Supply chain traceability has become imperative for businesses, especially for retailers and brands in the fashion and apparel industries. Rising consumer demand for transparency and sustainability, coupled with increasing and stricter regulatory requirements, means retailers need supply chain traceability now.
The commercial benefits of supply chain traceability to business are wide-ranging. By implementing effective traceability, businesses are empowered to meet regulatory requirements, improve operational efficiency, boost brand reputation, and make cost savings.
What is Supply Chain Traceability?
Why is Supply Chain Traceability Important?
Benefits of Supply Chain Traceability
What Technologies are used in Supply Chain Traceability Solutions?
Steps to Implement Supply Chain Traceability
Challenges to Achieving Traceability
An Example of Supply Chain Traceability in Action
Segura’s Supply Chain Traceability Software
Supply chain traceability is the ability to track and trace the entire lifecycle of a product and its components, throughout the supply chain, from raw material sourcing and production, to distribution, delivery, and eventual end of use.
Parts of the supply chain can be tracked in real-time, for example, from purchase order to delivery. And parts can only be traced retrospectively, for example, tracing back from the supply of fabric and components, to the production and creation of the raw materials: fabric and trims > yarn and ink > fibre and pulp > farm and forest.
Traceability is important for a multitude of reasons. Critically it helps businesses take a proactive approach rather than simply reacting to issues as they arise. Let’s explore some in depth reasons why supply chain traceability is so valuable.
Supply Chain Traceability allows businesses to ensure that their products meet high standards of quality throughout production and distribution. Should there be an issue, such as a product recall, traceability helps pinpoint exactly where the problem occurred.
Consumers and governments are increasingly focusing on sustainability. Supply chain traceability provides insights into the environmental and social impact of products, helping companies adopt more sustainable practices by ensuring ethical sourcing and minimising waste.
Awareness of end of use practices such as recycling helps consumers and businesses measure the impact of their product on the environment.
Adhering to both local and global regulations is critical for business operations. Traceability ensures that companies can comply with a variety of laws, such as environmental regulations, labour standards, and product safety requirements, by providing accurate, detailed data on every aspect of the supply chain.
New regulations are rapidly taking shape, we identified 25 active or pending pieces of legislation from the UK, EU, individual European nations, the USA and Australia, there are and will be more requirements for reporting on risks, impacts (and in some cases opportunities) relating to, but not limited to:
With major European fashion laws impacting the industry from 2024 onwards including compliance with legislation like the EU Corporate Sustainability Due Diligence Directive (CSDDD) will make it increasingly challenging for companies to rely on self-regulation in areas like transparency.
Please see our range of Factsheets available to download covering: CSDDD, European Corporate Sustainability Reporting Directive (CSRD), Ecodesign for Sustainable Products Regulation (ESPR), Extended Producer Responsibility (EPR), EU Deforestation Regulation (EUDR).
Importantly, supply chain traceability ensures your orders are being fulfilled where you think they are and that your 3rd party auditors are visiting and auditing the right suppliers. With real-time traceability tools like Segura this can be validated by tracking the purchase order through each tier of supply, as each supplier accepts the order through a chain-of-custody. Simple, but extremely effective.
Traceability promotes openness within the supply chain, enhancing accountability. When every step is monitored and recorded, businesses can take responsibility for their practices and ensure they are adhering to standards of ethics and quality.
Transparency significantly builds trust. When businesses openly share information about the sourcing, production, and distribution of their products, it demonstrates a commitment to ethical practices, quality, and accountability. This level of openness reassures consumers, partners, and stakeholders that the company operates responsibly, leading to greater confidence and trust in the brand.
Traceability enables retailers to pay attention to risk management in the supply chain. Identifying weak points can help prevent issues like fraud, poor quality control, or unethical sourcing practices. Effective traceability confirms the location of your suppliers and tracks orders in real-time. This gives you the power to mitigate the risk of supply chain disruptions, build effective contingency plans should a natural disaster or other supply chain failure occur, and reduce the likelihood of costly disruptions.
A company that offers transparency in its sourcing and production processes is more likely to earn consumer trust. Consumers increasingly value ethical and transparent companies, making traceability a critical component of a strong, trustworthy brand.
It’s fair to say that trust in brands is heavily influenced by perceived ethical and sustainable values and behaviours. Deloitte reports in its report The Sustainable Consumer 2023, “Most consumers say the commitment of businesses sustainability influences their trust in those businesses.”
And Trust Pilot’s 2023 survey of 2800 UK European fashion shoppers shows that ethical brands have a distinct competitive advantage. “More than four in five customers (82%) reveal they would definitely (31%) or probably (51%) stop buying from a brand found to be lacking ethical standards.” Consumer fashion spending and customer loyalty are won by fashion brands that have committed to good working practices throughout the supply chain, environmentally-friendly packaging and a recycling service.
Evidence from the Journal of Supply Management shows that consumers don't differentiate between individual suppliers within the supply chain. Instead they tend to hold a focal firm responsible for its suppliers' unsustainable practices.
Furthermore, according to a consumer survey in 2020, seventy percent of consumers stated that traceability is important, and they would be willing to pay more for it.
Accurate tracking of suppliers and order helps businesses pro-actively manage order activity and collaborate more efficiently with suppliers, helping them adopt best practices. A single view of supplier activity can also reduce waste, by reducing overruns and bill of material inaccuracies.
