Government rules and regulations over the world make it necessary for industries like pharmaceuticals and (F&B) to track and trace their products. However, the need for traceability goes beyond a handful of industries. But why is traceability so important that it’s required by law in certain industries? From legal compliance to responsible sourcing, traceability is the backbone of a transparent supply chain.
Today’s manufacturing process is truly global: a product manufacturing plant could be in Vietnam with raw materials sourced from China and the products being sold in the US. This is why traceability is required by law for many sectors, like food and pharmaceutical industries.
Traceability is also important for companies to minimize any costs resulting from supplier issues or recalls. According to a study done by the US Consumer Brands Association (formerly Grocery Manufacturers Association), the average cost of product recall is 10 million USD. The cost of brand reputation damage and lost sales is additional.
This makes it important for brands to consider traceability to create a smooth production and distribution process, and reduce costs in an unfortunate case of a callback of a bad product batch.
What is Traceability?
Traceability is the process of tracing the entire journey of a product, from the origin of raw materials and manufacturing to the end distribution. When organizations have an efficient traceability system, they’re able to access all the important past records of their products. This includes information related to:
- Origin of raw materials
- Production process and timeline
- Time required at every step
- Inspection data
- Final product location
Traceability creates a paper trail of the entire production lifecycle, helping you take action wherever required in the supply chain.
Track and Trace Solutions
Traceability requires some technology-driven systems to record and manage the data acquired at different control points of the supply chain. This is where track and trace solutions help.
Track and trace solutions include tools and technologies like barcodes, Radio Frequency Identification tags or RFID tag, and QR codes. The systems used for tracking and tracing need to be easy and quick to use, such as scanning a barcode.
The data collected via these systems then allows the real-time tracking and monitoring of the items.
What Are the Different Purposes of Traceability?
Traceability helps organizations in a number of aspects, such as:
1. Transparent Supply Chain
Today’s production and distribution network is truly global, with multiple countries involved in the product journey. With trans-border transactions and transport, businesses require a strategic traceability solution for smooth and profitable functioning.
With a synchronized track-and-trace solution, these complex supply chains remain transparent and efficient. Traceability keeps a documented record of all the moving items involved, which ensures overall quality and safety. It also helps to maintain the industry-required quality standards and regulations.
2. Environmental Impact
Traceability, in and of itself, isn’t related to environmental or social responsibilities. However, traceability is the pillar that allows companies to be aware of environmental metrics, and take actions where required.
With the ability to track the sourcing of raw materials, businesses can identify and manage the environmental impacts of the entire supply chain. It documents the actual environmental footprint of a production cycle, allowing companies to track wastage, resources, and chemical usage.
With access to such detailed information, brands can implement a more eco-friendly solution wherever possible. Traceability also helps in the verification and third-party certifications of the claims made by a company regarding its efforts toward sustainability.
3. Responsible Sourcing
The long and complex supply chain today creates a disconnect between the end user and the workers behind the product. Consumers today want transparency in the sourcing of products. And traceability directly helps in that.
With traceability, it’s possible to identify the labor conditions and any subcontracting at production sites. This helps companies to take measures to protect labor rights. In turn, this allows organizations to demonstrate their commitment to ethical and responsible sourcing by providing clear information about the origins of raw materials and the conditions under which products are manufactured.
4. Respect for Legislation
Traceability helps companies comply with government and industry rules and regulations, and in avoiding any legal penalties. Without the information provided by traceability, it’s not possible to identify the non-adherence of rules at any stage of the supply chain. This is especially important when the production cycle is spread over several countries with different laws.
What Are the Problems Encountered with Traceability?
While traceability offers a lot of benefits, it also faces challenges and issues that need to be addressed:
1. Traceability Can’t Help in Anti-Counterfeiting
Traceability’s function is to identify and trace the historical data of the production and distribution cycle. The system is still vulnerable to attacks by counterfeiters if the security protocol is weak.
For example, the scanning of track and trace technologies like barcodes or QR codes is only limited to the product packaging. Counterfeiters can easily replicate the packaging or replace the genuine items with fake items. For instance, an expensive wine bottle can stay intact while the wine inside it could be counterfeited. This gives a fall sense of security to the consumers and brands.
