Three pitfalls on the way to traceable supply chains

Dr Sarah Lake

Tracing global supplies can be a challenge, but is it always the right goal to pursue? Photo: bathyporeia via flickr.com, creative commons licence.

Traceability is becoming more and more possible in global supply chains, thanks in large part to advances in technology and data management. But do companies need to trace every drop of palm oil back to the tree? And even if they do it, how can they ensure it leads to more sustainable land use?

These days, it seems like traceability has become a holy grail for companies trying to boost their sustainability credentials and clean up their supply chains. A mini-industry of training, workshops and roundtables has grown up around the idea of making supply chains traceable. And the pressure is not just from companies themselves: environmental, human rights and consumer campaigners are also demanding their right to know just where commodities are coming from.

There’s little doubt that transparent, traceable supply chains are crucial if people further down the supply chain — consumers, retailers, financiers, importers, processing industries, for example — want to make a positive difference to what happens in the fields, plantations and forests.

But there’s a risk of losing sight of exactly what traceability is for, and just how far it needs to go. Here are three potential pitfalls that corporate traceability programmes should try to avoid.

1. Using the wrong tool for the job

When we think of a traceable supply chain, we tend to think of it being able to trace the food on our plate back to the very farm it came from. But it can take a huge investment of time and resources to get to that level of detail — particularly for commodities such as soy and palm oil that are bulked, binned, stored and processed even before they reach the port of export. And often that investment is wasted — traceability to a district, or even a region, can be enough for key stages in a sustainability journey.

Say you’re a corporate sustainability manager trying to piece together a deforestation-free supply chain strategy from scratch. What you really need to know is what are the most pressing potential risks and where are the potential hotspots across the supply chains of the corporation’s entire portfolio. For that, quick, higher-level, broad-brush traceability — the kind of information offered by the Trase platform — is more appropriate than detailed studies of individual suppliers. Once you have the big picture, you can move on to more targeted investigations, getting closer and closer to the point of production.

If you start the journey with detailed studies, you will have to make assumptions about where the risks are likely to be in your supply chains. Those assumptions might be wrong and you could end up wasting a huge amount of time and resource.

Waiting for fine-scale traceability might just not be feasible in the short time frames created by the realities of impending climate and biodiversity thresholds.

2. Cutting and running

One important step companies can take using traceability information is to identify high-risk areas in their supply chains. But what next? Deforestation or rights abuses in the supply chain can be a PR disaster, and the most obvious course of action might be to cut all ties and find less problematic sources and suppliers. But that won’t solve the problems on the ground. With their livelihoods under threat, producers may cut even more corners, and take even more risks. And there’s often a less scrupulous buyer ready to take their produce.

If companies are genuinely committed to sustainability, they should be ready to invest in increasing traceability in these high-risk areas, and helping these suppliers to improve their practices.

3. Mistaking the means for the end

A report released this year by Supply Change and Ceres lists 208 companies with potential for deforestation in their supply chains that have made explicit commitments to traceability (although not all of these were judged “clear” or “actionable”). Forest 500, CDP and SPOTT also take traceability into account when assessing companies’ performance.

While traceability commitments and achievements deserve recognition, putting too much focus on them risks making traceability an end in itself. What matters is what companies do with traceability information to de-risk their supply chains and source more sustainably. Assessment efforts need to give more attention to the outcomes enabled by traceability, rather than traceability itself.

From traceability to sustainable sourcing

Although the idea of achieving traceable supply chains is daunting and difficult to imagine for many commodities, it is a worthy and necessary challenge. As long as we do it efficiently, answer the right questions at the right time, and use the information effectively; traceability can be one of the most important tools we have to improve supply chain sustainability.

Dr Sarah Lake leads the Supply Chain Programme at Global Canopy and is a co-lead for Trase.