Plastics : Using NFTs as SKUs in the Plastic Supply Chain
Non-Fungible Tokens (NFTs) represent a technological evolution beyond traditional Stock Keeping Units (SKUs) in the plastic industry supply chain.
Unlike conventional SKUs which simply identify products, NFT-based SKUs create unique digital identifiers on blockchain technology that cannot be duplicated, providing authenticated tracking and verification for each plastic item or batch throughout its lifecycle.
Technical implementation:
Digital twin creation:
Each plastic product batch receives a unique NFT that serves as its digital representation
Blockchain registration:
The NFT is recorded on a blockchain (typically Ethereum, Polygon, or industry-specific chains)
Like a permanent, shared record book that everyone can see but no one can alter, it eliminates the need for a central authority to verify transactions, making it the technology behind cryptocurrencies like Bitcoin.
QR/NFC connection:
Smart Contracts are self-executing digital agreements where the terms are written directly into code.
QR/NFC connection:
Physical products are linked to their digital NFTs via QR codes, NFC tags, or embedded markers
Smart contract embedding:
Rules governing the product's journey are encoded in smart contracts
They automatically carry out actions, like transferring money or ownership when predetermined conditions are met, without needing intermediaries like lawyers or banks,essentially "if this, then that" programs on the blockchain.
Key differences from traditional SKUs:
Traditional SKUs:
1. Authentication and anti-counterfeiting:
Example: A manufacturer of high-performance engineering plastics creates NFT-SKUs for each batch of their medical-grade PEEK material, allowing medical device manufacturers to verify authenticity before production, preventing use of counterfeit materials in critical applications.
PEEK (Polyetheretherketone) is a high-performance engineering plastic that combines exceptional strength, heat resistance up to 250°C, and chemical immunity in a lightweight package.
Physical-digital connection:
Industry adoption:
Technical expertise:
Energy considerations:
Cost structure:
Implementation examples:
Plastic packaging traceability:
PlasticsChain, a European consortium, implemented NFT-SKUs for food-grade plastic packaging. Each batch of recycled plastic receives an NFT containing its processing history, contaminant screening results, and food-safety certifications. Brand owners scanning the associated QR code receive instant verification of safety standards compliance.
Ocean plastic recovery:
OceanToken created an NFT-SKU system for tracking recovered ocean plastics.
Chemical recycling verification:
A chemical recycling company uses NFT-SKUs to track batches of plastic waste through advanced recycling processes that convert mixed plastics into new molecular feedstocks.
Future directions:
Integration with IoT sensors:
Consumer engagement:
Automated transactions:
Extended lifecycle management:
Tokenized material value:
Transfer mechanisms:
As products move through the supply chain, NFT ownership transfers accordingly
Key differences from traditional SKUs:
Traditional SKUs:
- Identify product categories
- Can be duplicated
- Limited data storage
- Centralized systems
- Static information
- Identify specific individual items or batches
- Cannot be counterfeited
- Store comprehensive product history
- Decentralized verification
- Dynamic, updatable records
Benefits in the plastic industry:
1. Authentication and anti-counterfeiting:
Example: A manufacturer of high-performance engineering plastics creates NFT-SKUs for each batch of their medical-grade PEEK material, allowing medical device manufacturers to verify authenticity before production, preventing use of counterfeit materials in critical applications.
Widely used in medical implants, aerospace components, and electronics, PEEK delivers metal-like performance without the weight or corrosion issues.
2. Recycled content verification:
Example: a recycled PET producer assigns NFTs to batches of recycled plastic pellets, documenting exact composition percentages, contaminant testing results, and source materials. Bottle manufacturers purchasing this material can verify recycled content claims with certainty, meeting regulatory requirements.
3. Circular economy enablement:
Example: consumer packaging NFTs track products through their lifecycle. When a consumer scans and deposits the item for recycling, they receive token rewards, while the NFT updates to show the material's next iteration, creating a continuous, traceable loop.
