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Traceability Tops Companies’ Supply Chain Agendas

Digitizing the supply chain is getting big buy in from companies increasingly interested in pumping capital into traceability efforts.

A new study conducted by Forrester Consulting surveyed 307 supply chain executives in January to get a read on what the priorities are among companies when it comes to the digitization of their supply chains.

The report was commissioned by Milwaukee-based industrial automation company Rockwell Automation. Rockwell counts customers across several industries, including aerospace, food and beverage, automotive, textiles, publishing and warehouse and fulfillment that use its hardware and software products to squeeze out production efficiencies.

“Unsurprisingly, the Forrester study found that product traceability is critical to business success,” Christine Akselsen, ceo of Rockwell partner and serialization technology company Kezzler, told Sourcing Journal. “More than a third of respondents consider regulatory compliance and enhanced brand loyalty through better product management, two needs met by enhanced traceability, to be important.”

Some 60 percent of supply chain executives said their digital strategies are focused on using serialization and traceability to improve the customer experience, Akselsen said, pointing to the survey results.

“Traceability technology is an invaluable risk management tool for businesses amid, for example, product recalls or grey market diversion, but it’s also a powerful tool to nurture brand loyalty, uncover specific consumer preferences and improve their bottom line,” Akselsen said.

As consumers become savvier about the supply chain, it becomes more intertwined with branding, according to the report. Companies, as a result, are focused on digital transformation, sustainability and the customer experience when it comes to their supply chain investment decisions, the survey concluded.

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“Serialization and traceability efforts get a bad rep: Either they’re all about checking compliance boxes for auditors and inspectors or they just exist to reassure consumers that some expensive item is not a fake,” the report said.

Researchers went on to point out traceability initiatives also come with positives.

“Rather than scaring a prospective buyer into confirming the authenticity of their expensive purchase, why not encourage them to explore its journey from the point of manufacture?” the report said. “This feel-good use case uses the same technology and the same data, but it may also increase positive brand associations.”

Serialization uses unique identifiers, such as quick response (QR) codes or radio-frequency identification (RFID) technology, to authenticate product, a key initiative when it comes to combatting counterfeits. Forty-seven percent of executives surveyed said their companies lose between 11 percent and 60 percent of sales as a result of counterfeits.

Sixty-one percent of those surveyed said serial numbers or other unique batch identifiers are already being used and 23 percent indicated their company plans to invest in serialization. In the Europe, Middle East and Africa (EMEA) market, that push is partially in response to the regulatory environment, with 58 percent of those surveyed citing compliance as the reason for the investment.

That’s in line with the report’s finding that Asia-Pacific and EMEA companies are focused on digitizing their supply chains for the purpose of environmental, social and governance implementation.

Meanwhile, companies in North America were found to be more interested in using traceability data for sourcing data and improving the customer experience, with much of that driven by a push to be more sustainable and garner brand loyalty, according to the report.

Among the technologies being adopted at retail for visibility purposes, Akselsen pointed to the 2027 transition from the Universal Product Code (UPC) to the GS1 Digital Link 2-D identifiers as a good example within the U.S.

“This new standard will transition basic product barcodes into interactive gateways to enhanced information, product individualization and better supply chain management visibility,” Akselsen said.