As a business, it can be a challenge to track the journey of a product from start to finish. Supply chain transparency can be lacking in certain areas and tracing a product's physical properties can add further complexity. Understanding traceability is important for creating a more transparent supply chain and ensuring that products are ethically and sustainably sourced.
Traceability refers to the ability to identify and trace the history, distribution, sustainability claims (human rights, labor practices, environmental impact, anti-corruption measures), and location of products, parts, or materials. The chain of custody refers to the process of tracking information within the supply chain.
The Importance of Traceability
Traceability can bring numerous benefits to a business, including:
- Improved control over the supply chain, allowing for quicker responses in case of a product recall
- Increased sustainability, as traceability promotes transparency and improved business practices.
- Evidence of ethical and sustainable business practices
- Uniting companies and stakeholders towards a common purpose
- Opportunity to showcase transparency and sustainability efforts
Challenges of Implementing Traceability
The complexity of the supply chain can make it difficult to implement a traceability system. Different actors may use different systems, and products may be assembled using parts from various sources around the world with varying data availability. This can pose a particular challenge for companies that manufacture complex products with multiple tiers of suppliers. Data acquisition can also be time-consuming, and the systems required may be demanding.
There are three main models for tracing product attributes in a traceability scheme. It is important to understand which model will best fit your needs based on the type of information or product you want to trace.
Products can be physically separated into certified and non-certified and tracked along the supply chain. The end-user can know that the product is 100% certified and make a claim accordingly. Products can be segregated individually (identity preservation model) or in a batch mode (bulk commodity model).
Example: Luxury bags can be traced individually using a unique serial number, making it an identity preservation model.
Certified and non-certified products can be mixed and the corresponding volumes tracked along the supply chain. The end-user can claim that a certain percentage of the product is certified.
Example: Fair trade coffee cannot be traced bean by bean, but a certain percentage of the batch can be certified.
Book and Claim
This model model separates physical flow from attributes flow, with certificates issued for product volume at the beginning of supply chain. No physical traceability, and mixing of certified and non-certified is allowed. Producers can sell certificates, allowing end-users to claim sustainable attributes and support efforts
Example: Energy attribute certificates can be bought to support sustainable power generation, even though renewable power can’t be traced back to its source asset once added to the grid.
How ENGIE is Supporting Traceability with TEO
ENGIE, through its blockchain-based solution TEO – The Energy Origin, is helping different industries promote greater traceability throughout their supply chains. Producers are able to showcase the origin of their products and all sustainability efforts they undertake, while clients can support these positive practices.
TEO can be tailored to the unique needs of different industries, and its use of blockchain technology ensures that final users can easily trace the attributes of their supply, with no possibility of double counting. With ENGIE’s TEO solution, companies can take a significant step towards creating a more transparent and sustainable supply chain.