Digital Traceability:
A Framework for More
Sustainable and Resilient
Value Chains
WHITE PAPER
SEPTEMBER 2021
Contents
Foreword
Executive summary
Section 1 The case for digital traceability
1.1 A source for sustainability and improved competitiveness
Section 2 Beginning the journey
2.1 Connecting traceability to sustainability and business objectives
Section 3 Understanding the traceability enablers
Section 4 From experimentation to transformation
A call to action
Contributors
Acknowledgements
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Cover: Urfinguss, Getty Images – Inside: Getty Images
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Partners or other stakeholders.
Digital Traceability: A Framework for More Sustainable and Resilient Value Chains 2
Leadership teams in every industry face a strategic
imperative to create more sustainable value chains.
Long gone are the days of slow and incremental
improvements. To compete, companies must
adapt to rapidly changing consumer preferences
and stakeholder demands for more sustainable
products and circular value chains.
Most organizations have set ambitious sustainability
targets, vowing to reuse, remanufacture, or
recycle their products to minimize their impact
on the environment. But the hard part lies ahead.
Companies now need to translate those goals
into specific, tangible actions to prove to a
multitude of stakeholders that they have delivered
on their commitments.
Traceability across the entire value chain is the
key to success. Traceability technologies provide
management teams with a treasure trove of digital
information about the upstream suppliers providing
raw materials, the downstream partners adding
value, customers who purchase the product, and all
the processes along the way. Improved visibility on
inputs and processes gives executives the means
to achieve their sustainability objectives
and provide vital data for provenance
and sustainability certifications.
But traceability is more than a tool to enable
sustainability. Leading companies rely on traceability
to achieve a broad set of interrelated objectives,
including supply chain resilience, efficiency, visibility,
security, regulatory compliance, reliability and
additional growth through new business models.
Leadership teams that tap traceability to realize a
broad set of objectives unleash a multiplier effect.
At the same time, they accelerate the shift towards
more circular production processes (recycle, reuse,
remanufacture). These first movers will have a
stronger, more integrated impact on value chain
design than their competitors.
The rewards of getting it right are substantial.
Companies that build robust traceability will be
able to meet their sustainability targets, stakeholder
demands and new regulatory requirements. They
also will be able to deliver the right product to the
right place at the right time and with the right level
of customization and speed – all at a competitive
cost. Finally, these leaders will be more resilient
in the face of supply-and-demand shocks as
traceability helps companies predict potential
threats and adapt faster to disruption. All those
advantages will help deliver stronger growth and
profitability and enable new business models
(see Figure 1).
Francisco Betti
Head of Shaping the Future of
Advanced Manufacturing and Value
Chains, World Economic Forum
Foreword
Digital Traceability: A Framework for More
Sustainable and Resilient Value Chains
September 2021
Josh Hinkel
Partner and Global Solution Leader
of Digital Operations and Supply
Chain Traceability, Bain & Company
Hernan Saenz
Partner and Global Head of
Performance Improvement
Practice, Bain & Company
Digital Traceability: A Framework for More Sustainable and Resilient Value Chains 3
Traceability frameworkFIGURE 1
VISION
LEVERS
FOR CHANGE
GOALS
ENABLERS
Accelerate a manufacturing and supply chain
revolution by scaling digital traceability for greater sustainability,
circularity, efficiency and resilience.
Technology
Internal operating model Standards and certificationsEcosystem partners
Enable more
productive and profitable
supply chains
Deliver growth, enable
new business opportunities,
develop talent
Improve supply chain
resiliency and
responsiveness
Achieve
sustainability
goals
Shape and meet
regulatory standards
Product design Input Conversion Post-life
-
Data
Traceability solutions
Reduce
Reuse
Remanufacture
Recycle
Source: World Economic Forum; Bain & Company
Digital Traceability: A Framework for More Sustainable and Resilient Value Chains 4
Executive summary
Leadership teams are facing a pivotal shift. To
compete effectively, companies need full visibility
throughout their value chains. This paper presents
a framework for understanding how traceability
accelerates progress towards more sustainable
outcomes and, in parallel, delivers better
business results and improved competitiveness.
It encompasses company issues and broader
community issues that are critical in enabling
traceability. It also details the four steps critical
to a successful traceability effort: connecting
traceability to sustainability and business objectives;
building a collaboration ecosystem across your
value chain; deploying key enablers such as data
and technology; and taking a rapid test-and-learn
approach to get started.
In some ways, the traceability journey is analogous
to a digital transformation. The multitude of
technology options and application areas is
overwhelming. It is relatively easy to set up a simple
pilot but scaling it and amplifying the benefits
across different application areas is challenging.
Traceability adds a new element of complexity – the
need to collaborate closely with a vast ecosystem
of value-chain partners.
Successful companies are taking the lead and
engaging partners in the value chain to help achieve
broader sustainability goals while building solutions
tailored to their own strategic objectives. They
start by assessing their industry sector dynamics,
regulatory requirements, customer expectations,
stakeholder demands, competitive dynamics
and potential value chain shocks. Each of these
considerations informs the company’s goals and
potential trade-offs.
An important first step is preparing the organization
for the journey. Traceability requires cross-functional
coordination across the entire value chain, often in
ways that challenge traditional operating models.
Traceability also involves collaboration between
companies that may not have worked together
in the past. Partners must identify how to collect,
govern, protect and share relevant information
across the ecosystem.
Choosing the underlying technology to share and
host the data brings another set of challenges.
Each company needs to ensure data security
and privacy. In addition, the technology must
scale across partnerships and application areas,
connect to existing systems, and interoperate with
other traceability systems inside and outside of
the company. Those demands require significant
investments and partners will need to determine
how to share the costs and benefits. Most
successful traceability efforts start small, with
a high-value application. That approach allows
companies to set up the right standards for data,
technology and collaboration, and ensure value for
every participant. A micro-battle approach, with
each initiative serving as microcosm of the scale
solution, has served many sectors well.
As we have seen in digital transformations, the
biggest risk for companies is ending up in a
pilot doom loop. Experimentation is easy, but
transformation at scale is hard. For complex
and cross-functional topics like traceability, it is
imperative to determine in advance how to scale
each initiative. Successful efforts may start small,
but they also start with a detailed scaling plan
across application areas, use cases and enablers.
The four sections that follow explore each step
of traceability transformation in depth and share
best practices from industry trailblazers. Our hope
is that this framework helps management teams
plot a successful path forward and achieve their
sustainability and business-performance goals,
while establishing a foundation on which new
cross-company and multistakeholder collaborations
can emerge.
Digital Traceability: A Framework for More Sustainable and Resilient Value Chains 5