Understanding Chain of Custody in Supply Chains

“We’re all in this together!” That became a common mantra in the COVID era. But supply chain leaders have known for a long time that we’re all in this together. It’s only more recently that the rest of the world is starting to see this. How are they seeing the interconnectedness of all things? Arguably, it’s thanks to all the global supply chain news!

Today, we’re looking at one logistics tool that supply chain leaders use—chain of custody. They say the supply chain is only as strong as its weakest link. In essence, chain of custody is one way to identify and strengthen the weak links. After all, chain of custody traditionally has been a way to guarantee who has what, when, and where.

Beyond that, we can look into whether chain of custody is underused. In other words…

• How would greater use of chain of custody create stronger supply chains?
• What standards would make sense?
• How do we manage chain of custody?
• How has it traditionally been documented?
• And what technological tools are available—such as digitized document software—that can streamline the future of chain of custody workflows?

In total, chain of custody is another example of how supply chain logistics is becoming more transparent and more secure. Transparency and security don’t seem to mix, so let’s investigate further. Ready? Let’s get this chain movin’!

We Really Are All in This Together

We heard that mantra a lot in 2020. Back in the early stages of the pandemic, we were roughing it inside our homes. The arrested development of the global economy was still unfolding. Supply chains were still fully operational…as long as they were unrelated to hand sanitizer, N95 masks, or toilet paper.

Our inner cynic might have brushed off the in-it-together mantra as hyperbole. After all, we certainly didn’t feel together—we were alone!  We were confined. Confused. We were surviving online and through Amazon.

Hacking through our the jungle of our inner thoughts was rougher than we had imagined. In shock, we wondered, Why is sitting around doing so little so hard?

Global Supply Chain Teaches Valuable Lesson

After the pandemic, the mantra remains the same. We’re all in this together. But thanks to some hard lessons from the global supply chain, we’ve shed our cynicism. We understand that our togetherness is no longer defined by distance, affiliation, or logo. Hyperbole has been replaced by hyperbolic growth in many sectors.

Our supply chain is feeling the strain and capacity constraints that weren’t built into most businesses’ five-year plans.

At the beginning of 2021, many within our industry hoped logistics constraints would lessen. But throughout 2021, most would agree things got worse!

• Blockages in the Suez Canal and the South China Sea hampered ocean freight.
• North American over-the-road logistics witnessed a reduction in capacity and increased prices, driven by a shortage of drivers.
• And where ocean and trucking meet, there were delays!

Delays at North American ports happened because of many factors. These included COVID-related worker shortages, container shortages, and unbalanced trade relations between the United States and China.

That said, for supply chain leadership, these are the challenges we like. Busy is good. It sure beats the opposite! If we own up and improve what’s within arm’s reach, we can help the entire global supply chain. In general, having a sense of visibility if not ownership over events is critical. That’s how we feed growth, build understanding, increase confidence, and develop a sense of empowerment.

Therefore, chain of custody is a vital aspect of the future supply chain.

How Chain of Custody Improves the Supply Chain

The question that chain of custody solves for the supply chain is pretty straightforward. In an era where navigating the global supply chain is very complex, chain of custody provides a level of assurance. In short, how do we guarantee the who, what, where, and when of our freight? We do it the same way law enforcement ensures the validity of evidence used in a court of law—through chain of custody!

As noted, chain of custody is a tool for supply chain managers to use. Here are some examples of concerns that chain of custody addresses:

• Certified container contents when sealed at origin
• Certified container contents when opened at destination
• Confirmation and certification of proper cargo and quantity leaving and arriving at a facility
• Control of personnel with access and entry into the container
• Ability to track location of a container throughout supply chain transit for security and asset management
• Protection against potential legal action or auditing

In essence, how do chain of custody systems ensure that the freight that arrives on your dock is what you think it is? This happens when a business follows the chain of custody guidelines set forth by the International Organization of Standardization (ISO).

Chain of Custody Under ISO Standard 22095

Chain of custody falls under ISO standard 22095.  This standard calls chain of custody “a simple solution” designed “to help boost manufacturer and consumer confidence, [thus] reducing supply chain costs by addressing issues like risk, loss of time, and [poor] conditions of production.”

Chain of custody provides an added level of assurance to any shipment. Everyone involved in a shipment can identify the specific employee who certified your container of freight and its contents at sealing at origin and opening at destination. Another term for this is end-to-end visibility.

To clarify, the ISO doesn’t require your organization to re-create the wheel. Instead, it sets forth guidelines and standards you can incorporate into your current system.

As the ISO says about chain of custody, “This ISO standard is a multi-sector, globally applicable framework to which existing systems may refer for the clarification of the differences between their system and the generic ISO chain of custody models. Instead of starting from scratch, those implementing new systems will be able to base their definition of chain of custody requirements on ISO 22095, saving time and money and benefiting from an internationally recognized approach.”

In other words, adding the ISO-supported chain of custody protocols and approach to your system can save money and bring value. Call it an upgrade!

How to Improve Chain of Custody

That said, if you’re thinking about onboarding chain of custody into your system, be aware of the uptick in documentation it’ll bring. Therefore, if you want to hit the ground running from a management perspective, I’d consider how you plan to help digitize your information. Without doubt, digitized documents can save time, money, and organizational capacity.

Look into a company like Vector. Its digitized document software integrates with most major TMS platforms, and Vector’s entire mission is streamlining workflows. From load documents like BOLs to automated billing structures to audit preparation, digitized documents are a part of the future of logistics—and chain of custody.

Adding transparency to the supply chain encourages compliance with standard procedures and discourages theft and improper handling. One avenue to add transparency and fortify chain of custody systems is to use blockchain technology. Blockchain is considered a tamper-proof ledger, or immutable. So the information contained on an immutable blockchain is essentially locked in the amber of space-time. With proper access, this information can greatly increase the efficiency of chain of custody systems.

The logic for me is this: When partners share information, they can both be more successful. Now multiply that transparency up and down the supply chain.

We’ll have these issues smoothed out in no time, right? We’ll see. But make no mistake—this technology is coming, and the bedrock of its framework will be digitized documents.

New Challenges, New Ways to Work

To me, what happened in cryptocurrency markets over the first few months of 2021 is an example of how rapidly our world is changing. These times are challenging us. We must bring our A games. But let’s be honest—we love it! Who knew so much change could be so much fun?!

Love it or leave it, we’re all in this together.

This post was written by Brian Deines. Brian believes that every day is a referendum on a brand’s relevance, and he’s excited to bring that kind of thinking to the world of modern manufacturing and logistics. He deploys a full-stack of business development, sales, and marketing tools built through years of work in the logistics, packaging, and tier-1 part supply industries serving a customer base comprised of Fortune 1000 OEMs.