No solution has cracked supply chain #traceability yet.
But I’m most excited by one of them.
💡 Quick explainer to catch everyone up:
Traceability means being able to trace the ingredients or components in your product back to their original source. Why is this important? To prevent human rights and environmental violations along the way, such as sweatshops or conflict minerals.
How is traceability currently being solved?
1️⃣ Cascading data requests: Asking your suppliers about their suppliers, and so on…
The problem here is getting your suppliers to cooperate and the reliability of the data.
As you go deeper into the supplier chain, it becomes increasingly difficult to obtain and verify the information, so extensive industry collaboration is helpful.
2️⃣ Import/export data: leveraging global shipping information to automatically map out your sub-tier supply chain. see when physical shipments are received by your suppliers and from whom.
The data allows you to see when suppliers receive "things" from other suppliers, and hence allows you to guesstimate the sub-tier supply chain. Once you do that, you can then monitor and run risk analysis on these suppliers.
This approach is super exciting because it reduces the need for a supplier to provide information, and you're more likely to spot high risk sub-tier suppliers that may not otherwise be disclosed.
Some obvious limitations as well. The data doesn’t cover all countries and if it does, you can’t know whether you’re looking at the direct suppliers of your product versus another customer of your supplier.
3️⃣ Chain of custody certifications: in some industries a third party like FSC can step in to help do the heavy lifting of verifying the paper trail of the materials you’re buying.
Similarly, a supplier could provide similar chain of custody evidence from their direct suppliers.
This works when it's available for your commodity category and when your supply chain is short, so there are not a lot of tiers down to the raw ingredient provider.
👉 The best solution? All of them in tangent. 😂 Ideally in an open database with massive amounts of industry collaboration.
Comment what you think is the solution to traceability 👇
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