Supply chain transparency 101: Traceability at every stage

What is supply chain transparency?

Supply chain traceability means having end-to-end visibility into where materials come from, how products are made, and how they move—right through to delivery, reuse, or recycling.

It also means being able to communicate this detailed information to both internal and external stakeholders like:

• Your marketing team
• Resellers
• Marketplaces
• Customers

With proper supply chain traceability, you should be able to monitor and track every single part, process, and resource you need to create and sell your products. From multi-tier suppliers to region-specific regulations, the number of variables continues to grow—and so does the need for accurate, centralized product information.

To achieve supply chain traceability, you must know not only which resources are used in the supply chain but also their details and how they move through your production cycle.

What does this mean in practice?

Consider a hypothetical: A simple blue T-shirt from a leading fashion brand. Before it even reaches its first distribution center, the supply chain of this one T-shirt includes cotton farmers, dye manufacturers, and factory workers, to name but a few.

But full traceability goes deeper: How is the cotton grown? What pesticides are used in the process? How is the cotton harvested? What are the labor conditions of the farm workers? How is the cotton transported? These are all questions a fashion brand needs to be able to answer for every single garment they sell.

Why do we need supply chain transparency? 

Manufacturers and retailers didn’t always ask hard questions about their supply chains. But in the aftermath of COVID-era supply chain disruptions, many businesses are rethinking their approach.

Supply chains have always been complex. For large operations, supply chains often span multiple continents and large numbers of suppliers. These suppliers may have their own smaller suppliers, often with incredibly specialized processes, products, and knowledge. In practice, this means that the company at the top can often struggle to get oversight over the exact scale and size of its entire supply chain.

But if you can’t trace goods and materials progressing through your supply chain, can you be confident it is as resilient, ethical, and sustainable as it could be?

With so many moving parts, it’s harder to make sure that your business isn’t doing harm in some way, like contributing to:

• Exploitative labor practices
• Ecosystem degradation
• Environmental malpractice

Today’s consumers care more about these issues than ever before—and you don’t want to associate your brand with any of them.

Needless to say, supply chain traceability emerges as a key priority for businesses. However, effective supply tracing and planning requires visibility and high-quality, consistent data. A lack of quality data can seriously hinder a business’s agility when it comes to demand, inventory, capacity, supply, and finances.

Greater supply chain transparency means greater social impact  

Supply chain traceability requires strong working relationships with suppliers—all of them.

First and foremost, businesses must know:

• Who is in their supply chain
• What each supplier does
• How each supplier does what they do
• How single suppliers impact the entire chain, individual products, and even customers

This data provides the bedrock of a transparent, traceable supply chain.

It’s also the prerequisite for making impactful changes to that supply chain: Once you can trace the movement of materials and goods through your suppliers, you can introduce and uphold policies that will improve:

• Labor standards
• Human rights practices
• Ethics
• The quality of your final product (perhaps most importantly)

Many businesses are introducing supplier codes of conduct that make environmental or social commitments concrete and provide a clear benchmark to measure progress. But before doing so, they must understand and trace through every step in their supply chain.

Transparency increases supply chain resilience  

Complex supply chains are a necessity—but they also represent a serious potential risk. Small challenges compound and global disruptions, like COVID-19, can upend the supply chain landscape overnight. While we might not be able to foresee pandemics and other disruptive events, there are ways businesses can strengthen their operations to protect against future disruptions.

Supply chain risks occur when unexpected events exacerbate existing vulnerabilities. The answer? Scenario planning.

But in order to create strategies to deal with these disruptions, you need supply chain visibility and accurate, up-to-date data. Effectively, resilience comes through tracing movements through your supply chain, then continually optimizing it and preparing contingencies.

Climate change, for example, is making extreme weather conditions more common. Knowing how this will impact suppliers will be a crucial part of risk management in the years ahead. And with governments all over the world continuing to introduce new regulations around the wider environmental and social impacts of businesses, these efforts will likely become necessary for full compliance too.

As an exercise in supply chain traceability, simulate your logistics from start to finish, noting which regions it passes through and whether they:

• Have committed to climate pledges
• Already enforce climate regulations
• May feel more impacted by climate change

Transparency translates to better experiences  

Customers are more concerned than ever about the ethics and sustainability of their products. And they’re willing to pay for it: A 2024 study found that some consumers are willing to spend nearly 10% more on products they deem sustainable.

With complete supply chain traceability, businesses can introduce positive policy changes—credibly demonstrating their sustainability and ethics credentials to consumers.

Greater supply chain traceability also supports compliance teams. Having a handle on supply chain data puts companies in the best position to respond to new and extended regulatory requirements, like the EU’s . For example, in 2023 the European Union introduces its much-anticipated Digital Product Passport. for all companies operating within the trading bloc. Companies that have a transparent supply chain will be able to respond to these tightening regulations. Companies that don’t face costly fines, and risk losing out on business.

It’s simple:

• Companies tracing movement through their supply chain can more easily prove compliance with these tightening regulations.
• Companies that don’t could face costly fines and risk losing out on business.
• Companies looking to grow should especially prioritize supply chain traceability—whether they’re putting their businesses up for sale or simply trying to attract new talent.

A complete picture of the supply chain is an asset in M&E conversations. Companies with a more resilient supply chain are a more attractive proposition for investors, particularly as we transition towards a more circular economy.

Traceability also plays a part in talent recruitment. Applicants who place more importance on issues of sustainability and ethics are more likely to want to work for companies with transparent supply chains.

Data-driven tools make transparency possible 

Flying blind while navigating your supply chain? There’s good news: high-tech tools can help. Around the world, companies are automating processes, utilizing the latest in technology advancements to monitor every part of their operations in real-time, and using data analytics to provide decision-makers with invaluable insight.

These technologies are not only streamlining operations and boosting profitability, but they’re also driving sustainability and opening new revenue streams.

The key is product information management (PIM). PIM software is a foundational solution for companies looking to consolidate product information from sourcing through to end-of-life and recycling. A key technology in this push towards supply chain traceability is Product Information Management (PIM), a foundational solution for companies looking to consolidate product information from sourcing through to end-of-life and recycling.

Brands on their way to improved sustainability and ethics turn to inriver PIM: a platform shaping the future of supply chain traceability. With an adaptable, enterprise-ready PIM solution, inriver can help you develop a single source of truth for every product on your shelves. Interested in learning more about supply chain traceability and how it could impact your operations? Read our latest ebook, A new era of opportunity in manufacturing, for an invaluable look at the key drivers shaping the future of manufacturing sales. Want to know how the inriver PIM can help your shift towards supply chain traceability?