Vision drives business decisions. In traceability, data defines how far you can truly see across the supply chain. “In God we trust; all others must bring data.”
While I was pondering about Traceability and Ethical Sourcing, I was wondering how many countries contribute to make the Honda that I drive. Although not mentioned officially, with a little research I could trace that at least 20,000 parts from more than 20 different countries come together to make this car. In this deeply connected economy, Supply Chain has evolved into Supply Network, and I cannot emphasize enough how important Traceability and Ethical Sourcing is to keep the network running. And frankly, ethical sourcing goes beyond cost and efficiency—it ensures that the goods and materials a company procures are produced under fair labor practices, safe working conditions, and environmentally responsible methods.
In today’s interconnected world, global supply chains face mounting scrutiny from consumers, investors, and regulators who demand proof of ethical and sustainable practices. Scandals around labor exploitation, environmental harm, and greenwashing have shown how quickly trust can erode. At the same time, digital-native consumers are willing to pay more for products with verified traceability, making transparency a powerful differentiator. With AI and data analytics, companies can now detect risks, verify claims, and build resilient supply chains at a scale manual system could never achieve—turning Traceability and Ethical sourcing from a compliance exercise into a source of lasting brand value and competitive advantage.
Lindsay Dahl, sustainability activist and current Chief Impact Officer at Ritual said, “Traceability is insanely hard, and no one can get it perfectly right.” Perfection in this field may not be attained but near perfection can be attained through rapidly evolving Data Analytics, AI/ML and Blockchain solutions. From the roadblocks of missing visibility to the rewards of responsible sourcing, let’s uncover in this article, the challenges of traceability, the struggles of its absence, the gains of its adoption, and the power of technology to make it seamless. Traceability and Ethical Sourcing are no longer “Nice-To-Have” but are gradually becoming strategic “Must-Have”.
The High Cost of Opaque Supply Chains
From Supply to Scrap: How lack of visibility is catastrophic in nature.
Peanut Corporation:
A B2B company Peanut Corporation, which was a prominent player in processed peanut industry, handled 2.5% of US’s market. Even with such a strong hold in market and an annual revenue of staggering $2.5 Million, the company faced the inevitable result of opaque supply chain. After distributing salmonella-stained products to their customers, their inability to track the batches resulted in mass recall. More than 3500 products had to be recalled from nearly 400 companies, causing a industry wide losses of over a billion USD. Even more disturbing than this was the reported severe illness of more than 700 consumer and death of many. Needless to say peanut corporation faced massive backlash and criminal charges leading to their permanent shutdown and bankruptcy. Placing a traceability measure would have been much cheaper than this. I sometime wonder is the root cause really the lack of transparency in supply chain or management’s vison?
Takata Airbag:
This scenario illustrates the dangers of a global supply chain lacking traceability. Airbag inflaters containing unstable ammonium nitrate caused them to deploy unexpectedly, resulting in the deaths of 27 individuals and injuries to over 400 others. The absence of traceability compelled automakers to execute the largest recall in automotive history. More than 100 million vehicles were recalled across 19 manufacturers. This led to payout exceeding $24 billion for the company. What do you think the result was? Right! permanent shutdown, bankruptcy and legal charges.
Boohoo:
Once regarded as a fast-fashion digital powerhouse just weeks earlier, the rapid decline of online retailer Boohoo Group stemmed from its ethical sourcing failures. In 2020, investigations uncovered that several of its UK suppliers were paying workers only £3.50 an hour, which was below the minimum wage and involved wage theft in “unsafe conditions.” Unfortunately for Boohoo Group, their inability to monitor these suppliers and workers meant that the allegations remained unchallenged and unrefuted by the online retailer. This resulted in a dramatic drop in the company's market value by £1.5 billion within weeks of the allegations surfacing, leading major retailers like ASOS, Next, and even the German online fashion entity Zalando to distance themselves from the business to protect their own reputations.
Turning Transparency into Triumph
See More, Lose Less: Transparency That Grows Value.
