Traceability enables us to monitor every step of a product's life, from raw materials to the final delivery. Why is this so important? Let’s break it down.

Benefits of traceability in the supply chain

Transparency

First off, traceability boosts transparency. In a world where consumers are increasingly conscious about where their products come from, being able to trace a product’s journey adds credibility. If something goes wrong, like a recall, you can quickly pinpoint the source and handle it efficiently. This not only protects your brand but also builds trust with your customers.

For example, the global seafood industry has faced increasing scrutiny over sustainability and illegal fishing practices. In response, the environmental organization WWF and its partners introduced blockchain technology to the Pacific Islands tuna industry to help stamp out illegal fishing and human rights abuses.

Compliance

Next, traceability enhances compliance. Regulations are constantly evolving, and maintaining compliance can be a headache. With a solid traceability system, you can easily demonstrate that your products meet all necessary standards. This not only saves time during audits but also helps avoid costly penalties.

Chocolate makers including Nestlé, for example, are moving fast to comply with the European Union’s Deforestation Regulation (EUDR) with fully traceable (known as “ID preserved”) cocoa beans. These can be traced right back to the farms where they were grown.

Risk management

Another key benefit is risk management. Supply chains can be unpredictable, and disruptions can happen at any moment. With traceability, you can quickly identify vulnerabilities in your supply chain and take proactive measures. Whether it’s adjusting sourcing strategies or strengthening relationships with suppliers, having that visibility is crucial.

In the automotive industry, for example, product recalls can be crippling, with insurance claims soaring to $10 million per event. Automakers are responding by improving the end-to-end tracking of items as they are identified, returned to, and repaired by a supplier.

how to manage risk

Customer expectations

Then there are customer expectations. Customers today are more informed and conscious than ever about the products they purchase, making traceability an increasing priority. More people want to know where their food comes from, how it was produced, and its impact on the environment and society. In practice, we can expect to see shoppers giving product barcodes/QR codes a quick scan with their phones to check traceability before making a purchase.

survey by IBM found that 71% of consumers are willing to pay an added premium for products that offer complete transparency regarding their origins. This demand for traceability isn't limited to food; it spans industries including fashion, electronics, and cosmetics.

Efficiency

Lastly, traceability drives efficiency. When you can track products throughout the supply chain, you can streamline operations, reduce waste, and make informed decisions based on real-time data. This can lead to significant cost savings and improved margins.

Trustrace, for example, is a traceability platform built for the fast-moving fashion supply chain, focusing on accelerating compliance data collection with the ability to process millions of supply chain data points, per brand, per month.

Key traceability technologies

Here’s a summary of the main traceability technologies, with thanks to the experts at SCRIBOS.

1. Blockchain

  • Description: A decentralized digital ledger that securely records transactions across multiple computers.
  • Costs: Varies based on implementation and infrastructure.
  • Benefits: Enhances transparency and security by providing an immutable record of transactions, allowing all parties to verify product history.
  • Disadvantages: Complexity of integration, scalability issues, and potential energy consumption concerns.

2. Product Condition Tracking

  • Description: Technologies that monitor and record the condition of products throughout their lifecycle (e.g., temperature, humidity, shock).
  • Costs: Varies based on technology (sensors, monitoring systems).
  • Benefits: Ensures product quality and safety, particularly for sensitive items like food and pharmaceuticals; helps in compliance with safety regulations.
  • Disadvantages: Initial setup costs for sensors and monitoring systems; ongoing maintenance and calibration may be required

3. Text Codes

  • Description: Alphanumeric sequences for unique product identification.
  • Costs: Low.
  • Benefits: Easy to print, compliance with regulations.
  • Disadvantages: Manual searches, potential data entry errors, no customer engagement.

4. 1D Barcodes

  • Description: Linear patterns for unique identification (e.g., EAN-13).
  • Costs: Low, with additional investment for scanning technology.
  • Benefits: Easy to print and scan; compliance with standards.
  • Disadvantages: Susceptible to damage, limited user engagement.

5. 2D Codes (QR codes)

  • Description: Two-dimensional barcodes (e.g., QR codes) that store more data.
  • Costs: Relatively low for printing; higher for reading due to camera scanners.
  • Benefits: High data capacity, error correction, scanned from any angle.
  • Disadvantages: Requires camera-based readers, increasing implementation costs.

6. RFID (Radio Frequency Identification)

  • Description: Uses electromagnetic fields for tracking tags.
  • Costs: Moderate to high, depending on tag type and infrastructure.
  • Benefits: Real-time tracking, no line of sight needed, bulk reading capabilities.
  • Disadvantages: Initial investment, compatibility issues, privacy concerns.

7. NFC (Near Field Communication)

  • Description: Short-range communication technology for data exchange.
  • Costs: Varies, often lower than other RFID solutions.
  • Benefits: Convenient, secure, and compatible with many devices.
  • Disadvantages: Limited range, potential security vulnerabilities.

8. Bluetooth Low Energy (BLE) Beacons

  • Description: Transmits data using Bluetooth technology.
  • Costs: High initial investment, ongoing maintenance costs.
  • Benefits: Real-time updates, reduces manual scanning.
  • Disadvantages: Limited range, complex recovery procedures.

9. Ultra-Wideband (UWB) Beacons

  • Description: Provides precise tracking over larger distances.
  • Costs: High initial setup costs, ongoing maintenance.
  • Benefits: Accurate location data, real-time monitoring.
  • Disadvantages: Costly setup, complex integration.

10. GPS Trackers

  • Description: Devices that transmit location data via GPS.
  • Costs: High initial investment and monthly data costs.
  • Benefits: Real-time tracking, geofencing capabilities.
  • Disadvantages: Ongoing costs, not suitable for all products.

As you can see, there are plenty of technological solutions available for enhancing traceability. Whether you want to protect the brand, ensure compliance, boost efficiency, manage risks, or meet changing customer expectations, it is well past time to transform your supply chain from opaque to transparent.

Looking for more tools dedicated to supply chain management? Explore Unaversity, Una's online resource center dedicated to empowering procurement.