For brands starting a sustainability transformation, investing in a digital traceability platform can be a complicated decision. But what can digital traceability achieve for your business that manual traceability can’t? Read on to find out.
What is Manual Traceability?
Most brands start out their traceability journey with what we call manual systems, achieved by sending emails and collecting data in Excel spreadsheets. This works when a brand is collating general information about its suppliers, but as you scale your ambitions for system-wide traceability, manual systems will prove unsuitable.
For example, if working with certified materials, a large fashion brand can process 500,000 certificates between certified tier 1 suppliers to the final product purchase order each year. We calculate that it would take one person 19 years, or 41,667 working hours, to complete this task manually.
Manual systems also result in fragmented data that is low on detail and not easily shareable across functions. Large brands will find it difficult and inefficient to communicate with and build profiles on all their suppliers, as tracing beyond direct suppliers manually would become time-consuming and complex. Luckily, digital traceability provides a solution to this.
What is Digital Traceability?
Sustainability is no longer an independent function within a fashion business. A brand’s ability to improve the sourcing strategies aligned to their sustainability goals will be severely limited if they have an audit report or a scope certificate in an email, but don’t link the expiry details with the supplier information. This is where a digital traceability system comes into the picture.
A digital traceability system helps brands collaborate with suppliers across tiers on a near real-time basis, so that brands and suppliers can exchange details about their supply chain, products, and materials. Through the system, this data is consolidated and made available for all functions to see, making it much easier for sourcing, production, legal and compliance teams to collaborate and act on the information. A lot of data that is required for traceability is currently available in PDFs (like audit certificates, transaction certificates, or invoices around the chain of custody) so digitizing this information is one of the first steps in the traceability journey. When a social audit certificate is digitized, brands can easily keep track of the certificate’s validity, as well as which of their supplier facilities are covered by it. Major issues that conflict with the brand’s goals can be tracked and analyzed so that corrective action can be taken.
As new regulations are emerging, the need for high-quality, granular data about the materials and supply chain is ever increasing. Any claim that is made on a product today requires specific data to back it up. For example, a material content claim, such as the percentage of recycled polyester in a product, will require data about the complete material chain of custody.
To implement traceability at scale for cases like this, a digital traceability system should have intelligence on which product should be traced, what data needs to be collected, and from whom. This intelligence comes from product, supplier and order data that is already stored in Product Lifecycle Management (PLM) and Enterprise Resource Planning (ERP) systems, which can be integrated with a digital traceability system, ensuring a continuous flow of up-to-date information. With this automated digital solution, brands achieve traceability at scale and reduce the amount of time spent collecting data, so time can instead be spent analyzing that data and developing data-led strategies.
The Business Benefits of Blockchain
As traceability becomes critical across materials, it is imperative to replace the current paper-based transactions, including material certification processes by third parties, with digital ones. This requires a decentralized, robust and secure technology like Blockchain. Blockchain helps to establish the authenticity of material certifications as well as proof of ownership at any given point in time and is completely tamper-proof. Through blockchain-enabled product passports, suppliers, brands, consumers, certifying groups, recyclers, and other players in the fashion ecosystem have access to encrypted, decentralized and evidence-based information throughout the lifecycle of a product. It is important to note, however, that blockchain in itself is not a magic bullet, and although it enables decentralization and collaboration around data, this will not matter if the data in question is not granular, accurate, and up to date.
Considering that the fashion industry uses a vast number of materials and a highly distributed supplier network, there won’t be a single traceability system across the entire industry, but rather an ecosystem of players that interact to form different solutions pending on brand or industry needs. For example, traceability data for different materials can be stored with different standards bodies, in supplier systems and traceability software systems, but to achieve industry-wide traceability and visibility, all these systems must eventually be able to work together. To ensure this seamless data exchange, all traceability systems should adhere to standards like GS1.
The major benefit of a digital traceability system is that it provides a single source of truth about a product across the network, from suppliers and brands to retailers and consumers. It helps the entire industry to analyze, act and improve its sustainability efforts.
Benefits for Suppliers
- Avoid spending time sending and keeping track of individual emails and documentation per sub-supplier
- Have agency over their own information, which can easily be updated and shared with multiple brands
- Keep documentation up to date: digital systems automatically track and remind suppliers to upload new certificates when old ones expire
- Have proven sustainability credentials, which can improve competitiveness and access to sustainable financing opportunities
Benefits for Brands
- Saves a LOT of time
- Enables automated data collection from suppliers
- Makes data available to everyone across business functions
- A single data source eliminates the need to validate and consolidate data across multiple sources and systems
- Enables brands to make and back up compliance claims about their products and materials
- Ensure that certificates documentation is up to date: Automatically track and remind suppliers to upload new certificates when old ones expire, preventing fraud
- Enables automated consolidation of delivery vs. PO requirements
- Enables tracking and visualization of performance vs. targets
To learn more about how to implement digital traceability into your business supply chain, download the Traceability Playbook — TrusTrace's comprehensive guide published in June 2022.
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