Traceability in supply chains: why it matters.
6 May 2014
Are you interested in improving sustainability across your business’ supply chain? A new international report explains how traceability can help.
While researching supply chain transparency in relation to our Directory, we came across a new report by the United Nations Global Compact and BSR: A guide to traceability: practical approaches to advance sustainability in global supply chains. Although primarily aimed at multinational companies, the report also has some valuable lessons for smaller businesses looking to improve the sustainability of their supply chains.
The guide was produced to help companies and stakeholders understand and advance global supply chain traceability. The guide defines traceability as:
“The ability to trace and identify the history, distribution, location and application of products, parts and materials; to ensure the reliability of sustainability claims in the areas of human rights, labour (including health and safety), the environment and anti-corruption.”
In the context of sustainability, traceability is a tool that assures and verifies sustainability claims associated with commodities and products, ensuring there is good practice and respect for people and the environment all the way along the supply chain.
Programmes that certify the use of products that are grown in sustainable cultivations (whether related to food or to other commodities like cotton and wood), can have numerous positive effects on the environment, from the reduction of carbon footprints to the prevention of deforestation.
While traceability has traditionally focused on food safety, consumers, NGOs, governments, suppliers and buyers are increasingly demanding more information about the origins of a wide range of products and materials, and the conditions under which they were produced and transported.
The global increase in demand for organic, fair trade and environmentally friendly products has led to the development of well-functioning traceability systems, with new technologies developed to meet stakeholder needs.
Ten reasons why you should implement traceability in your business:
Five key things you need to know about traceability and how it affects your business:
- One of the most critical drivers for transparency in supply chains is an increased consumer demand to know more about the products they are buying: what is in them, where they came from, the conditions under which they were made, how they got to the consumer, and how they will be disposed of.
- Traceability must be a collaborative effort between companies and stakeholders. The most successful traceability schemes are multi-stakeholder, involving business, government and other stakeholders and organisations who have an interest in the sustainability of the product or commodity.
- To ensure traceability along the supply chain, a system is needed that records and follows the trail as products, parts and materials come from suppliers and are processed and ultimately distributed as end products – including information on the components of products, parts and materials, product quality, safety and labelling.
- Traceability is a useful tool for companies to prove claims and attributes of sustainable products.
- Traceability certifications are becoming validated as proof of sustainability requirements. As more governments and companies adopt the requirement of proof that a company meets sustainability requirements (particularly in regards to procurement), traceability becomes a viable and appealing way for businesses to meet both sustainability requirements and expectations of their customers.
Companies that invest in increased transparency, traceability and measurements of sustainability data along the value chain will have a competitive advantage in meeting this consumer demand.
Implementing traceability: a how to guide.
- Identify key commodities. Map your material supply chain inputs across all procurement categories, tracing products to raw materials where possible.
- Gain a full understanding of all relevant sustainability issues to those commodities and identify whether traceability is the best way to mitigate those risks.
- Develop your business case for traceability.
- Take traceability action by either: a) getting involved in an existing traceability scheme, or b) reaching out to peers or stakeholders to encourage or start a traceability scheme.
- Engage internally with key staff and develop solid internal practices and processes. Ensure this internal policy is embedded in your procurement processes and supported by senior management.
- Engage with your suppliers. Educate them about your traceability scheme and their responsibilities.
- Stay the course. Traceability can be difficult and takes time, so persevere.
If you’re interested in finding our more about supply chain transparency, click here to read the full guide.