| May 10, 2024

Traceability in Supply Chain: Why it matters.

Let’s talk about supply chain traceability, a common issue filled with various obstacles that make it tricky to make smart decisions and streamline the flow of goods. We will dig deep into why traceability matters in Supply Chain Management (SCM) in a setting where supply chains are getting more complex every day.

So, traceability – what’s that all about? At its core, it’s about keeping tabs on raw materials from where they start to where they end up in the final product. This means tracking their journey through production, processing, and distribution. The main goal here is to keep things transparent and hold everyone in the supply chain accountable.

Now, let’s go a bit deeper. Traceability isn’t just about following goods around; it’s also about keeping an eye on quality control, meeting regulations, and considering ethical factors like fair labour practices and environmental impact. In industries like food and pharmaceuticals, where quality, safety, and ethics are super important, traceability becomes a big deal.

But why does traceability matter? Well, it’s like a superpower for businesses – it helps them grow sales and cut costs at the same time. Let’s break down some critical tracking events (CTEs) along the supply chain and how they impact the top and bottom line.

Level I: Data Capture on the Ground

This is where the journey begins, with raw data collected at the source using cool tech like IoT devices, RFID tags, and barcodes. The result? Better product authenticity and quality, leading to higher demand and premium prices. Plus, efficient tracking can optimize procurement and cut down on waste, saving on material costs.

Level II: Data Entry at Vendor Sites

Now, data gets recorded at various vendor locations, covering handling, processing, and transportation. Accurate vendor data helps in negotiating better prices and terms, possibly reducing purchase costs.

Level III: Quality Control and Compliance Monitoring

This stage checks for product quality and compliance with standards and regulations throughout the supply chain. High standards can boost a brand’s reputation, attracting more customers. Also, catching quality issues early on can cut wastage and rework, controlling production costs.

Level IV: Transportation and Logistics Tracking

This level focuses on tracking products during transportation, from suppliers to manufacturers, and finally to retailers and customers. Reliable delivery schedules make customers happy and loyal. Plus, efficient transportation management can lower shipping costs and reduce damages or losses.

Level V: Warehouse and Inventory Management

Now we’re talking about managing inventory in warehouses – conditions, stock levels, and handling procedures. Better control means faster order fulfillment and improved sales. Minimized holding costs and reduced risk of obsolescence or spoilage also contribute to efficient operations.

Level VI: Point of Sale Data Collection

Here, we’re capturing data at the point of sale – crucial for understanding consumer behavior, managing demand, and planning future production. Insights from sales data can guide more effective marketing and product development. Understanding demand patterns helps in production planning, and avoiding overproduction or stockouts.

Level VII: End-User Feedback and Usage Tracking

The final level involves collecting feedback from end-users on product performance, usage patterns, and satisfaction. This is vital for businesses focusing on customer satisfaction and product improvement. Customer feedback can drive product improvements, leading to better market fit and increased sales.

As it turns out blockchain is a very good candidate to enable the process of supply chain traceability – we’ll dive into that in the next part of our blockchain article series.

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