a massive rewards programs or loyalty programs, but they also see ROI on things like reducing labor costs, because they don't have to send out field inspectors to do things that are now done by digital scans or digital interaction with the products. What's the incentive to do that. It varies from industry to industry, to geography, to geography. And, uh, so I guess back to your point earlier, it depend.

Tom Raftery: 22:56

Okay. Very good. And. Where to from here? I mean, we, we have this, EU legislation. You talked about coming up in the near term, but you know, looking at a, let's say five to 10 year horizon, what's coming down the line? What's gonna change in the industry?

Christine Akselsen: 23:13

No, I think, you can also look to the us, and particularly to food, right? Where the US, FDA and, and Frank Yiannas have, explicitly stated that, so end to end traceability is the foundation for food safety. So for new, so he talks a lot about, or the US FDA talks a lot about, traceability, across the food industry not only to be able to efficiently do recalls. But also to, build that full thread of, of ingredients and, and where it's coming from. So, so I think this will just spread, across industries that if you think about battery and, shortage of, certain minerals, and the demand that's put on, uh, recycling and reusing minerals and, and, uh, battery components. I think we're just seeing the start of it. And then you can say, will it be, compliance driving it? Will it be, sort of a consumer pull? I think all of the above and, and then also this drive internally from brands or from investors and employees of, increasing ESG efforts. But, but again, then you need, like we said, touched upon earlier, you need that insight. You need the data, to be able to measure and track and, and then eventually also act on, and prove that you are doing what you say you are doing. And that can only be done with, with data, I guess.

Tom Raftery: 24:33

Yep. Yep, absolutely. Okay. Christine, we're coming towards the end of the podcast now, is there any question that I have not asked that you wish I had, or any aspect of this that we haven't touched on that you think it's important for people to be aware of?

Christine Akselsen: 24:49

No, I, we briefly touched upon digital product, passports, and which industries that, will be hit. That probably requires another half hour, but, uh, but it is, like you said, it's or like we said, it's happening now. There's batteries, textiles choice, but also upcoming industries that have been mentioned by the EU, which is electronics furniture, building materials, tires, detergents lubricants paints. And then what comes after there? Probably a lot more. So, uh, well, we can do another session on that, I guess, or, or someone else from you should get someone from the, from the inside.

Tom Raftery: 25:29

Super super Christine. That's been really interesting if people want to know more about yourself or Kezzler or serialization or any of the things we talked about in the podcast today, where would you have me direct them?

Christine Akselsen: 25:43

So they can obviously go to kezzler.com. that's K E double z L E r.com, find me on LinkedIn and the, but most importantly, there is a webinar coming up on this Forrester report that I will be participating together with Matt Forderwalt of, Rockwell automation and Rajen Raval of Microsoft. So we are doing a webinar deep diving into the Forrester report and the finding from these 307 supply chain executives. And it will be on the 15th of September, 9:00 AM, central daylight time four PM central European time. And I will make sure you get the link so people can register.

Tom Raftery: 26:24

Okay, Christina, that's been fantastic. Thanks a million for coming on the podcast today.

Christine Akselsen: 26:28

Thank you very much for having me and, uh, hope to be here again, to speak about digital product passports. Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, simply drop me an email to Tom raftery@outlook.com. If you'd like to show, please, don't forget to click follow on it in your podcast. Application of choice, to be sure to get new episodes. As soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.