Traceability: The Foundation of Optimized Supply Chains Today and for the Future
It is an accepted fact that supply chain management is more complex than ever before. Manufacturers across all sectors are experiencing the dual pressures of a volatile business environment and consumers’ increased expectations. The resulting stress on supply chains is unprecedented.
This perfect storm has placed a particular burden on many brands who also saw swift and irreversible changes in consumer purchasing behavior caused by the global pandemic. This was coupled with an increase in counterfeit products across almost all product categories.
Industry has accepted that this is more than just a challenging moment in time, that disruption is the new normal. Now, it is imperative that manufacturers not only gain control of the resulting growing costs and exposure to risk, but also work to futureproof their supply chains.
The key to all this is traceability.
Unpacking the Challenges
The practice of supply chain traceability is not new. Its technologies and systems have been proven for decades in highly regulated industries where supply chain transparency is vital. Pharmaceutical companies, for example, have long relied on item-level traceability—from point of manufacture to point of dispensation—to protect consumer safety.
Now, early adopters are leveraging track and trace capabilities to manage risk, improve operations and redefine how they connect with their consumers. Initiatives like “Farm to Fork”, “Grape to Glass” and “Bean to Brew” have traceability as an underpinning foundation.
To understand the critical role that traceability plays for these early adopters, it helps to place this in the context of the typical disruptions experienced today.
- Across all industries market volatility is being caused by supply and labor shortages. In some geopolitical environments this is exacerbated by regional issues, for example Reuters recently cited China’s aging society as a looming labor shortage.
- Developments in regulations and legislation such as the Food Safety Modernization Act (FSMA) in the US, mandate the ability to track and trace specific products throughout the supply chain.
- The rise in counterfeit and pirated goods is degrading profits and brand integrity. The Organization for Economic Cooperation and Development estimated trade in fake goods made up 3.3% of global trade in 2019 and would continue to grow.
- Consumer behaviors and expectations have changed exponentially with a massive shift toward online marketplaces. Plus, now more informed than ever, consumers increasingly demand transparency from the products they buy. This includes the provenance of raw materials to tracking shipments.
Traceability in Action
Traceability provides transparency throughout the supply chain, which in turn helps identify inefficiencies, serve customers better and optimize operations all the way from raw material sourcing to consumer purchase. This provides the foundations for addressing the myriad supply chain challenges faced by manufactures today.
Most organizations already have access to some level of traceability, through the various partners in the sourcing and distribution chain, for example freight vendors. However, this information is often obtained through multiple siloed systems which do not communicate with each other, meaning that data is inconsistent and difficult to use.
Today, the most up-to-date traceability solutions enable manufactures to identify and capture data for key supply chain metrics that help build, measure and improve performance from manufacturing to marketplace. This proven technology exists for full end-to-end supply chain traceability.
These systems enable brands to track and record every product and transaction in their chain of custody. With traceability, they can instantly verify which products are where, which partners have them and how everything relates to each other. Traceability within food control systems helps manage food hazards, provide reliable product information and guarantee product authenticity and safety. Alongside, offering rich insight and data for improved consumer engagement and brand performance.
In the case of food recalls, traceability is essential. According to the Food and Agriculture Organization of the United Nations, all participants in modern supply chains are expected to have effective practices in place that allow for the rapid identification, location and withdrawal of food lots when problems are suspected or confirmed.
Traceability at work: Anatomy of a product recall
Transforming a supply chain is no small task. But investing time and resources strategically today will benefit organizations now and well into the future. Organizations owning their comprehensive traceability capabilities is the critical first step. To achieve this, it is vital to fully understand existing supply chain networks and then define and prioritize objectives. This sets the stage for future growth. It also establishes the route to finding the right technology partner to establish traceability initiatives that will deliver the most value.
Looking to the Future
As supply chains become dramatically more complex, managing them will require a coordinated view of inputs, outputs, events, participants, and processes. Traceability provides this visibility and enables a full range of actionable, real-time knowledge to help brands minimize threats and maximize operational excellence all the way through the system.
The fragmented nature of traditional supply chains with their functional silos is becoming a liability. Building a robust traceability program now provides the key data, partnerships and insight needed to transform supply chains into a competitive advantage. Traceability: the foundation of best-in-class supply chains of the future.