The Importance of traceability in a circular supply chain

Circular supply chains are becoming increasingly popular as businesses seek to reduce their environmental impact and promote sustainability. A circular supply chain is a system in which waste and resources are kept in use for as long as possible, reducing the need for new raw materials and minimizing waste. To achieve this, it's crucial that businesses have a clear understanding of where their materials come from and where they end up. This is where traceability comes in.

Traceability refers to the ability to follow the journey of a product or material from its source to its final destination. It allows businesses to monitor and control their supply chains, reducing the risk of fraud and ensuring the materials they use are ethically and sustainably sourced. In a circular supply chain, traceability is especially important because it helps to identify opportunities for reuse, repair, refurbishment, and recycling.

There are several benefits to having a traceable circular supply chain, including: 

Improved Environmental Performance

One of the main benefits of traceability in a circular supply chain is the improved environmental performance it can bring. By having a clear understanding of where materials come from and where they go, businesses can identify areas where they can reduce their environmental impact. For example, they may be able to find more sustainable sourcing options, reduce waste by repairing or refurbishing products instead of throwing them away, or increase the efficiency of their recycling processes.

Better Reputation

Having a traceable circular supply chain can also improve a business's reputation. By being transparent about the materials they use and where they come from, businesses can demonstrate their commitment to sustainability and show their customers that they take the issue seriously. This can help to build trust and attract new customers who are looking for environmentally friendly products and services.

Reduced Risk

Traceability also helps to reduce risk in a circular supply chain. By having a clear understanding of the materials they use and where they come from, businesses can reduce the risk of fraud, counterfeiting, and other unethical practices. This helps to protect their reputation and maintain their competitive advantage.

Increased Efficiency

Traceability can also help to increase efficiency in a circular supply chain. By having a clear understanding of the materials they use and where they go, businesses can identify opportunities to optimize their supply chain processes. For example, they may be able to reduce waste by repairing or refurbishing products instead of throwing them away, or they may be able to increase the efficiency of their recycling processes.

Ways to achieve traceability in a circular supply chain 

There are several technologies that can help businesses to achieve traceability in a circular supply chain. These include: 

Blockchain

Blockchain is a digital ledger that records transactions and provides transparency and security. In a circular supply chain, it can be used to track the journey of materials and products, providing a clear record of where they come from and where they go. This helps to reduce the risk of fraud and ensure the materials are ethically and sustainably sourced.

RFID (Radio-Frequency Identification)

RFID is a technology that uses radio waves to transmit information from a tag to a reader. In a circular supply chain, RFID tags can be attached to products and materials, providing a way to track their journey from source to destination. This helps to increase transparency and reduce the risk of fraud.

Barcodes

Barcodes are a simple and cost-effective way to achieve traceability in a circular supply chain. By scanning barcodes, businesses can track the journey of products and materials, providing a clear record of where they come from and where they go. This helps to reduce the risk of fraud and ensure the materials are ethically and sustainably sourced.

Closing thoughts 

Traceability is essential in a circular supply chain. It allows businesses to monitor and control their supply chains, reducing the risk of fraud, improving environmental performance, and increasing efficiency. There are various technologies available to achieve traceability, including blockchain, RFID, and barcodes. By having a traceable circular supply chain, businesses can demonstrate their commitment to sustainability, build trust with their customers, and maintain their competitive advantage. Implementing traceability in a circular supply chain is an important step towards creating a more sustainable future.

Author: Madhur Singhal, Managing Partner, Praxis Global Alliance

Co-author: Garima Malhotra, Associate Partner, Praxis Global Alliance