Why Supply Chain Traceability Matters More Than Transparency and Visibility in 2025

Over the past half-decade—and especially in the aftermath of the COVID-19 pandemic—more and more companies have allocated resources and expertise to cultivating greater mastery over their supply chains. They’ve done this by bringing on strategic sourcing professionals, fostering teams dedicated to developing supply chain resilience, and leveraging new technologies built for supply chain risk management (SCRM). 

These widespread efforts have yielded impressive results. According to recent research from McKinsey & Co., “companies are now reaping the benefits of the strategic resilience projects they have implemented over the past three years.” Sixty percent of organizations surveyed by the consultancy reported having comprehensive visibility into their direct suppliers, while three-quarters of respondents felt that they now possessed enough internal resources and infrastructure to effectively manage supply chain risk on their own. 

But even as businesses are expanding their visibility into supply chains and strengthening their ability to detect and mitigate risk, new compliance challenges and higher standards from consumers and other stakeholders are shifting the expectations placed on manufacturers. Some firms are facing pressure to go beyond identifying suppliers and manufacturing sites, and are being asked to grasp the flow of raw materials, parts, and products through logistics networks. Because of these escalating demands for even more dynamic, granular data and transparency, a new capability is emerging on the frontiers of SCRM: supply chain traceability. 

What Is Supply Chain Traceability?

Supply chain traceability can be understood as the ability to track and monitor materials, components, and subassemblies as they undergo various manufacturing processes en route to becoming a final product. Consulting firm BSR defines supply chain traceability as “the process of tracking the provenance and journey of products and their inputs, from the very start of the supply chain through to end-use.”

Put differently, traceability is the trajectory materials take to ultimately become an automobile, smartphone, pharmaceutical drug, or waterproof jacket. Because the focus is placed squarely on the goods themselves, effective traceability requires manufacturers to gather documentation that illustrates chain of custody, transportation, and warehousing records. 

How Is Supply Chain Traceability Different From Visibility and Transparency?

There’s significant overlap between supply chain traceability, visibility, and transparency. When trying to understand the former term, though, it’s important to highlight the subtle but meaningful distinctions between these critical SCRM concepts. 

• Supply Chain Visibility: Supply chain visibility is the broadest, most all-encompassing of the three terms. It generally refers to the ability to access and monitor all aspects of a company’s supply chain, including suppliers, subtiers, manufacturing locations, and the goods themselves. 

As we outlined in a previous article on the subject, the definition of visibility has expanded in concert with the growth of the risk management field. Today, supply chain visibility may also cover data and insights into geographical regions, regulations, and suppliers’ financial, legal, and regulatory histories. 

• Supply Chain Transparency: Supply chain transparency builds off the idea of visibility by also encompassing the communication and dissemination of supply chain data to relevant partners and stakeholders. As Alexis Bateman, director of the Sustainable Supply Chains Lab at MIT, explains, supply chain transparency entails both visibility and disclosure. While visibility requires “Accurately identifying and collecting data from all links in your supply chain,” disclosure means “Communicating that information, both internally and externally, at the level of detail required or desired.” 

• Supply Chain Traceability: The difference between traceability and the two terms defined above primarily has to do with the level of detail and depth of information. When strategic sourcing and procurement professionals talk about visibility, they’re usually referring to suppliers, factories, facilities, and regulatory landscapes within different countries and regions. 

Traceability, on the other hand, entails comprehensive insight into a commodity’s journey from raw materials extracted in one corner of the world to a final product released in a market in another. To tell this story, organizations rely on documents, records, and other evidence that capture the dynamic movement of goods across complex logistics networks.

What Advantages Does Traceability Have Over Supply Chain Visibility and Transparency?

Historically, supply chain visibility and transparency have been primarily leveraged by companies to identify threats and mitigate risks. Strong visibility can help organizations recognize financial vulnerability in a supplier before it crystallizes into bankruptcy, or show them how a natural disaster on the other side of the globe will impact their suppliers’ manufacturing sites. But when it comes to requirements for environmental regulations and internal sustainability objectives, visibility and transparency may not always suffice. 

For example, a firm that wants to certify that its product is completely free of forced labor may not be able to extract enough information from traditional supply chain visibility alone. By using traceability techniques, however, they can illuminate every step of the manufacturing process, including the subtier vendors involved and their labor practices. Because of the level of detail it demands, supply chain traceability can be an invaluable strategy for a myriad of different ESG initiatives, including not only certifying a lack of forced labor but also demonstrating conflict-free supply chains and achieving carbon neutrality. 

Supply chain traceability is so critical to sustainability, in fact, that the United Nations published a comprehensive report on how the technique can help corporations conduct more responsible business practices and maintain ethical supply chains. “In the context of sustainability,” the report explains, “traceability is a tool to assure and verify sustainability claims associated with commodities and products, ensuring good practice and respect for people and the environment all along the supply chain.”

What Industries Benefit From Supply Chain Traceability?

Supply chain traceability can be a fundamental tool for any business that is either looking to comply with emerging ESG regulations or striving toward its own sustainability goals. Some industries that may find traceability especially important to their efforts to meet consumer expectations and regulatory demands include:

• Agriculture
• Textile manufacturing
• Automotive 
• Electronics manufacturing
• Food and beverage
• Healthcare
• Chemicals

SCRM Platforms Are an Integral Part of Effective Traceability 

Robust supply chain traceability can both prepare companies for the next wave of compliance obligations and offer them a meaningful reputational boost. But the practice doesn’t come easy. Tracing the provenance and flow of materials and goods through dense, sprawling supply chains requires comprehensive documentation, as well as consistent communication with all the nodes in your manufacturing network. For larger, more well-heeled organizations with ample resources, that may sound perfectly achievable. 

But for many—if not the majority—of firms, however, carrying out all that logistical legwork can quickly strain a team’s bandwidth. Fortunately, supply chain risk management platforms like Z2Data are able to lend vital support to these complex traceability efforts. Z2Data features tools like part-to-site mapping, a powerful capability that allows companies to use their bills of materials (BOMs) to quickly and accurately trace their components back to factories and assembly sites all over the world. In addition, the platform seamlessly maps out the manufacturing locations that make up a business’s supply chain, giving companies a layered visualization to help them connect the dots and delineate their parts’ paths from raw materials to final products. 

To learn more about Z2Data and how the platform can help companies bolster their supply chain traceability efforts, schedule a free demo with one of our product experts.