In a world increasingly aware of environmental impacts, traceability is stepping into the spotlight, transcending mere regulatory compliance to become a cornerstone of modern business practice.
Traceability systems, once seen primarily as tools for meeting legal standards, are now recognised for their broader benefits. These systems not only comply with laws such as the EU Deforestation Regulation, but also serve as critical mechanisms for safeguarding reputation, enhancing transparency, promoting sustainability and delivering operational business benefits.
Last month, we launched our 2024 Deforestation Regulation Readiness Report, which sheds light on the evolving perceptions and implementations of traceability solutions among European timber operators. And the results were promising!
Beyond Regulation: The Growing Drivers of Traceability
The importance of traceability is magnified by its role in addressing some of the most pressing global issues, such as deforestation, which continues to pose significant threats to biodiversity, climate stability, and indigenous communities. With deforestation contributing to nearly 10 football fields of primary forest loss every minute in 2023, the urgency for robust environmental stewardship is undeniable.
Interestingly, regulatory compliance is just one piece of the puzzle. Organisations are increasingly driven by the need to meet consumer demands for sustainability and ethical operations. Consumers and stakeholders are calling for greater transparency in the origins of the products they purchase and the practices of the companies they support. Indeed our recent survey of 300+ European timber operators found that the average organisation felt that consumer pressure was a bigger driver than regulatory pressure, with market access closely following.
This differs significantly from the same survey we conducted in 2022, where help combatting disrupted supply chains and social impact came out as the biggest drivers ahead of regulatory and consumer pressure.
Tangible benefits of increased traceability
- Enhanced Operational Efficiency: Traceability systems streamline complex supply chains, making due diligence and compliance easier to manage. Practically speaking, data silos are broken down and accountability for data quality increases, both of which save large amounts of time for users and their supply chain stakeholders.
- Market Expansion and Competitive Advantage: Companies employing advanced traceability systems often find themselves at a competitive advantage. They are able to access markets that require high standards of proof for sustainability and ethical practices, thus broadening their market reach. Users have told us that traceability becomes a value added service that they provide to their own customers.
- Risk Management: With comprehensive traceability, businesses can quickly identify and address issues within their supply chains before they escalate into larger problems, reducing the potential for costly recalls, fines or damage to reputation.
- Consumer Trust and Loyalty: By proving the provenance and ethical credentials of their products, companies build trust with consumers, leading to increased brand loyalty and potentially, higher sales. Having authentic and full end to end traceability can prevent claims of greenwashing.
- Supporting Sustainability Goals: Effective traceability helps organisations contribute to global sustainability efforts by ensuring their products are sourced in environmentally friendly and socially responsible ways, and helps them with reporting on ESG requirements.
Traceability in practice
Let’s take the example of a sizable European-based wood-products operator who leverages Interu.
- They source from multiple countries, high and low risk, and have long standing supplier relationships.
- For years they have used spreadsheets and a shared drive to exchange due diligence information with their suppliers.
- They trialled Interu with imports from high risk areas, with a view that in doing so, it would free their time up to focus on sourcing from new customers in different regions that required a lot of capacity building.
- During the trial, which involved users passing full traceability due diligence to the operator, including information about certification, volumes and conversions, and other commercially sensitive information, the operator found that the quality of the data increased vastly, and they saved weeks if not months of time chasing down incorrect, incomplete or missing documentation.
- The suppliers reported that it helped them internally to have one system for all of their departments to contribute to, and have since used Interu for all of their customers due to the way in which it has helped them position themselves as a preferred supplier.
- It also gave them a commercial advantage as well as being able to leverage Interu for their audits, saving them (as well as the auditor) time, as well as improving general business reporting.
Our report clearly highlights that while the journey towards comprehensive traceability might be complex—citing challenges such as digital infrastructure, cost, and supplier resistance—the path is aligning more with strategic business benefits rather than mere compliance. As companies continue to navigate this landscape, the role of technology in enabling effective traceability systems becomes increasingly crucial, providing the tools necessary to achieve both regulatory compliance and strategic business outcomes.
In conclusion, the landscape of traceability is evolving from a compliance necessity to a strategic business enabler. As more organisations recognise the multifaceted benefits of traceability, it becomes not just a tool for compliance, but a critical element of modern business strategy, driving operational efficiency, market competitiveness, and sustainable practices. This broader perspective on traceability is setting the stage for a new era of business where transparency is not just valued—it's vital.
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