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How Product Traceability Software is Revolutionizing Supply Chains.

Product traceability software is changing your industry. We’ve written this blog to help you stay ahead of the game.

you’ve probably experienced increasing problems with distributors, downstream inventory management, fake product and product diversion over the years. Supply chain shocks can be caused by pandemics, natural disasters, rising oil prices, political upheaval and wars have exacerbated these problems and created new challenges for your brand and business.

Traceability technology is advancing rapidly and has changed significantly in the last two years. QR codes are scanned hundreds of millions of times a day by billions of people and RFID chips are found on more and more products, with both “tags” playing an important role in traceability programs.

What does product traceability mean?

Product traceability refers to the ability to track and trace products in your supply chain from production or manufacturing to the final customer. Product traceability requires the generation and organization of supply chain data and serves to improve supply chain transparency.

Modern traceability technologies benefit companies in the following ways:

  • Creating visibility for distributors and distribution channels and mapping product marketing
  • Tracking Parallel Imports and Diversions in Distribution
  • Creation of tools for demand forecasting and inventory planning
  • Tracking recalled items, returned products, and damaged and defective products
  • Supporting sustainability programs such as recycling, carbon footprint tracking and circular economy
  • Building trust with customers by communicating product origin and sustainability

To underline the importance of traceability for sustainability, the European Union’s Green New Deal has defined the Digital Product Passport , which contains standards for tracing a product’s upstream inputs, as a cornerstone of an initiative to encourage companies to become more sustainable and covers a wide range of sectors and products.

Example of traceability technologies:

  • QR codes and RFIDs attached to products and boxes are scanned in the downstream value chain

What is product traceability compared to logistical traceability?

Product traceability is about assigning a unique identifier or code to each individual product and documenting each product’s journey through the supply chain. This typically requires scanning devices and employees scanning the product and its case, pallet, etc. at multiple points in the supply chain.

Traceability in logistics typically refers to tracking containers or other logistics goods using GPS sensors during their journey on trucks, ships and aircraft.

To ensure product traceability across multiple downstream distribution points and to the final customer, it is usually more practical to collect product location data independently from QR code or RFID scans rather than trying to integrate it into different logistics data systems.

Benefits of traceability and transparency of products and supply chains

Traceability offers significant benefits to companies with complex supply chains and distribution networks by detecting parallel imports, improving distributor inventory management, simplifying product recalls, supporting regulatory compliance, contributing to the achievement of sustainability goals and communicating product origin to the end customer.

We will discuss each of these benefits of traceability in more detail below.

Tracking Parallel Imports and Diversions in Distribution

A key challenge for supply chain traceability programs is collecting data in the “middle” of the supply chain, when products are in the care of retailers or distributors.

Brands use product traceability software to understand how products reach the market, how their distribution network works, and whether or not distributors are violating their contracts and selling to unauthorized markets.

Optimizing Demand Forecasting, Inventory, and Sales Planning

Product traceability can enable better demand forecasting and better management of retailer inventory,bringing two categories of benefits:

Visibility into distribution center operations (both internal and external distributors) can be used for demand forecasting, improving downstream inventory management, and sales and operations planning (S&OP). This is especially important for products that are offered seasonally or as part of promotions. Better demand management leads to fewer shortages or overstocks and better cash flow management.

Knowing the type and amount of inventory in distribution centers can alert the brand to old products that need to be brought to market faster and replaced with newer ones.

Managing Recalls, Returns, Damaged Goods, Defects, and Warranty Claims

Traceability solutions can help identify products that have been recalled and track them through their distribution chain and on to their manufacture and production.Traditionally, tracking of recalled or damaged goods has been done manually using text codes and batch, lot and serial numbers printed on products. This approach lacks supply chain-level traceability data and a channel for customer engagement.

In modern traceability systems, unit-level labels on each product provide distribution and shipping information for each item, including production data (batch, lot) and logistics or shipping data (case, box, pallet) across the various points in the supply chain. Companies use this data to identify problems in their distribution that affect product quality and therefore their profit margins.

Meeting Regulatory Compliance and Trade Restrictions

Many industries are regulated to require products and their ingredients, raw materials or other inputs to be traceable down to the unit level. This can only be achieved at a reasonable cost through serialization – the printing, labeling or even laser marking of unique codes on products and packaging.

A EU initiative Digital Product Passports will require sectors such as batteries, textiles, building materials, electronic waste, plastics, chemicals and car parts to be given unique labels that can be used to assess the environmental impact of their production. The first sectors are expected to be regulated by 2024.

Advancing Circular Economy, Recycling, and Carbon Footprint Reduction

Traceability enables new business models and practices where the product or product packaging is reused, repaired, refurbished or recycled. This is increasingly the case in electronics and industrial goods. A wide range of products – from computer parts to car batteries to oil drums – now reuse or refill recycled components or parts of the packaging, saving costs and reducing the environmental footprint.

Supply chain traceability systems are now being used to facilitate these new business models and to prevent counterfeit or unapproved parts from being used or parts from unapproved channels from entering the upstream supply chain.

The EU Digital Product Passports programme would create standards for such traceability and assessment of the carbon footprint of products and require certain industries to use such systems and make this information available to their customers.

Providing Transparency on Product Origin, Quality, and Ingredients to Consumers

Upstream supply chain data, which includes the raw materials and ingredients of a product, can be passed on to the consumers of that product. This is a common use case for consumer goods, apparel, food, beverages and coffee.

Conclusion:

Product traceability software, like the one offered by Transgenie, is essential for modern supply chains, offering transparency, efficiency, and compliance. Technologies like QR codes and RFID chips provide visibility, helping businesses manage inventory, improve demand forecasting, and streamline recalls.

Traceability also supports regulatory compliance and sustainability efforts, building trust with consumers. The EU’s Digital Product Passport highlights its importance for future sustainability.

By adopting Transgenie’s traceability technologies, businesses can navigate supply chain challenges and ensure long-term success. Embrace product traceability with Transgenie to enhance your brand’s integrity, efficiency, and sustainability.