Supply chain traceability ensures businesses can track products from raw materials to final delivery, helping manage risks, improve efficiency, and meet regulatory standards. With growing consumer and governmental demands for transparency, it's critical for modern companies to invest in traceability systems that support sustainable and ethical practices.
From fast-fashion brands Boohoo and Shein to the storied chocolate maker Cadbury, companies of all stripes increasingly find themselves embroiled in supply chain scandals. Whether it relates to issues of forced labor or the use of harmful chemicals, businesses are held responsible for unsavory practices that occur anywhere within their supply chains. Even with no knowledge of suppliers’ actions, a brand's reputation and bottom line can be destroyed by bad actors. In 2021, Boohoo lost a valuation of over $1 billion when the public discovered its suppliers were paying less than minimum wage (QAD). And in 2022, Cadbury (maker of chocolate Easter eggs and Oreo cookies) was found to have children in their supply chain, with farm laborers as young as ten using machetes to harvest cocoa (The Guardian).
Amid these debacles, organizations are pushing for direct oversight of supply chain practices. Given the vast global nature of supply chains, filled with contractors and subcontractors, this is no easy feat. Yet such transparency is becoming table stakes for doing business. Customers are demanding more information about how and where their products (and product parts) are made, and governments are introducing new requirements for supply chain traceability (Food Navigator, RFgen).
This article offers a comprehensive overview of supply chain traceability, including the benefits and challenges of this approach, and considerations for businesses looking to bring greater transparency into their operations.
Supply chain traceability is the ability to track and trace the movement of goods and materials throughout the supply chain, from raw materials to the finished product that reaches the end customer. This process involves collecting and analyzing data at every stage to help ensure products are made safely, ethically, and sustainably. The use of data enhances accountability, making it easier to manage risk and reduce waste while increasing safety and security. This level of data also makes it easier to pinpoint specific issues, like products coming from a faulty batch (RFgen).
With the complex movement of goods and services, using advanced technologies to enable traceability is essential. Tools like RFID (Radio-Frequency Identification), IoT (Internet of Things) devices, and blockchain technology provide detailed tracking capabilities for products throughout each stage of the supply chain (Tata BB Matrix). According to an industry report, 87% of businesses see investing in such visibility as critical to their business (Tata BB Matrix).
This level of visibility is crucial for highly regulated industries like pharmaceuticals, medical devices, and food and beverage, where contaminated or counterfeit materials and finished goods are a significant safety issue, but the concerns are valid across other industries too. Blockchain offers secure, unalterable records of the movement and storage condition of goods for enhanced safety and compliance (Tata BB Matrix).
Supply chain traceability is essential for businesses with global operations. It helps organizations manage risk, ensure compliance, and build trust with consumers and stakeholders. While initially a value-add, this visibility is critical to enhancing operational efficiency, meeting diverse regulatory requirements (across different states and countries), and addressing ethical concerns.
By tracking the movement and handling of goods from raw materials to the final product, businesses can quickly identify and address potential risks such as quality control issues, labor rights violations, and unethical practices. This capability is vital for compliance with regulations set by bodies like the FDA and U.S. Customs and Border Protection (CBP), which have partnered to improve traceability and ensure safety and quality standards are met (CBP).
In an age of increasing consumer awareness, companies must have confidence that their products are made safely, ethically, and sustainably. Supply chain visibility helps companies meet these consumer expectations by providing verifiable data about sourcing and manufacturing practices. The ability to prove ethical sourcing, fair labor practices, and environmental sustainability can significantly enhance a company’s reputation while building long-term customer loyalty.
Supply chain traceability not only addresses ethical concerns but also drives greater overall operational efficiency. By providing detailed insights into every stage of the supply chain, companies can optimize processes, reduce waste, and improve sustainability.
As an example, companies can use this data to proactively risk-map for any number of potential supply chain disruptors—even labor rights abuses. To proactively minimize any fallout, outerwear retailer Patagonia has a detailed position on labor standards for its supply chain network, outlining how it responds to allegations or incidents of forced labor and human trafficking and the label's approach for remediation.
Regulatory bodies like the FDA, CBP, European Medicines Agency (EMA), European Food Safety Authority (EFSA), and others have highlighted the importance of traceability for maintaining safety and security in supply chains (DHS, WhiteHouse.gov).
In the U.S., the Biden administration announced new actions to strengthen supply chain traceability processes across critical sectors, including pharmaceuticals, medical devices, and the food and beverage industries. Additionally, the Department of Labor (DOL) is providing $8 million to improve its supply chain traceability methods, with special attention to child labor, forced labor, and mining and agricultural products throughout Africa, Asia, and Latin America.
These measures underscore the importance of having robust traceability systems to meet increasingly rigorous government standards and consumer expectations.
By investing in supply chain traceability, businesses not only comply with regulations but also position themselves as leaders in transparency and accountability, where customers can verify sustainability claims.
A fully traceable supply chain allows businesses to investigate and troubleshoot issues related to a specific component or ingredient. This traceability becomes crucial during events like recalls, giving stakeholders the means to locate the source of the issue. As a result, companies can more easily distance themselves from a problem and take corrective action more quickly.
