A recent study concluded that 94% of consumers are likely to be more loyal to a brand that offers supply chain transparency, while some 73% are willing to pay more for a product that is transparent in all attributes.
“Empowering trust and transparency across all industries and digital agreements is at the heart of the Cardano Foundation’s mission. I am proud of our integrations team, who have worked tirelessly with Scantrust to deliver the first solution of its kind to leverage metadata on the Cardano blockchain. Together with Scantrust, we are helping brands to reconnect with their consumers, increase transparency in their supply chain, and fight counterfeit activity,” says Frederik Gregaard, CEO of the Cardano Foundation.
How does Scantrust help improve supply chain transparency, and what makes the technology empower trust and transparency across all industries?
Ricardo: The long-term vision of Scantrust has always been to connect brands to end users—consumers as well as professional users—and empower the end users to learn more about the products they are buying.
Scantrust realizes that vision by focusing on three critical aspects. First, with brand protection by enabling end users to confirm their products are authentic, thanks to our invention of a secure QR code that is intrinsically secure against copy. Then, via the supply chain traceability by tracking products in the supply chain. And finally, thanks to the consumer engagement that establishes a digital touchpoint with the end consumer directly via the product’s packaging.
To execute on our vision, Scantrust has developed a system that allows brands to give every single product they produce a unique and secure QR code. With a QR code that is unique at the unit level, brands can track each product in their supply chain and link a specific provenance history. Also, as our QR code cannot be copied, consumers enjoy protection against counterfeits, as they can know in real time whether the product is authentic by scanning the QR code.
The result is that end users are empowered to check the authenticity of the products they buy and learn more about the product’s history, while brands get the opportunity to digitally communicate with end users at the point of sale, delivering valuable data on end-user behavior.
The principle of connecting brands to end users via individual QR codes on product packaging is a mechanism to increase trust and transparency that we have found to be universal across industries. We have live implementations of our solution on products as diverse as wines, spirits, water filters, lubricants, car batteries, cosmetics, medicines, cables, driving licenses, tax stamps, and of course, Swiss watches!
In Cardano’s article, you’re talking about the proof-of-concept implementation with Baia’s Wine. Can you give us more examples of applications and explain how your solution works?
Ricardo: On a high level, an implementation like Baia’s wine follows four steps.
First, the upstream data collection. This step consists of collecting information about the product’s history. In the case of Baia’s wine, this is the process of collecting data about the grape harvest, grape pressing, fermentation, etc., and anchoring this data in a blockchain solution along its lifecycle—in Baia’s wine’s case, the Cardano network. The way this data is collected and how it is anchored in a blockchain varies from product to product and from industry to industry; there is no one-size-fits-all solution. Sometimes, data sits in an Enterprise Resource Planning (ERP) system; sometimes, it’s a paper document that needs to be digitized; sometimes, very few or dozens of actors are involved.
Secondly, the unique product tagging. The finished goods (e.g., wine bottles) are then tagged with a unique digital identity—in our case, a label with a unique and secure QR code printed on it. There is a multitude of ways on how to integrate a unique code on a product, and a label is one of the options. At this moment, the bottles are empty, and the QR codes are “naked”—they are not associated with any product history yet.
Scantrust secure QR codes make every product intrinsically protected against counterfeiting.
In a third step, we’re linking products with upstream data. This step creates the link between the physical finished good (e.g., the wine bottle) and the upstream data about the ingredients. Also, at this step, there is a multitude of ways to achieve that operationally. In some cases, a camera in a filling or production line captures every single QR code and links it to the correct upstream information. In some other cases, the setup is simpler, and production batches can be associated in bulk. Again, it varies from product to product.
The fourth step ships products into the market and tracks them downstream. It consists of shipping products into the market. Since each product (e.g., each wine bottle) has an individual QR code on its label, it’s possible to continue tracking the products on their journey from manufacturer to end consumer along its distribution chain (e.g., from wholesaler to retailer to consumer).
And the final step is the end consumer. In the end, the end consumer purchases the goods and can use their smartphone to check if the product is genuine and learn about the entire product history with nothing else than a smartphone scan.
An example of what the end result looks like can be seen by scanning one of the QR codes for Baia’s wine that demonstrates the consumer experience:
Can you tell us how consumers will be able to sense this shift in the traceability at the checkout of their purchases?
Ricardo: We are in the middle of a paradigm shift. At the moment, forward-looking premium and organic brands are actively disclosing information on a product’s journey to give their brand claims more emphasis and position their brand as a transparent provider in the market. It’s a specific type of brand that chooses to do that.
We believe that in the future, there will be a paradigm shift from “actively disclosing information to inform” toward a different set of expectations. toward brands paradigm where “if you don’t disclose information, you must have something to hide.” This paradigm shift will put even more pressure on brands to become more transparent and make information available to end consumers digitally via QR codes on packaging.
How will this collaboration with Cardano help achieve your vision?
Ricardo: As stated in the beginning, Scantrust’s vision consists of connecting brands to end users—consumers or professional users such as mechanics or similar—and empower the end users to learn more about the products they are buying.
The collaboration with Cardano enables us to get one step closer to that vision, as it gives us an additional tool in our toolbox: A solution to offer brands and manufacturers a way to securely anchor upstream product data in a public blockchain at a very low cost and high speed.
This is an important step to accelerate the adoption of blockchain for decentralized product traceability, as many existing blockchain solutions have the shortcoming that the transactions are too slow and costly for large-scale traceability. We continue seeing increased interest in such solutions in the market.
What do you think the impact of this new Cardano-Scantrust solution will be?
Ricardo: The solution allows to bring trust and transparency in supply chains to a new level. With Scantrust, we have a secure solution to give each product identity and bridge the gap between the physical and the digital world.
With Cardano, we have a public network that is highly suited for anchoring supply chain data. The combination of both brings us one step closer to the vision of having end-to-end traceability of products from the origin to consumers.
What difference does it make to be based in Switzerland?
Justin: Switzerland has a long tradition in the area of development of deep tech solutions, and with the recent creation of the Trust Valley, the Lake Geneva region is becoming a global hub in the field of digital trust and cybersecurity. The excellence of Swiss engineers and the security ecosystem have been great assets in the development of the Scantrust platform. On top of that, we have seen that Switzerland has heavily invested in support mechanisms for startups over the last years—be it accelerator programs, funding opportunities mentoring, or scale-up support. We have benefited a lot from all this support we can get here. One example of this is our participation in Tech4Trust, which has helped us create connections with key players in the digital trust ecosystem.
Why did you decide to collaborate with Cardano?
Ricardo: Cardano recently launched a new feature to store metadata in the public network. This opens up a lot of opportunities to use the public network for supply chain traceability applications. On top of that, the speed and especially the low fees were important arguments for the choice of the technology. In comparison to other blockchain solutions, it’s actually possible to conduct transactions in the Cardano network at fees that are economically viable for business scenarios.
You won Venture Kick in 2014. How did it help you lay the foundation for your growth and today’s achievement?
Justin: Winning Venture Kick Stage 3 in late 2014 was a key moment in the history of Scantrust. It was seen as a strong validation by prospective investors who were following us at the time, and it helped us accelerate our series seed fundraising, which we eventually closed in April 2015. This CHF1.4 million Seed round allowed us to hire a whole team to execute on the vision of Scantrust.
Scantrust was selected as Global Shaper 2013 and participated in the Swisscom Startup Challenge and Venture Leaders Technology in 2014. The startup was elected at the TOP 100 Swiss Startup Award five years in a row, from 2015 to 2019. In 2020, Scantrust participated in Venture Leaders Mobile.