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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