4. Supply chain transparency:
Example: a company producing biodegradable plastic alternatives uses NFT-SKUs to track each production batch from raw material sourcing (documenting sustainable farming practices) through manufacturing (capturing carbon footprint) to distribution, allowing customers to view the complete environmental impact.
5. Regulatory compliance:
Example: Plastic manufacturers facing Extended Producer Responsibility (EPR) regulations use NFT-SKUs to provide immutable proof of compliance with recycled content requirements and proper end-of-life management of their products.
Extended producer responsibility (EPR) is a policy requiring manufacturers to take responsibility for their products' entire lifecycle, including disposal and recycling costs.
2. Recycled content verification:
Example: a recycled PET producer assigns NFTs to batches of recycled plastic pellets, documenting exact composition percentages, contaminant testing results, and source materials. Bottle manufacturers purchasing this material can verify recycled content claims with certainty, meeting regulatory requirements.
3. Circular economy enablement:
Example: consumer packaging NFTs track products through their lifecycle. When a consumer scans and deposits the item for recycling, they receive token rewards, while the NFT updates to show the material's next iteration, creating a continuous, traceable loop.
4. Supply chain transparency:
Example: a company producing biodegradable plastic alternatives uses NFT-SKUs to track each production batch from raw material sourcing (documenting sustainable farming practices) through manufacturing (capturing carbon footprint) to distribution, allowing customers to view the complete environmental impact.
5. Regulatory compliance:
Example: Plastic manufacturers facing Extended Producer Responsibility (EPR) regulations use NFT-SKUs to provide immutable proof of compliance with recycled content requirements and proper end-of-life management of their products.
Under EPR, companies must pay for collecting and properly disposing of their products after consumer use, encouraging them to design more sustainable, recyclable products while reducing waste.
Implementation challenges:
Physical-digital connection:
Ensuring tamper-proof connections between physical products and digital tokens
Industry adoption:
Requiring participation across multiple supply chain partners
Technical expertise:
Developing specialized knowledge not traditional in the plastics industry
Energy considerations:
Managing the environmental impact of blockchain operations
Cost structure:
Balancing implementation costs against benefits, particularly for lower-value products
Implementation examples:
Plastic packaging traceability:
PlasticsChain, a European consortium, implemented NFT-SKUs for food-grade plastic packaging. Each batch of recycled plastic receives an NFT containing its processing history, contaminant screening results, and food-safety certifications. Brand owners scanning the associated QR code receive instant verification of safety standards compliance.
Ocean plastic recovery:
OceanToken created an NFT-SKU system for tracking recovered ocean plastics.
Collection partners record plastic recovery locations and volumes as NFT metadata.
When this material is processed into new products, brands can verify the authenticity of ocean plastic claims and consumers can trace their product back to specific cleanup efforts.
When this material is processed into new products, brands can verify the authenticity of ocean plastic claims and consumers can trace their product back to specific cleanup efforts.
Chemical recycling verification:
A chemical recycling company uses NFT-SKUs to track batches of plastic waste through advanced recycling processes that convert mixed plastics into new molecular feedstocks.
The NFTs document exact conversion processes, testing results, and mass balance calculations, providing transparent proof for sustainability claims.
Future directions:
Integration with IoT sensors:
Automatic updating of NFT data through connected sensors monitoring conditions, quality, and location
Consumer engagement:
Direct consumer interaction with product NFTs through mobile applications
Automated transactions:
Smart contracts automatically executing payments and transfers based on verified movements or conditions
Extended lifecycle management:
Tracking through multiple recycling iterations
Tokenized material value:
Development of trading systems for recycled material tokens
By implementing NFT-based SKUs, the plastic industry can transform its supply chain from a linear, opaque system into a transparent, circular ecosystem where materials retain their identity and value through multiple lifecycles.
By implementing NFT-based SKUs, the plastic industry can transform its supply chain from a linear, opaque system into a transparent, circular ecosystem where materials retain their identity and value through multiple lifecycles.
This technology bridges the gap between physical products and digital verification, enabling unprecedented levels of traceability and trust.
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