With the global marketplace moving at seemingly breakneck speed, the reliability of supply chains has never been more important. Grappling with the aftermath of a pandemic, geopolitical tensions, and climate change place significant responsibility on supply chains.
Ever-evolving change means growing expectations. Governments are drafting new legislation. Consumers are demanding more transparency. And smart, forward-thinking organizations are inventing new ways of doing business.
These trends need to be viewed as opportunities. The good news is that new technology and insights have provided the world with innovative ways of not just solving these problems but thriving in the face of them. Long-standing operational risks and reputational threats, such as unnecessary levels of waste and inaccurate views of stock quantities and locations can (and should) be consigned to the doldrums of inefficient business history. The urgency is only heightened with the bottom line also at risk. The competitiveness of markets means that now more than ever before, businesses need a differentiator. With many still paying lip service to the transparency and traceability of how they do business, the time to drive meaningful improvement is now.
To succeed, businesses need to understand and act on the main factors at play.
Consumer demand for sustainability
Firstly, let’s look at waste.
Did you know that a whopping $163 billion worth of inventory is thrown away each year due to expiry or overproduction? That's more than the GDPs of Croatia, Costa Rica, and Iceland combined. The scale is almost unbelievable – and it calls for immediate action.
But while companies are acutely aware of this problem, they’re not investing enough in solutions. In fact, three-quarters of businesses are investing only 5% or less of their technology budget in supply chain sustainability.
This needs to change – and people are waking up to it.
Consumers demand improvement. They want quality in what they buy, but they also want a clear conscience. An inspiring 86% of people worldwide say they want a more ethical and sustainable world, according to one WEF report. But sustainability still has a long way to go to make it into many customers’ immediate priority lists when shopping.
There’s a silver lining to this, though – almost half of global consumers rank product durability as a top concern. This shows there’s a real opportunity for businesses to shape the future of sustainability by focusing on the resilience of their products, instead of throwaway convenience.
The legislative push
Along with the shifting consumer attitudes, governments are pushing for higher standards within their economies.
The European Commission, for instance, is working towards Digital Product Passport (DPP) legislation under the Ecodesign for Sustainable Products Regulation (ESPR).
The DPP is an initiative that’s part of the EU’s Circular Economy Action Plan (CEAP), aiming to provide a digital identity to products in various economic sectors. It’s officially defined as “an environmental policy instrument that aims to improve product circularity by exploiting the power of digital to collect, organize, and store information in a secure way”. The DPP is likely to contain information about the item’s origin, material composition, environmental footprint, and more. Products like apparel and textiles, and batteries are among the product groups being targeted first, but we can expect this range to widen over the coming years.
The DPP is expected to play a major role in promoting sustainability and transparency in global supply chains. It will apply to any business placing a product on the EU internal market. While the details of its implementation are still being discussed, its impact is already being seen in certain global industries as parties in the supply chain start to prepare.
In the food industry, the US has been making great strides with its New Era of Smarter Food Safety blueprint and the FSMA section 204. This plan represents a new approach to food safety, leveraging tech tools and new processes to create a safer, more digital, more traceable food system. It aims to reduce foodborne illness by enhancing traceability, improving predictive analytics, and responding more rapidly to outbreaks. It also addresses new business models and promotes the development of stronger food safety cultures.
These are just a few promising signs of a growing legislative wave that’s set to ripple through the global economy in the coming years.
Tracing the path to transparency
The call for supply chain traceability isn’t just a trend; it’s an imperative. The combination of consumer awareness, legislative pressure, and the sheer scale of waste in global supply chains means it’s here to stay.
As a society, we’re getting better at identifying the challenges, and technology is leading the way in offering solutions.
There’s been an influx of new technologies and practices that not only help comply with regulations but also set new standards in sustainability and transparency.
Companies recognize this, too: 35% of firms are planning to introduce technologies for unique item-level tracking and traceability. There’s potential for significant cost savings and sustainability benefits, making it a no-brainer for the future of your operations.
With atma.io, a world-leading connected product cloud, you can store, track, and manage every event associated with each product. By assigning unique digital IDs for utmost transparency, you can revolutionize your supply chain traceability.
Want to see it for yourself? Book a free demo of atma.io now.