ELC and Aveda Pilot Blockchain Tech in Madagascan Vanilla Supply Chain

The Estée Lauder Companies (ELC) and its brands work with multiple stakeholders across a global supply chain to source ingredients and materials from around the world that go into its products. When sourcing natural ingredients, ELC works to continuously improve and strengthen its sourcing practices. Whether it be the implementation of new tools and ratings platforms, or the testing of innovative, digital solutions, the company’s aim is to enhance transparency and traceability across the supply chain to benefit all stakeholders involved.

In February 2019, the company and Aveda—an ELC brand established on a mission of environmental responsibility—partnered with natural ingredients supply chain partner LMR Naturals by IFF, local Madagascar vanilla supplier Biovanilla, global sustainable business partner BSR, and blockchain innovation partner Wholechain to launch a pilot program to leverage blockchain technology in its Madagascan vanilla supply chain. Blockchain technology provides further traceability by collating data from supply chain partners in real-time via a secure, digital system. ELC and Aveda are proud to be among the first beauty players to launch a successful, commercial blockchain pilot at such scale, furthering their diligent work in the area of responsible sourcing. The program will bring blockchain-enabled, traceable vanilla to more than 125 Aveda products in spring 2021.

Using Blockchain Technology

Blockchain is an immutable ledger that enables stakeholders to share data and product attributes at each link in the supply chain. From the point of harvest, blockchain inputs data at every step, creating a digital record that enables visibility into the entire supply chain. Blockchain is used to verify the source and quality of ingredients, such as with the Madagascan vanilla Aveda uses in its products.

Using mobile phones and QR codes, the pilot’s blockchain technology created a tamper-proof record of each vanilla bean’s journey. Beginning with 450 smallholder farmers in Madagascar, the technology traced the beans along the process from the sale to the local coop to LMR, ELC’s natural ingredients supply chain partner in Grasse, France to Aveda’s manufacturing facility in Blaine, MN.

For generations, the Madagascan vanilla beans harvested from this group of farmers were traced using a unique stamp called a Fitomboka, which served as a record keeping system for the vanilla farmers. To preserve this tradition, the Fitomboka was digitized onto a digital card, and data was captured directly from the farmer co-op in Madagascar. Each farmer was given a digital ID card that converted their unique traceability code via a QR reader. From the time the vanilla left the producer’s hands to the moment it arrived at Aveda’s campus in Blaine, MN, it was tracked on blockchain to validate its quality and authenticity.

Why Vanilla?

Vanilla, like many ingredient supply chains, is complex, involving a variety of players from farmers to co-ops to fragrance houses. It is one of the most ubiquitous ingredients in the world, yet 80% of the world’s vanilla comes from a single place: the island of Madagascar¹, where small farms are responsible for most of the production.

Complexities in the vanilla supply chain are multilayered, ranging from price fluctuations to major climate challenges and intensive farming needs. Due to these sensitivities, ELC’s Responsible Sourcing team selected vanilla as a priority ingredient as part of the company’s commitment to develop robust biodiversity and social action plans for sensitive ingredient supply chains by 2025.

Reinforcing ELC’s Supplier Code of Conduct—which outlines sourcing standards across its supplier network—the blockchain pilot enabled the company to further verify compliance with these standards, using technology to create an immutable chain of record where claims made by each party cannot be undone later. With the success of the vanilla pilot, ELC and Aveda have laid the foundation to roll this technology out across other brands and priority ingredients in the future.

A Blueprint for the Industry

Whereas many commercial blockchain pilots are theoretical (relying on sample data) or extremely small in scale, ELC and Aveda’s program is one of the largest scale pilots to be launched in the beauty industry. The implementation of digital tracing capabilities at the beginning of the supply chain process helps to facilitate positive impacts across the value chain including greater transparency for the end consumer. Additionally, digital traceability enables a level of visibility needed to facilitate the management and mitigation of complexities in supply chains arising from unforeseen events such as climate changes or global pandemics.

Tracing and verifying the steps in the supply chain from 450 smallholder vanilla farmers all the way to Aveda’s manufacturing facility, the extensive pilot provides a true proof of concept that can be leveraged by others in the industry to improve transparency and raise sourcing standards.

[1] https://www.nytimes.com/interactive/2018/08/30/world/africa/madagascar-vanilla.html