Managing supply chains has risen up the corporate agenda, so why do so few companies employ a head of traceability? Catherine Early reports
Companies are under increasing pressure from consumers, investors and campaigners to know exactly where their products are sourced. Regulation clamping down on greenwashing and bans on supply chains linked to deforestation and human rights abuses are just a few examples of new compliance requirements linked to traceability.
“At the last count, there were 16 pieces of legislation coming into being that applied to the fashion industry, and a significant number of them relate to their supply chain. So having robust internal systems around traceability and being able to verify what you claim is very important,” says Nicole Rycroft, founder and executive director of not-for-profit Canopy, which works to make forest-related products more sustainable.
A multi-faceted job
Traceability is cross-functional, covering sustainability, IT, product development, sourcing, legal, logistics and marketing. However, it often comes under the remit of sustainability departments, which have limited leverage over sourcing and logistics staff, raising the risk that company claims cannot be traced adequately, according to financial think tank Planet Tracker.
Alternatively, it is siloed in sourcing, logistics or IT departments, potentially without considering sustainability issues, it noted. Planet Tracker analysed LinkedIn profiles to find all companies that have appointed a head of traceability or equivalent. Searching on LinkedIn, it found only 18 companies with a head of traceability, compared with at least 10,000 heads of sustainability.
Acknowledging the limitations of its research – LinkedIn represents 25-30% of the global workforce, and Planet Tracker looked at results in English only – the think tank believes the findings to be noteworthy. One reason for the lack of senior people in a specific traceability role could be that it is not the traditional way of organising companies, says François Mosnier, head of Planet Tracker’s oceans programme.
“You have someone in charge of sourcing, someone in charge of environment, of IT, or marketing, and all these people have different backgrounds. Traceability is cross-functional, so you need to understand all these different things,” he says.
Who’s in the HoT seat?
The profiles analysed by Planet Tracker revealed that heads of traceability typically had a background in IT and data, which Mosnier says makes sense because, by definition, traceability is essentially about following data, both within and outside the organisation.
“But it’s equally important to know what you track and why. For that, you need a sustainability hat because it relates to risk management, and also a marketing hat to understand how to present this opportunity to your consumers,” he says.
“It’s important to know what you track and why. For that, you need a sustainability hat and a marketing hat”
Of the 18 companies Planet Tracker found had a head of traceability, the majority had their headquarters in Europe, the US and Asia, although two companies were based in Australasia, and two in African countries.
Three-quarters of all companies employing a head of traceability were in the food or textile industries, and included H&M, Inditex, VF Corp and palm-oil producers Golden Agri-Resources and Sime Darby Plantation.
Both food and fashion have had scrutiny on their environmental and social practices for many years now, so it made sense that they were more likely to have a dedicated head of traceability, who could not only set the ambition of sustainability targets related to supply chains but also deliver them right through an organisation, says Rycroft.
“They have realised that a head of traceability is a business position, it helps mitigate risk. It is now deeply relevant to compliance as well as quality control. I was a little surprised that there aren’t more of them,” she says.
Business benefits
Mosnier believes that companies worry that being transparent could give critical information away to competitors or provide details that could be used against them by campaign groups or activists. Having a head of traceability would remove a company’s ability to claim that it did not know about something bad that had happened in its supply chain, he speculated.
However, better traceability should instead be seen as a way for companies to save costs through increased efficiencies, and reduce risks associated with waste and recalls. Planet Tracker estimates that textiles companies would increase net profits by 3-7% if they implemented full traceability, while seafood company profits could rise by 60%.
Having one person responsible for the issue would allow them to examine budgets across the business – rather than just looking at costs of implementation. They could also see where costs in another department could be reduced, or profits increased, Mosnier adds.
“Considering the regulatory landscape, a dedicated position for traceability makes a lot of sense from a business perspective,” says Rycroft.
Ambitious targets
However, having someone senior overseeing traceability is not an answer in itself, she stresses. “It does really need to be paired with having ambitious sustainability targets. A head of traceability gives you a clear line of sight on a product, but that doesn’t inherently reduce your risk.” She uses the analogy of a lifejacket made from cement – someone may have full oversight of its production, but the product does not serve its purpose.
Anyone taking on the job would also have to be sure that the company enabled them to bring the rest of the company along to meet those targets, she adds. But Rycroft believes the job would be rewarding – the acronym HoT is appropriate, she says. “It’s a sassy acronym for a job title that on face value doesn’t sound all that sexy. It involves ensuring compliance, and making sure sustainability efforts are actually delivered to that company’s supply chain. It’s a fun combination.”
Catherine Early is a freelance journalist
