Theoretical description of the process
 

TrusTrace’s Certified Material Compliance solution assists brands with reconciling their purchase orders with the certification information coming from the supply chain in a smarter and faster way. This is what guarantees that the material ordered is the actual material contained in the product and allows brands to make reliable and data-driven product claims. 

However, as it was explained in the challenges for the brands, it is common that a product does not have the entire chain of custody maintained for material value chains (from raw material to finished product). The Document-based Chain of Custody can often stop at a yarn or a fabric level, meaning that for a certain supplier, a certificate is missing, prohibiting the brand to make material claims of the product. 

The CMC solution enables brands to build a Digital Chain of Custody which is a secure continuation of the Document-based CoC when a certifying document is missing. Building this Digital CoC then allows the reconciliation of the certification information with the purchase order from the brand to happen. 

The flowchart below represents the 3 steps of the TrusTrace CMC solution: Commissioning, Digital CoC and PO Reconciliation. 

Different Transactions 

This flowchart is a representation of the real supply chain of fashion brands. In any representation there is an abstraction of the reality. The transactions are what represent the physical flow of the material.

To best mimic the movement of the material in the supply chain, the CMC solution uses three types of transactions at supplier level: Inbound, Production, and Outbound transactions. Each of these transactions contain information, in the form of digital fields, regarding the real flow of the material. The information can come from 3 different data sources: certificates, manual input, or master data, that will be further detailed later.

Keeping the same representation as the previous flowchart, this tables presents the 3 transactions used in CMC:
 

Now, we will see how these transactions are used in the 3 steps of the CMC solution: Commissioning, Digital CoC and PO Reconciliation. 

Commissioning – Digitization 

This step is color-coded as purple in this entire document.
 

This step designates the entry of the certified material in TrusTrace’s digital network. It is the transition from the external Document-based Chain of Custody to TrusTrace’s Digital Chain of Custody. 

In this step, a supplier uploads a certificate document onto the TrusTrace platform which will then be digitized using AI. All the relevant fields from this document will be extracted and saved in the platform to conduct a series of validations. Validations are checks that will be made to ensure that the information gathered does not have any errors and matches the brands data (more details later). 

The commissioning step can happen either at Inbound or at Outbound stage depending on who uploads the transaction certificate. 

• Inbound: 
  If a material supplier (Tier 2) uploads a yarn certificate (from Tier 3), then it will be an Inbound transaction (because it represents the inventory, the input of the Tier 2 supplier). 
• Outbound: 
  If the material supplier (Tier 2) uploads a material certificate, it will be an Outbound transaction (because it represents the output of the Tier 2 supplier)  

How is it determined? 

Only a supplier that is visible for the brand and more importantly onboarded on the TrusTrace platform can upload a certificate. Meaning that it will most of the times be upper tier suppliers (Tier 1 and 2) that will upload the certificates as inputs. However, the TC is uploaded as output if it is a finished good TC because it is uploaded by the finished good supplier, not the brand. 

Digital Chain of Custody 

This step is color-coded as orange in this entire document 

If the Certificate is available for the final product, the Commissioning and the PO Reconciliation can be done at the same time and there is no need to build a Digital Chain of Custody. Indeed, in this case we can say that the Document-based CoC is complete because it meets the brand PO, so there is no gap to bridge between the certificates and the PO. 

However, in many cases, the certificate is not available for the final product but only for the yarn or fabric. In this case a Digital Chain of Custody must be built to preserve the integrity of the material during the last transactions and manufacturing steps to the final product. 

When building a Digital product segregation Chain of Custody in the TrusTrace platform, Inbound, Production and Outbound transactions are recorded. 

The Digital CoC is a cycle of Inbound, Product and Outbound transactions starting at the Commissioning (so either at Inbound or at Outbound).   

The Inbound transaction represents the material that a supplier (Tier N) has received from its supplier (Tier N+1). This transaction is always automatically recorded, either at Commissioning with the TC upload or during the Digital CoC, using the information from the previous Outbound transaction. 

After the Inbound, the Production transaction is recorded. It represents the manufacturing stage; when the material undergoes a transformation (from fiber to yarn, yarn to fabric, fabric to finished good). The information in the production transaction is always manually recorded by the supplier (how much material has been produced from the input material…). With the information recorded under the Production transactions, validations are conducted to check consistency with brand data or certificate data (regarding material composition, BOM, units of measurements etc.). These validations will differ depending on the tier at which this transaction is recorded, if we are looking at garment, fabric, or yarn production. 

Then an Outbound transaction is recorded to represent the material that a supplier (Tier N) is shipping to the next supplier (Tier N-1). After the commissioning stage (where the Outbound can be recorded using TC information), the Outbound will be manually recorded by the supplier in the Digital CoC, following a Production transaction. In the Outbound transaction, the supplier will populate data about a shipment of goods. 

The Inbound, Production and Outbound chain is built for the suppliers onboarded on the TrusTrace platform and repeated until it meets the PO from the brand. Meaning that the last Outbound transaction covers the good for which the PO has been raised. 

 
PO Reconciliation 

This step is color-coded as green in this entire document

 PO Reconciliation is the last step of the CMC process. It is the moment when the information from certified material is matched with the PO from the brand. 

The PO Reconciliation always happens with an Outbound transaction. 

• If there is a certificate covering the commodity for which the PO has been issued (garment, fabric, or yarn), then there is no need to build a Digital CoC. The commissioning happens at the Outbound transaction and the information collected from the certificate is directly matched with the PO. 
• If there is no certificate covering the commodity for which the PO has been issued, then a Digital CoC is built to extend the evidence provided by the certificates. Then the information contained in the last Outbound transaction is matched with the PO. 

The PO reconciliation has two dimensions: 

• PO Fulfilment (Quantity): Checks if all the elements required in the PO have been delivered to the brand. For instance, if a PO is raised for 1000 blue jeans, then the PO is fulfilled when the sum of the Outbounds recorded by a garment manufacturer (Tier 1) for this PO equals 1000 blue jeans or more. Indeed, to fulfil a PO, a garment manufacturer can send several successive shipments. The fulfilment is checked with a validation that happens at the Outbound transaction (more info in the following section). 
• PO Compliance (Quality / Composition): Checks if the elements delivered by the supplier are compliant with what was required in the PO (for example material composition etc.). PO compliance is ensured by a series of compliance validations done before the last Outbound transaction (at Inbound and Production stage). These validations will differ depending on the type of good and the supplier to which the PO has been raised. 

Outcome of CMC

The result of matching POs with certification information is that brands are empowered to make material claims while holding the relevant evidence in hand. Brands can make product claims even if they are using a yarn or material TC and they will be able to prove them. 

To access the documentation, monitor their progress and effectively perceive the value of CMC, brands will have access to two different dashboards on the platform:  

• Progress Overview: An operational dashboard which will allow brands to monitor their progress in the reconciliation of their POs.
   
• Detailed PO Reconciliation View: A more detailed dashboard that will contain all the proof and the workflow for each individual PO.
  
  

The outcome of CMC is further explained in the last section of this methodology document.