Why is Traceability Important for Manufacturing?

Traceability is vital to supply chain management, allowing companies and consumers to follow materials from the beginning to the point of sale/purchase. Traceability is often viewed through the lens of improving supply chain efficiency, by tracking and verifying material touchpoints throughout the supply chain, connecting suppliers, and ensuring that quality and production metrics have been achieved along the journey to a finished good.

However, with many supply chains becoming more complex with globalization, and with supply chains being only as strong as their weakest link, traceability is no longer perceived as “nice to have”, but is a critical component of doing business.

Traceability is a prerequisite for sustainability

As the importance of ethical sourcing, protection of human rights, and protection of the environment and consumers has grown, markets and supply chains that have existed for millennia have had to shift away from the status quo and implement processes into a system not designed to manage these factors.

It requires energy, focus, and intensity to produce a good where human rights are upheld selectively, and sustainability is achieved. The practical ability to do this requires robust science and technology to accomplish. There is no silver bullet; a combination of tools is needed to achieve this.

Why is traceability important?

The importance of traceability boils down to several driving forces, including:

1. Regulatory compliance
2. Investor protection
3. Consumer demand
4. Environmental, social, and governance (ESG) & responsible sourcing
5. Supply chain risk management

Regulatory compliance

Governments are demanding transparent supply chains, stricter due diligence processes, and greater investor accountability around the globe. Numerous North American and European regulations have come into force this year, with 2023 proving revolutionary for supply chain regulation.

Examples of rules requiring traceability include the Uygur Forced Labor Prevention Act (UFLPA), The Corporate Sustainability Reporting Directive (CSRD), and The EU Deforestation Regulation (EUDR), along with several other forced labor, green claim, and reporting laws.

Investor protection

A significant push for verified traceability is coming from the finance sector, with investors of ESG funds tightening their due diligence requirements. Directors can become criminally liable for greenwashing and misleading investors, making proven traceability a top priority for investors and board members.

Additionally, investors are directly vulnerable to the fallout from counterfeit products. By protecting products and raw materials from the risk of fraud, Oritain protects brands from the financial, legal, and reputational risk that accompanies product fraud and protects investors' interests.

Consumer demand

Consumers' preference for sustainability and responsible sourcing is on the rise. Consumers are increasingly conscious of their purchasing decisions and social and environmental impacts. A survey conducted by McKinsey & Co. found that 60% of consumers surveyed were willing to pay a premium for sustainably sourced products. Underpinned traceability ensures that companies paying a premium for ethically sourced raw materials are rewarded with consumer preference.

Environmental, social and governance (ESG) & responsible sourcing

Traceability plays a pivotal role in verifying the origins of materials. Pinpointing the exact source of raw material, such as cotton or wool, can ensure that the product has been sourced from ethical and responsible suppliers. This helps prevent using materials associated with child labor, forced labor, or environmentally harmful practices. Awareness of the provenance of products and raw materials is essential for companies to claim compliance with ESG criteria and substantiate such claims.

Supply chain risk management

With the scale and complexity of global supply chains, materials are passed through many sets of hands, often across different parts of the globe. This creates a significant risk of product counterfeit, blending, and substitution. Traceability tools such as Oritain’s origin verification solution can be used to determine the fraudulent from the legitimate, protecting companies from counterfeit products infiltrating the supply chain.

Verified traceability builds trust

Using forensic testing, Oritain can work with businesses to prove the origin of their products and raw materials at any stage in the supply chain. The stamp of authentication that this testing provides allows those doing honest work to be rewarded with consumer trust.

By harnessing the power of science, Oritain can verify authenticity and improve traceability and transparency. For our client partners –from luxury goods to government organizations to leading food, fiber, and wine producers – the Oritain Trust Mark on their products protects their reputation, helps with regulatory compliance, builds trust, and minimizes risk.