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3 Reasons Why Traceability Matters

By Robert Young 

Market Access Analyst 

“Today’s consumer is not just buying a product; they are buying a story.”-Rupert Hodges, Chief Commercial Officer at Oritain [1]

Have you ever considered the story behind the items you use and consume every day? From the jacket that keeps you warm to the delicious plate of seasoned fish; everything has a fascinating tale to tell. It's not just about the brand or purpose of the product, but also about how it was created and found its way into your life. These product stories are more than just narratives; they help us appreciate the journey of the items we use and love. So, next time you come across something new, take a moment to think about its story and appreciate the experience it brings to your life. 

The increasing demand for clean business practices has pushed traceability into the limelight. Over the past couple of years, it has become somewhat of a buzzword in the trade community, and it is more than a passing trend. 

3 reasons why the global supply chain needs traceability 

First, traceability can aid companies in being more sustainable. Consumers today are more socially and environmentally aware than in the past. These same consumers are making more educated decisions about how their buying decisions affect the planet and the labor involved in production. Traceability can make the whole production process much more transparent and very well could affect the bottom line of a company that does not follow this growing trend. 

According to a World Economic Report on Digital Traceability: 

67% of consumers want to know the origin of their food, and 69% of customers under 40 would pay extra for sustainably sourced electronic products.” [2]

Secondly, it ensures better quality control. With a proper tracking system, one can follow each step of a product's lifecycle, from raw materials to finished goods. This can improve quality assurance over any issues that might happen in the process. 

Finally, traceability can help ensure better compliance with trade regulations. This can help the company avoid fines and adhere to ethical practices when using labor to produce their products for the market. 

The Sustainable Sea Change 

Over the past few decades, we have witnessed significant progress since the first Earth Summit in 1992 held in Rio de Janeiro. Back then, holding companies accountable for their environmental and social impact was not a common practice. However, today, with consumers becoming more aware and responsible, companies are being encouraged to be more socially and environmentally responsible. This progress highlights the positive steps we have taken towards a sustainable future. 

In addition to choosing sustainable products, consumers also value clarity, honesty, and knowledge when it comes to quality control to prevent fraud and counterfeit goods. Sustainable and transparent practices go hand in hand and can help to ensure that the products we buy are ethically produced. Counterfeit products can often be linked to forced labor practices, highlighting the need for more stringent quality control measures. Thankfully, technology is advancing and there are now ways to verify the authenticity of raw materials, such as cotton, to ensure they are genuine. These developments are a positive step forward in ensuring that the global textile industry operates ethically and sustainably. 

Oritain is a Kiwi company that uses forensic isotopic testing to trace raw materials such as cotton. This type of testing can give a “chemical fingerprint” of the cotton's origin, which can then help clarify the origin of the raw material to prevent fraud from farm to fabric. 

In the State of Washington, Stardust Secured is a leader in offering state-of-the-art services for supply chain traceability. They have become market leaders by supplying unique supply chain tracers with advanced R & D capability that enables them to customize the tracers.  This technology can deliver court-admissible, forensic evidence for anti-counterfeiting.  Their hand-held tracking devices enable brand owners, manufacturers, customers, and employees to manually verify authenticity. 

Sustainable from Farm to Fork 

Traceability can also be found right on your dinner plate. New and innovative digital solutions for tracing products have grown over the last few years. These innovations have come about to save producers money, ensure quality control, and prevent food waste. The UC Davis report states, 

In developed countries, an estimated 20 percent of food is wasted on the farm or from improper or inadequate drying, storage, packaging, and transportation.” [3] 

 Companies like Transparent Path from Washington State have been taking giant steps towards reducing these wasteful practices. The company has incorporated cutting-edge Intel technology and IoT sensors to report real-time location, humidity, shock, light, tilt, and temperature data to save spoilage and ensure freshness. 3iv Transparent Path uses these sensors to collect GPS and automated data from when these trackers are placed on the cargo until they are removed. Transparent Path's CEO Eric Weaver had this to say about their innovative system: 

Think of it as travel insurance you might buy when you purchase a plane ticket online.” “For an extra amount, you can get so much more data than you ever had before. Is it being kept cold-chain compliant like the truck driver or warehouse swears it is?” [4]

New Global Regulations  

Governments in the EU and USA are acting regarding traceability in global supply chains. On January 5, 2023, the EU Corporate Sustainability Reporting Directive was enacted. This reporting guideline's main purpose was to hold companies responsible for reporting social and environmental impact to the public. To qualify for this, a company must meet two of the three standards for having over 250 employees, over 20M in assets, and over 40M in revenue (all in Euros). This puts pressure on companies to comply with sustainable laws and practices, which, if not met, could greatly impact how investors and stakeholders choose which companies to support. 

In the USA, a new rule was passed in 2023 called the Requirements for Additional Traceability Records for Certain Foods (Food Traceability Final Rule). This new law sets traceability record-keeping rules for companies or persons who manufacture, process, pack, and hold foods. This rule requires the parties involved to inform and share information with all those involved in the supply chain. 

Digital Traceability is Here to Stay 

Disruptive technologies like AI and IoT push traceability quality to the next level. In the pharmaceutical industry, digital traceability gives end users quicker and more reliable information on medications and a better ability to avoid medication fraud. 

In Brazil, some of the country's largest meat producers signed an agreement at COP27 in Egypt in 2023 to eliminate deforestation from their soy, beef, and palm oil chains by 2025 [5]

Latin America is witnessing the connection between traceability and sustainable business practices. Latin America is second in the world in providing carbon credit. According to an article from JP Morgan, Latin America is home to highly valuable carbon deposits. Brazil is home to $13.7 trillion of stored carbon. Considering that carbon credits will be a major topic under the sustainability umbrella over the coming decades, the importance of environmentally friendly supply chain tracing will impact market and investment opportunities. [6]

With the push for a more sustainable world, companies are becoming more aware that their carbon footprint can be traced to their business practices, and they will have to answer for their actions with a globally conscious consumer. 

How Sidera Consult can help with traceability 

Sidera Consult has had its finger on the pulse of sustainable market development. We have helped numerous companies and clients navigate through the complex task of understanding these new and developing laws that are affecting global market entry and trade. Feel free to contact us and strike up a conversation when your service or company is ready to do international trade sustainably. 

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