Sometimes it is difficult to understand how such intangible approaches can ever yield practical advantages and that too in a span of a few years or so, let alone in a few decades. By making supply chain visibility end-to-end, manufacturers turn compliance into a competitive advantage, commanding price premiums, gaining market access, and multiplying trust into sustained growth. So, these few examples demonstrate how traceability affects a vast number of industry spectrums, ranging from a niche coffee concern who primarily welds differentiation to a mass market leader who primarily banks on scale.
Coda Coffee:
How would you feel that coffee you drink is grown ethically, maintaining the social and economic dignity of the laborers? I, for once will take a sip without worrying that it won’t stain my conscience. A pioneer in ethical sourcing, Coda Coffee made it a reality. By embedding their supply chain with blockchain technology they ensured transparency from ‘Fram-to-Cup’. Through this innovation, every bag of coffee carries a scannable QR code that allows consumers to trace its journey back to the farmer, including details of origin, farming practices, and even the wages paid. This consumer-facing transparency not only built extraordinary trust but also allowed Coda Coffee to command premium pricing in a crowded market.
A FMCG giant
In order to ensure complete traceability of its supply chain, a world leader in fast-moving consumer goods (whose name is anonymous), procuring more than 1.8 million tons of seed agricultural extracts every year, relied on blockchain-based mapping and satellite-based deforestation tracking. This move has translated into uninterrupted access to high-regulation markets in the context of new deforestation regulations (assisted by EU 2025 norms), thereby also strengthening consumer confidence in various iconic personal and food care product lines. This also translated into significant commercial benefit, as the company’s sustainability and product lines enhanced more than 60% and contributed more than 70% of total growth compared to other products.
Reinforcing Traceability with digital innovation
Traceability represents the foundation of the modern supply chain management, providing insight, accountability, and confidence throughout the process. As it is driven through technology, traceability develops from a state of mere compliance to becoming a force for strength and competitive advantage.
Precision Recall with Lot-Level Traceability:
Lot Level Traceability & Recall Management allows tracing products at batch/lot levels from material procurement through manufacture until end-use. Each item is linked with a “lot level” identifier (QR code, RFID tag, or blockchain hash), enabling firms to immediately pinpoint faulty or contaminated batches in place of undertaking ‘expense-heavy blanket recalls.’ One packaged foods giant rolled out QR/RFID-coded “lot-level traceability,” shortening tracing time from 5-7 days to just 3 seconds. On identification of one tainted ingredient, it pinpointed one lot as opposed to initiating an MRC [Multi-Region Recall] in various geographical regions. Recall losses avoided ~45%; monetary losses avoided > $8 million in additional product write-offs. Traceability is compelled by government regulations like “Food Safety Modernization Act” (FSMA) in the USA. It is required “for high-risk foods,” pursuant to ‘FDA FSMA Traceability Rule’ as stated above. There is little “business dispute” in this regard. Socialist stated, “Governments and regulations are required. At least consumers or industries at this point must be educated in this respect. “Understanding traceability” is one “area” they tackle. “Their biggest marketing issue is trust. It’s one thing to claim ‘we’re safe,’ as in, ‘our ice is safe.’”
Transparency at the Consumer’s Fingertip:
Consumer Transparency Analytics involves making the traceability aspect visible and accessible to the end consumer, allowing customers to scan the codes or use an app that traces the journey of the product. This information can range from farm origin, certifications, environmental factors, and even the working conditions of the farm. Starbucks, for instance, has introduced the “Bean-to-Cup” traceability concept that is made possible by the use of blockchain technology, allowing customers to scan the coffee purchased and trace the origin of the coffee from the farmer and ethical standards. Another company that introduced the traceability concept of coffee through the use of blockchain technology is Coda Coffee, where customers can trace the coffee by scanning the codes on the product. This creates value for the company by increasing extraordinary trust with the consumer and the ability of companies to charge high prices given that consumers are more open to paying high amounts for ethical and traceable goods (Nielsen Ethical Consumer Report).
