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Understanding the Emerging Demands for Retail Traceability

Earlier this year, the New York State Legislature introduced the New York Fashion Sustainability and Social Accountability Act – a bill that could significantly impact traceability in the retail industry. If passed, the bill would require retailers and manufacturers with more than $100 million in global revenue that do business in New York state to disclose detailed information about the origin and supply chain of at least 50% of their products by volume. This legislation could impose a number of new requirements on a retail industry where traceability has largely gone unregulated to date. 

Sustainability in Retail  

In recent years, retailers have stepped forward with a number of sustainability initiatives, such as the use of organic fibers in apparel or developing new products out of recycled materials. Adidas is just one example of a retailer that now manufactures shoes partially constructed from plastic waste collected from oceans and beaches. 

In addition to products, sustainability also plays a role in shipping. Shipping cartons made from recycled paper or cardboard immediately come to mind, but there are numerous other ways sustainability is influencing shipping in retail. The use of inflatable air pillows cuts down on the need for Styrofoam to cushion packages and is less impactful to the environment since most of the cushioning is done with air. In some cases, these inflatable air pillows are even made from biodegradable materials. Other examples of sustainable shipping include package cushioning made from recycled fabrics or fibers or cooler packs made with biodegradable gel that can either be reused or thawed and washed down the sink.   

Delivery efforts are also contributing to sustainability efforts in retail. Amazon now allows frequent customers to combine deliveries to a single day per week to cut down on packaging and emissions from delivery trucks. Route optimization software can be used to ensure that delivery routes are efficient. Finally, the use of electric or hybrid delivery fleets are also tools retailers are using to promote sustainability. 

Where Does Traceability Fit in Retail? 

While sustainability is becoming top-of-mind for many retailers, traceability is a lesser known – but no less important – concept. Simply put, traceability is the level of visibility throughout a supply chain and the ability to identify the path of a product from raw material sourcing to end consumer. Traceability is an enabling factor to many sustainability objectives.    

Food recalls often provide good examples of effective traceability. Recently, J.M. Smucker Co instituted a voluntary recall of its Jif® peanut butter and other products after the FDA identified cases of salmonella linked to the products. The company was able to analyze the products and trace them back to manufacturer at a Lexington, KY, based plant. The company was able to not only identify the plant needing to be addressed, but also other production lots that may have been affected. By having effective traceability practices in place, the amount of time it took to identify the source of contamination and the corresponding amount of product needed to be recalled were both minimized.   

Other examples of effective traceability in the retail industry include: 

  • Tracking product shipping progress to understand where it is in the supply chain 
  • Knowing what parts of production are being carried out at certain factories and ensuring those factories follow your corporate sustainability guidelines 
  • Knowing what farms are producing cotton for your fabrics, where they are located, what labor practices they follow, and whether the cotton grown is organic or not 
  • Documenting what factories are being used at different phases of production and regularly visiting those facilities to confirm they are performing within company guidelines 

Of course, there also are examples where traceability efforts have been less than optimal, such as production facilities using unfair or illegal labor practices. In these situations, the retailer almost certainly wouldn’t endorse using such practices but may not have put the time or effort into exploring the factories being used to produce their products.   

The lesson here is that sustainability efforts are only as effective as the traceability efforts going on behind the scenes.     

Costs and Benefits of Traceability in Retail

Traceability efforts have costs associated with them. There are the monetary costs, time required to implement practices and procedures, and effort to build a trusted vendor network of willing participants that share the same vision for traceability. Checks and balances as well as internal systems or processes will be required to ensure that sustainability guidelines are being followed by all partners throughout all stages of the supply chain.  

While there are costs to traceability, there are tremendous benefits associated with a strong traceability strategy. If the New York Fashion Sustainability and Social Accountability Act passes, these traceability efforts will now be required. Proactively developing and implementing traceability could prevent a rushed implementation should the legislation pass. As mentioned earlier, effective traceability can quicken response time to product recalls and can limit product loss. Finally, as sustainability becomes a bigger priority for the general population, companies with solid traceability programs will be best positioned to avoid potentially embarrassing missteps that may damage brand image and cost the company revenue.   

The bill in the New York legislature is currently in review status with committees in both the State Senate and Assembly. Whether the bill is passed remains to be seen, but regardless, traceability and sustainability go hand-in-hand. Sustainability can only be as effective as the traceability enabling it in modern retail organizations. 

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Contributions from Drake Jaglowski and Dave Foos 

Tags: Serialization & Traceability, Sustainability, Retail Trends
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