Hardly a day goes by without a major incident involving what a global company doesn’t know about its product ingredients, performance of supply chain partners or diversion of intended product uses for customers. From coffee to chemicals to counterfeit materials, what you don’t know about your business can hurt you and cost you.
As information technology advances, and the costs of acquiring information about product development, distribution and use continue to decline, the issue of “traceability” has emerged from the domain of information specialists to a more central issue of business strategy and competitive differentiation.
What is traceability? Known frequently as “trace and track,” the idea of traceability has evolved across three emerging pathways that include:
- An ability to obtain and verify the physical location, status and history of a material, item or data.
- A risk-based approach designed to protect the safety of people, and the security of facilities, business processes and products across the value chain.
- Assurance of a product or product ingredient’s safety and security for its intended use.
Individual companies have somewhat different definitions of traceability, and must tailor traceability systems and practices to their unique business processes and product mix, but a robust approach will embody elements of all three pathways. Some companies also embed life cycle analysis within their traceability systems.
Why has traceability emerged as a major issue in the management of global business operations? A number of drivers help explain the increasing attention to traceability issues. They include:
- The globalization of business through extended supply chains, expanded business networks and the growth of multiple licensees.
- Advancement of technologies that enables many more participants to gain access to traceability information and apply it for their own individual or organizational objectives.
- Proliferation of labels, management systems, product standards and certification requirements.
- The need to protect and communicate quality, brand equity and reputation.
- Increasing importance of educating regulators, stakeholders and customers on changing technologies and product characteristics.
- Growing need for cyber security and protection against hackers, state-sponsored business espionage and organized criminal networks.
- Government policy initiatives—e.g., REACH.
- Societal demand for increased transparency that extends to the points of material extraction/sourcing or resource management.
Amidst the interaction of these various drivers, however, is growing consumer confusion over conflicting product claims, product standards and differing certification and labeling schemes.
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