What is Supply Chain Traceability and Why is It Important?

One aspect of supply chain management that has taken on more importance in recent years is traceability. Here we will be looking at what supply chain traceability is and the benefits it can have for your business.

What is supply chain traceability?

Traceability in supply chains refers to the ability to identify and track a product’s entire lifecycle as it moves along the supply chain, from the origins of the raw materials all the way to the finished product reaching the end user and any end-of-life activities such as reselling or recycling. 

Traceability and transparency go hand in hand, and the concept of traceability is used in both discrete manufacturing and process manufacturing. In many industries and for specific products, such as pharmaceuticals or packaged foods, traceability is required to a specific degree by national or international regulations. 

Why is traceability important in supply chains?

Traceability is an important aspect of ensuring a business’s quality control and sustainability. Knowing the complete history of a product and its individual components or materials significantly reduces the risk of product defects, recalls and returns which are damaging to both the business’s finances and its public image. 

Furthermore, traceability is essential to know whether a product is truly sustainable. A product’s sustainability needs to be assessed at every stage, including the raw materials, manufacturing and end-of-life (whether the product or its parts can be reused or recycled). It is only by analysing the entire process that a company can make meaningful steps to reduce its environmental impact.

What are the benefits of traceability?

Implementing supply chain traceability helps to improve: 

Efficiency – By tracking and tracing a product’s journey, businesses can work to more accurate lead times which help with production schedules and customer satisfaction, reducing the chance of faults or returns.

Quality control – Using digitised labels such as barcodes or RFID tags throughout a product’s lifecycle help to identify fake or faulty products and also reduces the risk of mislabelling.

Simplifies audits – Full traceability makes it much easier to ensure all products are in line with any regulations. Auditors can easily verify a product’s legitimacy and sustainability credentials by checking where the product has been sourced, manufactured and transported – all information that is readily available. 

Easier to troubleshoot – Should issues occur with a product, full traceability helps to narrow down the problem to a specific component or ingredient, which is then quicker and easier to rectify. 

Boosts brand image – More consumers than ever are taking an interest in where their products are coming from, and a business that can disclose that information can be seen as more trustworthy.

How to improve traceability

Developing and implementing a traceability plan will take time and what that plan looks like will be unique to each business, although all plans should involve digitally labelling products and ensuring end-to-end supply chain visibility.

The first step to improve traceability in the supply chain is to understand any compliance regulations that need to be met. It can be beneficial to go above and beyond these regulations, but meeting them is a minimum requirement. 

Using visualisation tools allows you to map out the end-to-end supply chain and better understand cargo flow, supplier benefits or limitations, process inefficiencies and any potential gaps, risks and opportunities. 

Finally, the level of disclosure needs to be established throughout the supply chain and the published data needs to be authenticated. This data should be accompanied by actionable insights and circulated to all stakeholders. 

If you are interested in learning more about how to improve the traceability of your supply chain, please get in touch.