By identifying inefficiencies and weak points in the supply chain, businesses can minimise costs related to delays, waste, and overproduction. Oversight of orders brings opportunities to streamline the supplier base and benefit from more robust commercial negotiation.
With traceability, businesses can monitor and assess their suppliers more effectively. This allows them to choose partners that align with their ethical and operational standards and helps in addressing issues like supplier non-compliance and Corrective Action Plans.
Traceability simplifies the auditing process by ensuring that all necessary data is readily available and reportable. With clear records of every step of the supply chain, businesses can more easily brief internal and external auditors and be certain of compliance.
Traceability plays a key role in promoting sustainability by giving companies the tools to monitor their environmental impact, reduce waste, and ensure ethical sourcing. This then support corporate social responsibility (CSR) efforts through powerful reporting and business intelligence.
The data collected through traceability allows businesses to make informed, strategic decisions about their supply chain, enhancing overall efficiency and adaptability to market changes.
Technologies to help businesses track and trace their supply chains vary from software tools like Segura, through to physical tags that can transmit the location of orders and inventory.
There are several traceability software tools on the market now which all approach the challenge of tracking and tracing fashion and apparel industry supply chains slightly differently. A traceability software system or platform like Segura provides a single source of truth across your supply chain data sources. Our solution is underpinned by the business process that must always happen: to contract with a supplier, a purchase order / bill of materials must be sent, and this also applies to sub-contracted suppliers. Our traceability tool requires this happens via the Segura platform, so that all purchase orders and all subsequent outsourcing in the supply chain is captured in a single place.
Segura’s traceability software is a cloud-hosted, database-driven, SaaS solution that enables our clients to capture data, map it out visually, create any variety of reports and output actions plans based on the data.
Blockchain technology ensures that data is secure and tamper-proof by using distributed databases and ‘decentralising trust’. The main advantage of this technology is that it allows businesses to maintain an immutable record of each step in the supply chain, which is difficult to hack. Its downsides include speed and efficiency, because it requires a lot of storage space and takes time to update. It is also vulnerable to majority attack, which means the data is not controlled a single authoritative source. Segura doesn’t use blockchain technology because we are able to deliver all the benefits of blockchain without the risks.
RFID stands for Radio Frequency Identification. These technologies physically tag objects with a tiny transmitter to track and identify products and components as they move through the supply chain. This produces a report and real-time insights of an object’s origin, journey and current location and status. RFID textile tags can give insights into stock control and speed the instore checkout process.
Many retailers already use barcodes on clothing care labels acting as unique identifiers for each product. Firstly, barcodes and QR codes can help retailers accurately track, monitor, and control inventory levels. Secondly, in terms of traceability this is important in two ways: quality control and legislative compliance.
For quality assurance, if each component from different suppliers has a unique barcode related to the purchase order then as components move through production, manufacture and distribution, the barcodes provide a digital trail. If a quality issue arises, the brand can trace it back to the specific supplier and take corrective action.
For legislative compliance, a finished product might have a QR code printed on the care label for consumers to be able to read more information about the product. This could include information about the components, the location of the manufacturer and suppliers, and relevant green credentials, as required by the EU Digital Product Passport.
GPS systems provide real-time tracking, allowing businesses to monitor the movement of products during transportation and ensure timely delivery. Again this requires a physical identifier present on the consignment to be able to transmit location.
Achieving supply chain traceability is not just about technology; it requires strategic planning and consistent effort.
The sheer amount of data collected throughout the supply chain can be overwhelming. It is key to decide carefully about business goal and objectives so that you collect the right data. Businesses need effective data capture and reporting software in place to handle this information and ensure it is usable.
Achieving traceability requires cooperation from suppliers and partners who may not have the same technological capabilities or traceability standards. Your suppliers are also likely to be receiving multiple data requests in different formats from different customers. You may encounter communication or language barriers in a multi-tier global supplier chain. So, ensuring strong relationships and understanding of shared goals and priorities is critical for success.
Segura’s supply chain traceability tool has been pivotal to enable River Island to reach the lower tiers of its supply chain so it now has visibility of all its own branded yarn production. Segura’s supply chain data uses information to identify key risk areas for forced and bonded labour and carry out in depth assessments.
In addition, River Island has been able to focus on its suppliers’ water usage, particularly in the production of denim, and has identified all its sites using water, including dyeing and laundry.
The transparency provided by Segura allows River Island to proactively manage its suppliers and mitigate risks, while also offering customers greater assurance about the quality and ethics behind their products. This partnership highlights how advanced traceability can build trust and improve both operational efficiency and brand reputation.
Segura's innovative platform for supply chain transparency, compliance, and reporting is designed to provide retailers and brands with the comprehensive visibility, data, and proof required to fully map their supply chains.
Read more about Segura’s powerful supply chain traceability tools.
Segura is the leading fashion supply chain traceability solution, empowering fashion retailers and brands to deliver ethical, sustainable and efficient multi-tier supply chains.
Segura provides n-tier mapping, transparency, traceability, visualisation, compliance and reporting. Segura sits in the centre of your supply chain management structure creating a central repository for all your supply chain, ESG-related data and evidence, including from third-party data sources.
With all supply chain traceability data stored on a single platform, our customers get the right evidence in the right place to back up claims and meet regulatory compliance.
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