Workforce Fairness and Living Wage Insights:
Labor Practice, Fair Pricing, and Living Wage Analytics can be activated by aggregating data from the supplier's HR payroll system and personnel data with purchase orders and data on wage rates with grievances and audit data. Then by employing Natural Language Processing and Anomaly Detection algorithms, firms can identify instances of under-compensation, excessive overtime pay, or data fraud. Certain framework such as the ‘Fair Labor Association’ and ‘Ethical Trading Initiative Base Code’ help identify wage issues, and the ‘International Labor Organization Global Wage Report’ provides global comparisons for the relevant data (Fair Labor Association). The effects on the organization include the ability for non-compliance detection and prevention by up to 40-70%.
Carbon Mapping & Green Supply Chains:
Organizations cut carbon emissions by first making them visible. They track what actually happens across the value chain—how much energy plants consume, how goods move across lanes and modes, what materials go into each product, and how suppliers perform from a life-cycle perspective. This data comes straight from day-to-day systems like ERP, TMS, MES, smart meters, IoT sensors, and supplier portals, so the carbon baseline reflects real operations, not assumptions.
At the heart of this is Activity-Based Carbon Accounting (ABCA). It works much like activity-based costing, but instead of asking “what does this cost?”, it asks “where does the carbon come from?” Every meaningful activity—running a machine, producing a batch, shipping a pallet, sourcing a material—is assigned a carbon value. That carbon is then traced to products, SKUs, suppliers, and transport lanes using digital LCA and product carbon footprinting tools, supported by platforms like SAP Sustainability Control Tower or Microsoft Cloud for Sustainability. Globally accepted emission factors from DEFRA and the U.S. EPA convert this activity data into grams of CO₂e per unit, making the numbers consistent, comparable, and ready for audit.
Once emissions are tracked this way, decisions become clearer. Companies typically see 10–20% reductions in logistics emissions, stay compliant with EU forest and deforestation regulations, and position themselves to compete in low-carbon markets, where credible, traceable carbon data is no longer optional.
Smart Fraud Detection & Authenticity Analysis:
Predictive Fraud & Mislabeling Detection involves the use of Optical Character Recognition (OCR), Natural Language Processing, and Anomaly detection techniques in certifications, customs papers, blockchain-data, and commodity prices. OECD's report about illicit trade in the food sector and the EU Rapid Alert System for Food and Feed (RASFF) provide patterns of fraud, while case studies from IBM Food Trust indicate improvements made by blockchain technology in fighting product fraud. 30-50% of fraudulent and non-compliant products, along with 20-40% reductions in audit time, can be realized by firms adopting predictive fraud analytics.
To put into perspective, imagine a large CPG manufacturer sourcing flavors, starches, and edible oils uses predictive fraud and authenticity analytics to screen its 12,000+ incoming raw-material lots each year. OCR extracts data from supplier CoAs and customs papers, while NLP checks purity and pesticide-limit descriptions against historical patterns. Anomaly detection then compares each lot’s declared values and pricing with global commodity benchmarks and the company’s own multi-year supplier baselines. During one routine check, the system flags a flavor-oil batch showing a 19% purity–price deviation and inconsistent lot IDs across two documents—both strong fraud indicators. The batch is immediately isolated for advanced testing, helping the CPG firm prevent a potential adulteration event while cutting its verification workload by 30–40% across the sourcing cycle.
Conclusion:
In the next decades, traceability and ethical sourcing will become more feasible through data analytics and artificial intelligence. It will become possible for a business to trace the supply chains with an level of accuracy that was unheard of before and detect potential problems before they become larger issues through the use of real-time data and intelligent automation. While Big Data Analytics provides a beam of light that luminates the hidden issue in Supply Chain, AI finds the invisible issues of either labor and/or the environment. Traceability and ethical issues of the past are no longer going to be limitations, thanks to the coming of agentic AI.
AUTHOR - FOLLOW
Atanu Datta
Associate Manager, SCM
