Why Technology is the Key to Transparency and Traceability

The need for organisations to incorporate transparency and traceability into their supply chains has assumed heightened importance in today’s more environmentally and socially conscious world. 

Demand is coming from all angles, including both internal and external stakeholders, while increasingly stringent regulations are driving a more intense ESG agenda. 

For an example of the latter, one need look no further than the Corporate Sustainability Reporting Directive (CSRD) introduced by the European Union in 2023. 

It has prompted a seismic shift in sustainability reporting, setting new standards and requirements for companies to disclose information on their ESG impacts, risks and opportunities.

This kind of legislation – and there are countless ESG-related regulations emerging – is perceived as being key to enhancing future transparency and driving corporate change across climate change, human rights, circular economy, gender equality, microplastics and more.

Across the EU, the CSRD has greatly increased the volume and rigour of disclosure, while mandating external assurance to increase trust and comparability.

“Regulations like the CSRD and the underlying European Sustainability Reporting Standards (ESRS) are mandating and standardising corporate disclosures,” explains Saskia van Gendt, CSO at Blue Yonder, a world leader in digital supply chain transformation.

“Not only does CSRD require transparency for the 50,000 European companies it applies to, it also creates a ripple effect of disclosure for environmental and social impacts along the value chain.”

Lack of tech holding organisations back

Heeding widespread demand for enhanced transparency and traceability in supply chains is one thing; achieving it is another matter altogether. 

Before diving into the challenges organisations are facing, it is important to differentiate between what are fast becoming two business imperatives.  

Transparency primarily concerns the communication of information about a supply chain to downstream stakeholders, such as the customers paying for goods or services. 

Traceability is more about generating data relating to the lifecycle of a product, from its origin through to consumption. 

Certainly, many companies are finding the process of abiding by transparency and traceability regulations far from straightforward. 

Saskia says this often boils down to the technological tools at their disposal. 

“Most organisations lack the systems to track their full value chain,” she continues. “Retailers and manufacturers often only have visibility for and influence on tier 1 suppliers, whereas traceability requires n-tier accountability. 

“Lacking the right tracking systems, organisations are responding to the pressure for transparency by surveying suppliers down their value chain, which has led to survey fatigue and is challenging to maintain given supply chains are constantly changing.”

Demand stems from consumers

One sector which has experienced a dramatic surge in demand for transparency and traceability over recent years is food production. 

This is largely being dictated by consumers, who want to know more about where the food that ends up on their plates has come from.

Well placed to shed further light on this is Andrew Dalziel, VP Industry & Solution Strategy at Infor, which provides cloud business application software solutions. In particular, its ERP solutions for the food and beverage sector are developed to enhance financial management, operational efficiency, product lifecycle management, supply chain planning and asset management. In turn, this makes it easier for clients to improve food safety, maximise yield, provide greater supply chain transparency and increase margins and cost control.

“Modern consumers are becoming more informed and conscious about their food choices, seeking detailed information on the origins, production practices and environmental impact of their food,” he says. 

“This shift in consumer expectations is driven by heightened concerns about food safety, ethical sourcing and environmental impact. As a result, there is a strong demand for more detailed and transparent information about the origins and handling of food.”

Andrew highlights that firms specialising in food production are among those grappling to meet expectations due to the increasing complexity of their supply chains, often involving multiple intermediaries. 

He adds: “This complexity has heightened the need for effective transparency across systems to monitor and manage every step of the supply chain.”

Avoiding data fragmentation

Andrew paints a vivid picture when it comes to assessing why transparency and traceability remains an issue for so many organisations. 

Focusing on food, he stresses that tracking food products from source to consumer involves numerous stakeholders – farmers, ingredient suppliers, processors, distributors and retailers – each with their own systems and protocols. 

However, some farmers lack the necessary IT skills and may not see the immediate value in data, making it challenging to capture key supply chain data accurately and promptly. 

“This fragmentation complicates maintaining a seamless flow of information across the supply chain,” Andrew says. 

Echoing Saskia’s thoughts, Andrew points out that numerous companies are still relying on outdated, manual systems that are prone to errors and inefficiencies. 

Collecting and standardising data for the purposes of transparency and reporting is already a daunting task – and is being further complicated by varying international regulations such as the new Section 204(d) of the FDA Food Safety Modernization Act (FSMA) in the US, which imposes stricter record-keeping requirements on those who manufacture, process, pack or hold specific fresh foods to enhance food safety. Other nations, including the UK, are expected to follow suit. 

Andrew summarises: “Despite clear consumer demand for traceability, the lack of integrated digital platforms to manage these processes remains a barrier. Therefore, organisations struggle to implement effective traceability systems to ensure transparency, build consumer trust, isolate impacted products and perform rapid recalls.”

A safe and secure single source of truth

So, if technology – or lack thereof – is the problem, what exactly are the solutions? 

According to research from InsightAce Analytic, the food traceability market for IT solutions, including blockchain, barcoding and biometrics, has grown significantly and is projected to be worth US$40bn – and that is just in the food sector. 

Blue Yonder is among those able to provide end-to-end supply chain visibility for customers across all industries, supporting their transparency and traceability goals in the process. 

“We’re also developing new capabilities that will allow measurement and optimisation of waste from end to end,” Saskia reveals. 

A significant milestone in Blue Yonder’s recent history was its acquisition of One Network Enterprises, whose commercial technologies enable multi-enterprise transparency. This provides a safe and secure single source of truth and a complete set of master data for use by all trading partners across the entire network.

Customers now have the ability to collaborate and share data – from inventory levels to raw and finished goods materials movement – in real time across all trading partners up and down the supply chain. 

“Blue Yonder can support traceability and chain of custody for all trading partners on a single platform, maintaining a real-time single version of the truth for supply chain management,” Saskia says. “This means end-to-end visibility of raw materials, across all tiers of supply and across all modes and legs of the supply chain.”

Overhauling data management

On the food front, Andrew says ERP systems and blockchain technology are transforming real-time tracking in the supply chain by overhauling how data is managed and leveraged for business decision-making and visibility. 

The former, combined with a data fabric capability to centralise data from various stages of the supply chain, allow for streamlined collection and analysis. 

This centralised data provides real-time visibility into crucial factors like source of origin, raw material and product attributes, quality at different stages, inventory levels, production processes and distribution channels. 

Meanwhile, blockchain technology offers a way to capture and record extended supply chain data related to every transaction, processing stage and movement of goods in a decentralised way. 

By providing a transparent, tamper-proof record of the food's journey from farm to shop, data integrity is guaranteed and stakeholder trust enhanced. 

“Together,” Andrew concludes, “these technologies enable businesses to track products in real time, quickly identify and isolate issues such as contamination and respond swiftly to regulatory requirements and consumer inquiries. 

“This enhanced level of traceability not only improves operational efficiency but also enhances consumer trust by ensuring transparency and accountability throughout the supply chain.”

To read the full story in the magazine click HERE

​​​​​​​******

Check out the latest edition of Supply Chain Magazine and sign up to our global conference series – Procurement and Supply Chain LIVE 2024. 

******

Supply Chain Digital is a BizClik brand.