TRACEABILITY IS EVERYWHERE

While it is logical to associate traceability issues and processes with food supply , traceability is rapidly becoming an issue for almost all commodities to some degree . For example , is green power , for which the consumer may pay a hefty premium truly generated in an environmentally friendly way ? Traceability now impacts areas like jet fuels , refined products , timber , and many other commodities outside of food for a variety of reasons . New regulations are emerging on a consistent basis that continue to create the need to properly track and account for commodities and products through the supply chain .

Implementing proper traceability is an expense and complexity for all participants involved in the supply chain . Investment is required in technology and processes aimed at tracking goods along the supply chain . Despite that , there is often a premium or penalty aspect to pricing associated with commodities and products that can be shown to have been produced in a certain way whether that is environmentally friendly , socially acceptable , or some other criteria that consumer ’ s value . Furthermore , there is a brand aspect to the ability to conduct proper traceability that is extremely valuable .

According to the United Nations 1 , there are three main approaches to tracking sustainability claims and each involves different methods of tracking a claim and assuring at each point in the supply chain ( Table 2 ). The UN also points out that further investment and work is required in the area of traceability to improve it both generally and for specific commodities .

Each of the three approaches involves some degree of cost and complexity , and the more rigorous the approach , the more costly , and complex it will be .

As traceability is mandated or required by more and more consumer groups , industry associations , regulators , and governments , there are several other factors to consider . The commodities business is founded upon trust and verification such that , for example , the physical metals at a warehouse actually exist and ownership is clear . Without this trust and verify mechanism , commodity finance would suffer . There would be no confidence in trades and banks would have issues financing companies involved in the supply chain . In some commodities , repo financing where the bank takes ownership of the commodity for a period of time releasing cash to the owner with a provision to sell the commodity back at a certain point in time , for example , is a key aspect of this . Traceability then can also be seen to have other uses and benefits .

1 . A Guide to Traceability , United Nations , 2014

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TRACEABILITY IS EVERYWHERE