Digital Traceability: Building Resilient and Sustainable Supply Chains

Bain’s Hernan Saenz outlines the benefits of digital traceability in supply chains and how companies can get started.


Digital Traceability: Building Resilient and Sustainable Supply Chains

With the spotlight on sustainability, companies must find a way to manage the demands of investors, consumers, and governments. We believe digital traceability is and will be the great enabler that allows companies to balance this broader set of business objectives, including efficiency, resilience, responsiveness, and sustainability. Hernan Saenz, leader of our Global Performance Improvement practice, shares key takeaways from the Sustainable Development Impact Summit, including the steps and benefits of implementing digital traceability.

Read a transcript of the video below:

HERNAN SAENZ: For decades, businesses have perfected highly linear, highly efficient supply chains. Raw materials have traveled in one direction, been converted into products, used, and discarded in a waste heap. That approach now puts a firm's competitiveness at risk. Investors, consumers, and governments all expect sustainable processes and sustainable products, all with the right certifications. Winning in the future will require circular value chains—value chains that reduce, reuse, recycle, and remanufacture.

On top of this, evolving consumer preferences and customization demand increased flexibility and speed. Plus, demand and supply shocks make resiliency a key variable. How do you manage all of these demands?

We believe that digital traceability is, and will be, the great enabler that will allow companies to balance all of these business objectives, including efficiency, resiliency, responsiveness, and sustainability.

Digital traceability gives companies the ability to follow goods and products as they move along the value chain, and then glean exact information about the provenance of inputs, supplier sourcing practices, and conversion processes. The data also allows companies to make predictions, run scenarios, identify unnecessary resource consumption, respond faster to changes in demand, and minimize the impact of internal and external shocks. These combined benefits will translate into higher growth, lower costs, increased market share, better return on investments, and, overall, an improved return to all stakeholders.

Traceability leaders will also help shape the standards and regulations in their sectors. Most companies are well aware of the importance of traceability, but leadership teams have found implementation painfully complex. In some ways, the traceability journey is analogous to a digital transformation. The multitude of application areas and available technologies can be overwhelming. It is relatively easy to set up a simple pilot, but scaling it and amplifying it can be very hard. Plus, traceability adds a new element of complexity: the need to collaborate with a vast ecosystem of value chain partners.

Our prediction is that, over the coming decade, firms will cluster around two very different performance curves—a much higher performance curve for those companies with traceable supply chains, and a much lower performance curve for those who lack traceability. Again, digital traceability is the great enabler. You must see it. You must manage it. You must certify it.

Read more

Traceability: The Next Supply Chain Revolution

It goes beyond sustainability. Traceability can help companies improve efficiency, resilience, and competitiveness.


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