INTRODUCTION
The commodity business has always been fraught with complexity, but under increasing scrutiny from legislators, regulators, consumers, and therefore auditors, that complexity is growing steadily and inexorably. One significant challenge in which complexity is increasing, is the need to track commodities, consumables, and fuels, from source to market. It is no longer the case that buyers can simply pick the best price in choosing a supplier as concerns over issues like food safety, as well as an increasingly savvy consumer that is concerned over abusive labor practices, workers rights, and environmental issues, for example, are increasing the traceability complexity across almost all supply chains.
The recent Trade Facilitation and Trade Enforcement Act, for example, has tightened import controls into the US allowing customs to detain and seize any product thought to have been produced with child labor. The legislation has already been used to detain a shipment entering the US. In order to release a shipment, the owner is required to prove that the custom’ s suspicions are incorrect. This is a good example of how a myriad of new rules and regulations are forcing commodity firms to pay much closer attention to traceability. Increasingly, the onus is on the owner of the commodity or product to prove compliance with standards for environment, labor and sustainability etc.
What is traceability? The widely accepted definition from the International Organization for Standards( ISO) is as follows,“ The ability to identify and trace the history, distribution, location and application of products, parts and materials, to ensure the reliability of sustainability claims, in the areas of human rights, labour( including health & safety), the environment and anti-corruption.” This is a fairly broad definition, but it does not include the additional driver of protecting brand value. Selling food products or commodities that are substandard, defective, or that do not live up to certain environmental claims, can have a massively detrimental impact on brand value. Nestle is a good example of how brands can be tarnished after being targeted by a very vocal Greenpeace campaign regarding its use of palm oil to make Kit Kat bars procured from producers deemed to be destroying rainforests and habitats.
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