Achieving full supply chain traceability can seem like a complex process, but it's essential for improving efficiency, compliance, and risk management. Different project managers have different approaches. Whether it’s a complex journey or a seven-step framework, the core principles remain the same.
Here’s a simplified approach to getting started:
Before diving into changes, you need to establish your primary goals and assess potential risks. Consider the impact on existing supplier relationships, the possibility of compliance issues, and how environmental, social, and governance (ESG) factors play into your strategy. Aligning your goals with these elements is the key to minimizing disruption while achieving long-term success.
Next, create a detailed map of your supply chain from start to finish. You can leverage visualization tools to gain insights into every layer, from raw materials to final delivery. This process helps you see the full scope and reveals areas ripe for optimization, cost savings, and process improvements.
Finally, determine what data to collect, how to store it, and how to share it with stakeholders. It’s important to strike a balance between meeting regulatory requirements and satisfying stakeholder demands. Your data collection tools should be fully compliant and aligned with your business needs, helping provide full transparency without overcomplicating the process.
Despite the many obvious benefits of full traceability in supply chain processes, achieving total end-to-end transparency takes a lot of work. With global supply chains, daily oversight is impractical. Businesses can’t always be on-site with vendors to monitor working and environmental conditions.
Additionally, collaboration among suppliers and manufacturers is challenging. Vendors may be reluctant to disclose information or lack the technology compatibility to share data.
Businesses must introduce and standardize raw material tracking, production tracking, distribution tracking, and consumer tracking, which involves tools such as RFID tags, barcodes, blockchain ledgers, and GPS.
Many companies have successfully transitioned to supply chains with end-to-end visibility, reaping significant rewards in efficiency, compliance, and business reputation (RFgen).
Outdoor clothing company Patagonia has long been a leader in sustainable business practices. As part of its commitment to traceability, Patagonia launched its Footprint Chronicles project in 2007. It provides customers with detailed information about their products' environmental and social impact, including all materials used, the manufacturing process, and the conditions under which each item is produced. By providing greater transparency, Patagonia has enhanced its brand reputation and built a loyal customer base that values sustainability.
Walmart, the world’s largest retailer, has implemented several initiatives to improve supply chain traceability. In 2017, Walmart launched Project Gigaton, an initiative to reduce greenhouse gas emissions by 1 billion tons by 2030. As part of this initiative, Walmart works with suppliers to implement more sustainable business practices. Walmart also uses blockchain technology to closely track the movement of food products, which can help improve food safety and reduce waste.
Nestle, the world’s largest food and beverage company, has implemented several traceability initiatives in the supply chain. In 2019, Nestle announced that it would use satellite imagery to monitor its palm oil supply chain, as the use of palm oil is a significant driver of deforestation. This initiative is part of Nestle’s broader commitment to sourcing sustainable goods and ensuring their products are produced ethically. By implementing these initiatives, Nestle has improved its reputation and built stronger relationships with customers who value sustainability.
Bumble Bee Seafoods, a multinational seafood company, has implemented a traceability program called Trace My Catch. This program allows customers to follow the journey of their seafood from the ocean to their dinner plate. By providing this information, Bumble Bee Seafoods has improved relationships with shoppers who value sustainability and ethical sourcing.
Sportswear giant Adidas introduced its own sustainability program called Parley for the Oceans. This program involves removing plastic waste from oceans and upcycling it into yarn, which is then used to make Adidas products. Through this program, Adidas enhanced its brand reputation and boosted customer satisfaction.
Based in Saudi Arabia, Arabian Plastics sources materials and manufactures products locally for multinational companies like Unilever and Procter & Gamble.
By using Epicor Kinetic, APICO improves transparency and efficiency across their entire supply. This ensures that products meet the high quality and safety standards for popular household brands sold around the globe. In a vast international market, Epicor helps APICO safeguard its reputation in a vast international market.
These companies demonstrate the benefits of supply chain traceability, including enhanced transparency, improved customer trust, and a more sustainable business model. By collecting and analyzing data at every stage of the supply chain, companies can identify potential issues and inefficiencies, reduce waste, and create more value for their customers.
In today’s highly connected global economy, supply chain traceability has evolved from a "nice-to-have" to a strategic necessity. Companies across all industries are under increasing pressure from consumers, regulators, and stakeholders to ensure that every step of their supply chain operates transparently, ethically, and efficiently. From mitigating risks of supply chain disruption to maintaining compliance and brand reputation, traceability systems are key to future-proofing businesses.
At Epicor, our robust solutions for supply chain management enable businesses to achieve total end-to-end visibility. The complexity of today’s global supply chains, coupled with the need to track multiple layers of suppliers, demands resilient, scalable technology solutions.
Through the use of blockchain, the Internet of Things (IoT), artificial intelligence (AI), and other advanced technologies, Epicor delivers clear insights at every phase. Businesses can trace products from raw materials to finished goods, helping ensure ethical production practices, regulatory compliance, and optimized performance across global operations. Businesses use Epicor solutions to stay ahead of the curve in a landscape of increased regulations and shifting customer expectations. Investing in supply chain traceability now is key for competitive relevance tomorrow.
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