Traceability is far from a new concept. Back in the 1930s, traceability was certifying the origin of premium goods, like French champagne. Today, it is more relevant than ever.
Technology that enables traceability has evolved a long way from these humble beginnings. Over the past three decades, regulated industries such as pharmaceuticals and tobacco have set technical standards. At the same time, food safety issues, such as Asian bird flu, have further underscored the importance of supply chain transparency. Together, these have transformed traceability systems from simple verification methods to sophisticated systems that use unique identifiers (UIDs) and supply chain event data to safeguard product quality and security.
What has driven the transformation of traceability? The journey towards digital systems.
Traceability technology has undergone a profound transformation over the last century. In the 1930s, certificates were used to verify the origins of luxury products, before being replaced by simple labels. Back then, a physical token was deemed sufficient to monitor the movement of goods. Gradually, labels evolved from incorporating one-dimensional codes to machine-readable formats, which seamlessly integrated with digital systems.
More recently, regulation has played a key role in the evolution of technologies and the sophisticated solutions we see today, with unique identifiers, authenticators, and mobile verification. But what was behind this dramatic shift? As global trade became the norm and supply chains grew more complex, counterfeit and trade diversion intensified. To combat this illicit trade, legislation was introduced to regulate markets, including the Framework Convention on Tobacco Control (FCTC), which was led by the World Health Organization (WHO), and the Falsified Medicines Directive (FMD) in the EU. Such regulations would revolutionize traceability standards.
How has regulation propelled traceability standards? The need for item-level visibility.
What set these legislations apart was their demand for complete item-level visibility. The FCTC and FMD regulations mandated unique identifiers to enable traceability across global supply chains. For the first time, when a UID was allocated to an individual product, stakeholders could trace the entire product lifecycle, from point of manufacture to retail. This milestone was the first time that true item-level visibility became a reality.
But it did not stop with individual items. With the aggregation and disaggregation of UIDs, it became practical for entire product shipments to be monitored throughout the supply chain. The inclusion of machine-readable codes, each carrying UIDs, also moved things forward, ensuring that every item could be accurately traced and essential metadata captured throughout the product lifecycle. As a result, supply chain insights expanded.
183 countries have now adopted the FCTC treaty, which mandates the use of UIDs for tracing tobacco products.
How has technology evolved to enhance security? From digitization to authentication.
Though unique identifiers are a proven traceability solution, a serialized code can be replicated without some form of securitization. In short, how can you ensure a UID is genuine and attached to only one product? FCTC highlighted the importance of an authentication device, typically a hologram, to accompany the UID and protect the 2D data matrix. This helps ensure the serialized code remains unique and associated with one specific item.
Combining UIDs with holograms, or other optical security devices, provides certified item-level traceability, and allows authentic products to be traced accurately. Technology evolved further, as advances in the capabilities of mobile devices offered a practical means of verifying and reporting on UIDs, regardless of the location.
How are traceability solutions changing for brands? Adapting to new market demands.
While regulated markets have set traceability standards, many industries can benefit from similar approaches. For many brands, adopting traceability solutions can support a range of business goals, from tackling channel diversion to complying with sustainability, responsible sourcing, or other policies. Indeed, supply chain visibility will be vital in meeting new regulations, such as Digital Product Passports (DPP). Brands can also gain insights into channel behavior, monitor operational efficiency, enhance stock control, or highlight potential counterfeit hotspots. UIDs can even play a role in enabling direct-to-consumer engagement marketing programs.
By scanning a QR code or other identifier, consumers can authenticate and register new products, access unique content, or participate in promotions. These product scans unlock traceability data, up to and including the point of use by consumers, allowing brands to see how and where their products are being bought, resold, or engaged with. Circularity is becoming a new application for traceability systems, as these increasingly popular programs are giving new life to products and carrying the brand story to a wider range of followers. So, by gaining complete visibility of products, supply chains, and distribution networks, new possibilities are constantly emerging.
Traceability is vital for sustainability, as supply chain emissions typically account for over 70% of a business’ carbon footprint.
Traceability technology has been a story of continuous innovation. Often it has been a necessity, mostly coming in the form of regulatory compliance, that has been the instigator of invention. And much has inevitably changed, from those early certificates used nearly a century ago to the sophisticated digital systems in use today. Just as technology has evolved, so too has industry demand. While regulated markets set the initial standards, brands are recognizing the benefits of gaining complete supply chain control, whether it be improving operational intelligence, ensuring compliance, or enhancing their customer relationships. Traceability is here to stay.
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