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Supply Chain Visibility Vs. Traceability: What's the Difference?

Posted on 
December 3, 2020
Matthew Wright
Founder & CEO, Specright

Supply chain visibility and traceability are both essential for improving supply chain functionality. Many companies have limited knowledge about how their supply chain works outside of one or two upstream or downstream layers. By gaining more transparency throughout the supply chain, companies are in a better position to identify inefficiencies, reduce complexities, and improve decision-making.

To make the most of what visibility and traceability have to offer, it’s important to understand the two are closely related, but not interchangeable.

What is Supply Chain Traceability?

Think about the products you sell and all the materials or ingredients that go into those products. Now, pick a material.

  • Can you trace it all the way back to its origins?
  • How about all the way to its end users?

These are the goals of supply chain traceability. It’s mapping the entire journey of raw materials or finished goods. Traceability is paramount in industries where safety and quality are top concerns, such as food products and pharmaceuticals. It’s also becoming more important in other industries, especially those whose customers have strong feelings about where their products come from or whether materials have been sustainably sourced.

Currently, the technology that is most promising to provide traceability is blockchain. In the supply chain, all components can contribute to a blockchain to provide transparent, traceable data that’s been verified and cannot be changed without altering the entire blockchain. Learn more about blockchain technology.

Why is traceability important in supply chains?

Although supply chain disruptions affect almost every industry, the risk is greater where products are prone to recalls, such as automobiles, aircraft, and perishable goods. To tackle this challenge, supply chain management experts came up with traceability solutions. 

Documenting the product’s information at each stage of the supply chain allows manufacturers and supply chain managers to pinpoint the cause of the problem and take immediate corrective actions without wasting time in second-guessing.

With end-to-end traceability, you can gain visibility into your global supply chain network in real-time, from procurement and production to end users who purchased the product. This will allow you to identify production failures and conduct efficient recalls to reduce your environmental impact. 

What are the benefits of traceability?

Let’s look at how traceability improves manufacturing operations and maintain product quality in a cost-effective manner

Efficiency –

Since every aspect of the production process is documented with time stamps, it’s easier to locate errors and keep faulty products from leaving the facility. Even if the product does end up in the hands of end users, traceability allows managers to conduct recalls on affected products without reputation exposure.

Quality control –

Ensuring product quality is an important aspect of doing business. However, meeting internal or enforced quality standards can be a challenge in large-scale manufacturing processes. This is where traceability offers efficient ways to ensure granular quality control so that each product meets the desired quality standards with a minimal error rate.

Simplifies audits –

In most cases, your auditing objectives are directly related to your company’s reputation and product quality. But auditing the entire supply chain process can be time-consuming. Traceability allows for efficient and simplified audits, making sure nothing falls through the cracks, and your business does not lose too many revenue-critical man-hours.

Easier to troubleshoot –

When you have accurate, hands-on documentation at every stage of the process, rectifying errors becomes a lot easier. Traceability gives you further insights into how the error occurred and what could be done to prevent a recurrence.

The less time you spend on troubleshooting errors, the more time you can devote to driving your business forward through innovation.

Boosts brand image –

With a robust traceability system in place, manufacturers can enjoy greater control over the production process and are better positioned to work on improvement areas that help them deliver high-quality products to their customers. As the customers’ trust grows in the product, the brand’s overall value goes up proportionately. 

Besides, businesses can achieve significant time and cost savings with traceability systems in place. These savings can be passed on to other sectors of the organization to improve product quality and overall brand image.

Steps to Implement Supply Chain Traceability

Traceability can be implemented in any production process regardless of the scale or industry. Here’s a lowdown on how to implement chain traceability in your organization.

Earmark Your Key Components 

The first step is to earmark key components involved in your core supply chain operations. It is important to identify the source of these components and map out their journey throughout the product’s lifecycle. 

Track Risks and Set Goals

What are the risks associated with each component? Knowing what could go wrong at what stage will help you with effective documentation without resorting to guesswork. Once you have this information, you can tie a goal with each component. For instance, you know a certain component of your product could snap under certain circumstances. In that case, you will likely create a checkpoint around that scenario so that when things go south, you know where to look.

Visualize the Supply Chain & Collect Information

This involves mapping out the sequence of operations in your supply chain, right from procurement to finished products. Having a clear understanding of the production schedule, raw materials and equipment needed to create the product enables you to track progress at a granular level and identify issues that may arise at any point. Collect information about your suppliers, service providers, and end users so that you can streamline your recall process and only replace products that are affected by the production error.   

Set the Level of Disclosure

The level of disclosure varies from business to business. Some businesses and stakeholders might want to limit the level of transparency in their operations to protect their interests. In that case, you can decide who should have access to supply chain data, what kind of supply chain data can be shared, and under what circumstances those supply chain insights can be shared.

From another standpoint, supply chain transparency is an excellent way to infuse trust into your strategic partnerships and public image. As a result, organizations can win over customers without investing heavily in marketing and advertising.

How to improve traceability

Product quality is a pressing concern for organizations across the board. Many companies lose their customers and reputation to preventable product issues and loopholes in the supply chain. That said, by implementing and improving traceability, organizations can mitigate risks and potential setbacks within their supply chain.

Here are the essential steps to improve supply chain traceability.

Collaborating with suppliers

By collaborating with suppliers and having a traceability system in place, manufacturers can chalk up their finished products to each procurement and production stage. As a result, any issue that may arise in the product can be traced back to its origin and rectified promptly. This will also help with efficient recalls in case the affected product makes its way into the market.

