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Unlocking Value: The Significance of Supply Chain Traceability and Its Multifaceted Benefits

Supply chain traceability refers to the ability to track and trace the movement of products and raw materials through various stages of the supply chain, from production to distribution and consumption. This process involves capturing and recording relevant data at each step, creating transparency and accountability within the supply chain

For more than a century, businesses have honed highly efficient, linear supply chains. Raw materials flowed in one direction, were transformed into a product, used, and ultimately discarded in a waste heap. That approach now puts a firm’s competitiveness at risk.

To ensure supply in an increasingly volatile business landscape, companies need more resilient networks. Fast-changing consumer preferences and customization require increased flexibility and speed. And investors, consumers, and governments expect more sustainable products and processes—with certifications to prove companies’ claims. Winning in the coming decade will require a transparent and circular value chain—one that reduces or reuses materials and remanufactures or recycles products—lowering cost and creating less waste.

It is a profound paradigm shift. And the technology is already available to trace each raw material that goes into a product and follow how a product is used and where it is discarded. In fact, digital traceability enables companies to meet and balance a broader set of business objectives, including efficiency, resilience, responsiveness, and sustainability. It allows companies to redefine the boundary of operational excellence and set aspirational new goals.

What is Supply Chain Traceability?
Traceability, in supply chain traceability, is the ability to identify, track and trace elements of a product or substance as it moves along the supply chain from raw goods to finished products.

The journey of food from farm to the consumer’s table is a complex one. The supply chain is a vital network with inter connected systems connecting the source of food to the final consumption. The relatively short shelf life of food products is a major challenge in the food and agriculture sector. There has been a paradigm shift in consumer behaviors.

In a dawn of the trust revolution, Food Traceability has emerged as a top priority in building resilience in food supply chains. Defined as the ability to track movement of food through various stages of production, processing and distribution, food traceability enables identification of sources of food contamination and fraud in the supply chain. This assures a safe and quality product to be delivered to the end consumer.

Steps to Implement Supply Chain Traceability
A traceable supply chain allows organizations to achieve their primary objectives – improve sustainability, efficiency, resilience and performance.

  1. Track Risks and Set Goals
    A business must look at the risks it is immediately exposed to, such as compliance risks, disruptions the company has faced historically, and supplier relationships. This step also involves plotting all potential ESG issues affecting the business and co-relating them with the business risks to lay out the company strategy and goals.

For example, sourcing sustainable raw materials could satisfy stakeholder interests and impact the company’s performance. Adopting a blockchain traceability supply chain helps in achieving the above objectives.

  1. Visualize the Supply Chain & Collect Information
    Once the risks are identified, the next step is to visualize and map the end-to-end supply chain. Visualization tools provide unique insights into the supply chain for a better understanding of the cargo flow volume, gauging the suppliers and processes, and unearth potential gaps, risks and opportunities for improvement and innovation.
  2. Set the Level of Disclosure
    Lastly, organizations must set parameters for the disclosure of information. They must balance regulatory requirements against stakeholder demands and decide ways to authenticate the published data. Any supply chain transparency technology must be aligned with the objectives and have the backing of all stakeholders. It must collate relevant data, provide actionable insights, and circulate these insights to all stakeholders.

Connecting Traceability to Business Objectives
Connecting supply chain traceability to business objectives is crucial for any company that wants to succeed in today’s marketplace. By doing so, companies can ensure that they produce high-quality, sustainable products that meet their customers’ needs. Moreover, with end-to-end visibility, the product is traced throughout the entire supply chain, ensuring quality and reducing the risk of product defects and recalls.

Benefits of Supply Chain Traceability
The most significant benefits of supply chain traceability are regulatory compliance and enhanced reputation.

  1. Improve Supply Chain Integrity
    Traceability prevents fake products and ensures the authenticity of products. It tracks the product through its entire lifecycle — from raw material sourcing to the customer — and further provides visibility if it is resold, reused, recycled or recalled. Traceability also helps to remove supply chain bottlenecks and ensures quality, safety and a sustainable supply chain.
  2. Reduce the Risk of Mislabeling
    Digitized labeling such as barcodes or RFID tags contains information for tracking and tracing a product throughout its lifecycle. It helps to identify fake or faulty products and assures its genuineness. This prevents the risk of mislabeling.
  3. Track Product Management
    The traceability and tracking management systems could be capturing data within their supply chain or across a multi-supplier network capable of tracking across the entire value chain.

Traceability of processing details, such as type and stages for producing the product.
Traceability of quality checks at each step of the product cycle.
Product manufacturing date, batch, lot, and type must be recorded and labelled accordingly.
Record where the product was sent (forward tracking) and from where it came (backward tracing).
The above details must be recorded using time stamping and linked to identifiers for verification and audit purposes.

  1. Simplify Audits
    Tracking management of a product helps at the time of audit. The auditor can perform due diligence easily and verify whether the product has been sourced, manufactured and transported as per sustainability practices and established norms.
  2. Faster troubleshooting
    It offers the ability to investigate and troubleshoot issues related to a component or ingredient. This becomes crucial during events such as recalls, so stakeholders have the means to locate the source of the problem. In turn, this enables a company to either distance itself from a problem — for example, to say its food or product was not affected — or to take corrective action.
  3. Better business processes
    In addition, the data generated from a traceability program can help companies optimize business processes, such as informing planning and supply chain management It can help address performance issues related to lead times, transportation costs and inventory management.
  4. Improved sustainability
    Traceability is also a key element of supply chain sustainability, a concept to which it is closely related. Risk management, security, triple-bottom lineand corporate social responsibility are other related concepts.

References:
https://www.techtarget.com/searcherp/definition/traceability
https://tracextech.com/6-best-practices-for-traceability-in-food-supply-chain/
https://www.bain.com/insights/traceability-the-next-supply-chain-revolution/
https://www.environmentalleader.com/2022/10/cold-chain-traceability-system-tackles-food-pharmaceutical-waste/
https://www.reliableplant.com/Read/30954/supply-chain-traceability
https://www.gep.com/blog/strategy/how-supply-chain-traceability-benefits-

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