Supply chain traceability is not a new concept, but historically the focus has been on quality control – hence its prevalence in industries such as pharmaceuticals, food and automotive manufacturing. Traceability is often linked to food safety, product recalls and distinguishing authentic versus counterfeit products, but in recent years a link has been established between traceability and sustainability. As such, the scope of traceability has broadened to encompass tackling issues such as human rights, environmental impacts and corruption.
A similar trend is evident on the consumer end. In 2016, the Nielsen Global Brand-Origin Survey found that nearly 75% of global respondents, on average, said a brand’s country of origin was as important as or more important than nine other purchasing drivers, including selection/choice, price, function and quality. In recent years, consumers have become even more discerning. For example, in a 2018 Sustainable Fashion survey conducted by Ipsos MORI, 79% of respondents said that it was important for clothing brands to provide information on their environmental commitments and 70% said the names and locations of factories used in the clothing supply chain should be disclosed.
Supply chain transparency is often confused with supply chain traceability – the difference is in the level of granularity. Supply chain transparency involves mapping a supply chain and understanding who each supplier link is in the chain. This in turn enables a company to expose risks and inefficiencies such as bottlenecks and supplier dependencies.
Supply chain traceability takes this one step further. You may be familiar with phrases such as ‘bait to plate’, ‘grass to glass‘ and ‘goat to coat’ – phrases that are becoming more and more common as companies seek to assure a growing segment of consumers who care about the origin of products. Traceability is about the chain of custody for an individual component or batch – ideally all the way back to the raw material stage. For example, that cotton t-shirt you’re wearing? Imagine if you could find out the exact field that cotton was grown in, when it was harvested and who was responsible for growing it. This is exactly what a traceability system enables.
In simple terms, traceability systems track an item as it moves through a supply chain and keeps a record of each stage of the process. There are different ways of tracking and recording items, spanning the spectrum from manual referencing to highly digitised solutions. For example, writing reference details on a bag of cotton/cashmere/wool can provide sufficient information for basic tracking. Additional details can be recorded by using QR codes, barcodes or RFID tags, which also enables a traceability system to be digitised.
At the other end of the spectrum, the immutability, security and transparency of blockchain means that it’s an obvious choice for traceability systems, with blockchain providing the additional benefit of removing the need for an independent body to verify the records.
Traceability empowers consumers to make value-based decisions regarding their purchases. It also allows companies to truly understand their supply chain and even differentiate their brand, as companies begin to recognise the importance of supply chain sustainability. In a society where distrust seems to be at an all-time high, traceability helps to bridge the trust gap between companies and consumers.
Image 1 Credit: Chetna Organic
Image 2 Credit: Provenance
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