Deploying traceability software

Software can help collect supply chain data in one place. The data is gathered through barcodes or RFID labeling to avoid redundancy and errors. In an event of a product recall, these systems make it easier for retailers to locate the affected product in the supply chain.

Integrate traceability with legacy systems

If you have existing ERP or inventory management systems to track the movement and transformation of the product in the supply chain, you can integrate smart traceability software to improve efficiency and reduce errors.

Set up alerts

By setting up alerts, each entity across the supply chain network can be notified about the recall-worthy issue. Upon receiving the alert, the chain partners can freeze inventory and cull affected products wherever they are in the supply chain.

Communicate with customers 

Through loyalty programs, retailers can put an alert system in place to notify customers about a product recall immediately upon discovery. Doing so will protect the customers’ interest and the company’s reputation.

What is Supply Chain Visibility?

With supply chain visibility, you can see your entire supply chain at each tier of operations. Traceability is an important part of this process, which is why the two are usually talked about together.

Similar to traceability, supply chain visibility thrives on transparency. The main difference is that instead of knowing a product’s entire journey, visibility focuses on knowing every touchpoint in your supply chain. Different products and materials will likely have different journeys from source to end-user, and companies should understand all of the points that make up their network.

In doing so, businesses are better able to collect and share insights with customers and stakeholders, reduce operational risks, improve performance, and identify potential bottlenecks.

Why is Supply Chain Visibility So Important?

Supply chain visibility is crucial for managing inventory and mitigating risks associated with it. By offering a clear line of sight into the inventory and products in transit, end-to-end visibility helps control costs, minimize delays, and avoid supply chain disruptions. 

Supply chain visibility addresses communication gaps within the supply chain so that every process can function optimally, allowing businesses to take proactive steps to manage external factors that could disturb their demand-supply harmony. 

Key benefits of supply chain visibility

Here are some of the key benefits of implementing supply chain visibility in your operations. 

Mitigate disruptions:

Knowing the origin of potential disruptions beforehand gives you the ability to nip the problem in the bud or contain its effects further down the supply chain. With real-time data analysis and communication as your strong suits, you can optimize your supply chain for exceptional results.

Competitive Advantage

Supply chain visibility gives you a competitive advantage. When you have full visibility into your supply chain, you can make quick decisions that eventually boost efficiency and productivity – no matter the circumstances.

Increase speed:

With your supply chain decisions rooted in data analysis, you can predict what’s coming and make your next move without wasting any time. The faster your product moves in the supply chain, the bigger profits you make.

Meet consumer demands:

Consumer demands can change quickly, often giving you less time than you need to adapt. With supply chain visibility and a seasoned consultant at your disposal, you can rethink your supply chain on the fly and ensure customer satisfaction. 

Data-driven results:

Supply chain visibility gives you a large amount of data to work with. By utilizing this data, you can make intelligent decisions that strengthen your supply chain and drive your business forward. Combined with artificial intelligence and machine learning, digital supply chain visibility can do wonders for your manufacturing operations.

How to achieve better supply chain visibility

Organizations can achieve better supply chain visibility through different means. However, one thing that’s common in every approach is increased awareness about advanced product lifecycle management systems. 

Here are a few tips that should help.

Employ the latest technology:

We are living in the age of rapid digital transformation. Using the latest software and systems, you can track supply chain variables efficiently and devise effective strategies to deal with unforeseen circumstances, from inclement weather to pandemic-like situations. 

Improving the capabilities of all tiers:

Training your employees across all tiers to be versatile is important because you need people to operate automation software and other technological assets you have invested in. Strict specialization can limit your employees’ ability to interact with supply chain tiers. As a result, inefficiencies can creep in and affect the overall productivity of the organization. 

Focus on workflow:

Making quick decisions without compromising visibility is only possible when you have a strong workflow. For this to happen, you need versatile employees who can solve issues across different tiers of the supply chain and make critical decisions with confidence.

How Supply Chain Data Management Supports Traceability and Visibility

To achieve supply chain traceability and visibility, companies must consider a myriad of moving parts and compile them into usable, easy-to-access insights. Supply chain data management can help facilitate this by providing a central source of truth of all products, materials, and supply tiers. By relying on one data resource, companies have the information they need to understand how their supply chain works and how various components are connected. They can use this data to drive decision-making and respond to risks and opportunities that could impact the bottom line. Download our ebook for a closer look at how Specright supports your data management strategy.

In The Evolution of Products and Packaging, Specright CEO Matthew Wright provides a first-hand account of the trends that ushered in an explosion of SKUs and an increase in supply chain complexity that plagues manufacturers, brands, and retailers still today.

Over the course of Wright’s journey, the answer to this complexity seemed simple: to keep up, the professionals would need to embrace data to make better, smarter, more sustainable products and packaging. You’ll recognize stories of the common pitfalls organizations slip into when it comes to managing their most important data and get a glimpse into the future of how data can drive the answers to some of our most pressing supply chain challenges.

About 

Matthew Wright

Matthew Wright is the founder & CEO of Specright. Prior to founding Specright, he spent more than 25 years in the packaging industry, holding leadership positions at International Paper, Temple Inland, and rightPAQ — a packaging company he co-founded. He has also been involved in leading multiple M&A deals in the packaging industry. He sits on the Packaging Advisory Board at Cal-Poly San Luis Obispo.

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