Supply Chain Traceability

A supply chain is a system of activities that is required to convert raw materials to the final product spread across in time and geography. Traceability in such systems make it easier to understand what is happening at each step of the process. This is critical especially in the Food and Pharmaceutical industry, where they are trying hard to trace each component that goes into their products.

With better traceability, it will be easier to enforce regulations. Regulatory authorities can more easily make sure that there are no banned substances used in any product or if any banned processes were used.

From a business point of view, it will be easier to optimize value chains for each product and find possible synergies. Currently all businesses do this, but at a higher level. Not every company is interested in raw materials right from the ore to the form they use. But traceability would make it more transparent for businesses to see the history of each delivery and the complete chain.

Within the food industry, there is a growing need and market for products that are ethically sourced. Big companies want to be seen on the right side of history when it comes to sourcing from local farmers and institutions. Traceability in supply chains is one way to improve their overall brand image. For example, the Fairtrade initiative. Which is then used by downstream companies like “Ben & Jerry’s” who source cocoa, sugar etc. under this initiative.

There are a few ways traceability can been introduced to a supply chain. Subway has 98% of their products traceable by using barcodes. RFID tags, alphanumeric codes are possible solutions as well. Blockchain is a relatively new technology that is being used for this purpose. A distributed ledger that cannot be tampered with keeps track of the supply chain. And all stakeholders are free to check the validity of it themselves. A drawback with using blockchains is that these chains become stronger and more viable when the size of the information is huge. For smaller amounts of data, a centralized approach would suffice.

Usually supply chains include contracts between different parties right from the start until the product reaches the customer. Blockchain maybe is a more viable solution to manage these smart contracts in one of its ledgers. These agreements are usually repetitive in nature and can span across different geographies, time-zones, currencies etc. A distributed ledger in this case could act as a common protocol used by all stakeholders to manager and maintain contracts.