2. Integration of Complex Technology
If the track and trace technology isn’t simple enough to be used by all the partners involved in the supply chain, implementing the technology can be challenging. The supply chain has a global network with items being sourced and produced in different parts of the world, where the partner involved might not be technologically advanced. So, having a simple solution is important.
3. Availability and Accuracy of Track and Trace Data
As discussed earlier, traceability is dependent on track and trace devices like barcodes, RFIDs, and more. The problems related are threefold:
- As the supply chain is extremely long and complex, some data might not always be available or accurate. This creates discrepancies and a lack of visibility of the stages where the data monitoring isn’t available.
- If the data entry system isn’t standardized, the collection of data can prove to be ineffective over time.
- The track and trace devices could malfunction if they aren’t placed properly or in different temperature conditions. This is more prominent in devices that are low-cost and not well-made.
4. Data Breach and Privacy Concerns
Traceability is built on the principle of real-time data visibility at every stage of the manufacturing or retail process. However, the supply chain involves a number of operators and third-party partners, such as logistics partners, producers, item suppliers, and more. Some of the partners might not be comfortable sharing company data to maintain a competitive edge.
Concerns about data and privacy breaches are also valid if the technology used for traceability isn’t secured properly.
5. Manual Errors and Delays
A lot of processes in the traceability cycle are done manually, which makes the data susceptible to human error. Procedures like scanning track-and-trace packaging with handheld scanners, and uploading data manually are time and labor-intensive. A delay in even one stage could lead to bigger issues like lost or unaccounted items.
How to Create a Secured Traceability Network
Despite the problems in the traceability system, it’s extremely beneficial in reducing product recalls (or minimizing the cost during recalls) and complying with different regulations. So, how can brands can still benefit from the system while also addressing the limitations?
The solution is simple to implement: combining existing traceability systems with complementary security features to combat problems like counterfeiting and technical integration.
Here are some complementary and alternative solutions to consider:
- Cryptoglyph: Cryptoglyph is a patent technology of AlpVision that you can use for product authentication along with your existing track and trace technology. It is a covert anti-counterfeiting tool, not visible to the naked eye, and almost impossible to replicate. The technology works by applying micro holes in the varnish of the packaging that are impossible to replicate. This protects your products from possible counterfeiting.
What’s more, Cryptoglyph is extremely easy to implement, needing to change your current printing process. It doesn’t require any complex technical integration, making it easy to implement throughout the supply chain.
- Secured QR Code: If you’re already using QR codes as a way of tracing, enhancing its security with a Secured QR code will be the easiest solution. AlpVision’s Secured QR code integrates seamlessly into your existing process, while still providing the extra security for product authentication.
Similar to Cryptoglyph, Secured QR codes are built by imprinting micro holes in the existing QR code structure. The QR codes can then easily be scanned with a smartphone, making it usable for supply chain partners who aren’t technologically advanced.
- Fingerprint: AlpVision’s Fingerprint helps in product authentication of molded or stamped products. This, like other technologies, can be integrated with your existing track and trace without any heavy cost. It uses the product surface’s unique characteristics to authenticate the product.
While alternatives like blockchain are routinely suggested, the technology can’t contribute to product authentication. Blockchain helps in recording data in a decentralized manner, which can prove effective for reducing privacy concerns. However, for manufacturing and retail tracking, blockchain technology can’t be used standalone.
But if you choose to implement blockchain, make sure your existing systems are compatible with it. For example, AlpVision’s solutions can be easily integrated with a blockchain system.
Secure the Supply Chain with Traceability and Authentication
Traceability is an indispensable tool in the modern supply chain. It serves many functions, from promoting corporate social responsibility to minimizing costs for brands in case of unfortunate events like product recalls. Traceability helps companies of all sizes in legal and regulatory compliance, in turn protecting them from any costly lawsuits.
The problem arises when traceability is used interchangeably with counterfeit protection. Traceability’s function is to only track and trace the products. When product authentication is also included in the mix, the consumers are left with a false sense of security.
However, it’s a limitation that can be fixed easily by the implementation of a complementary technology like AlpVision’s suite of solutions.
If you’re looking to secure your supply chain and protect your products’ integrity, contact us to learn how we can help you.
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