Traceability is reshaping supply chains by providing transparency and accountability throughout a product’s lifecycle. This is critical for circular supply chains, which aim to reuse, recycle, and reduce waste instead of following the "take, make, dispose" model. Key points covered include:
- Traceability Defined: Tracks materials from sourcing to end-of-life, ensuring visibility and informed decisions on quality, compliance, and reuse.
- Circular Supply Chains: Focus on reducing waste by designing for durability, repairability, and material reuse.
- Role of Traceability: Enables data sharing, lifecycle tracking, and compliance with regulations like the EU’s Digital Product Passports (DPPs) by 2030.
- Technology: Tools like blockchain, IoT, and DPPs provide secure, real-time tracking.
- Examples: Companies like Patagonia, Walmart, and Biosphere Solar are leading with traceability systems to reduce emissions and improve resource efficiency.
- Consumer Behavior: Transparency builds trust; 71% of consumers are willing to pay more for traceable, sustainable products.
- Challenges: High costs, complex supply chains, and inconsistent regulations hinder implementation, but standardized frameworks like GS1 are improving collaboration.
Traceability is becoming indispensable for companies to meet regulatory demands, reduce emissions, and align with consumer expectations for ethical and sustainable practices.
Recent Research on Traceability in Circular Supply Chains
Research Findings on Resource Efficiency
Recent studies highlight how traceability systems are closing supply loops and advancing circular economies by improving transparency, optimizing resource use, and cutting down on waste.
Consider this: global plastic waste exceeds 353 million tons each year. In 2019, only 9% of this was recycled, with projections suggesting the figure might rise to just 17% by 2060. These numbers underscore the need for integrating quality control into traceability solutions to improve the usability of recycled materials. By tracking materials throughout their lifecycle, companies can tackle illegal dumping, reduce contamination in recycled content, and use resources more effectively.
A great example is Walmart’s Project Gigaton, launched in 2017. This initiative aims to cut 1 billion tons of emissions by 2030, relying on supplier collaboration and blockchain technology to enhance food safety and reduce waste. These efforts not only improve resource efficiency but also contribute significantly to cutting emissions, showcasing the vital role of traceability in managing Scope 3 emissions.
Impact on Scope 3 Emissions
Traceability doesn’t just boost resource efficiency – it also plays a major role in monitoring and reducing supply chain emissions. Scope 3 emissions, which include indirect emissions from a company’s supply chain, often form the bulk of an organization’s carbon footprint. On average, supply chain emissions are 11.4 times higher than those from direct operations, accounting for about 92% of total greenhouse gas emissions.
By enhancing traceability, businesses gain better visibility into their emissions, which improves monitoring, reporting, and verification processes. This transparency allows companies to allocate resources more effectively toward emissions reduction initiatives and identify potential partnerships along the supply chain.
Consumer demand for transparency is also on the rise. Surveys show that 80% of consumers expect brands to be open about their environmental impact. Additionally, 61% want more detailed product information to make sustainable choices, 43% are willing to pay more for companies making a positive impact, and 84% consider sustainability an important factor when making purchases.
Michael Wood, Partner, captures the essence of this shift:
"Traceability is about trust. Trust will enable deeper and more meaningful collaboration. Collaboration should enable investment, at the scale required to deliver the desired impact."
Case Studies in Circular Supply Chains
Real-world examples bring these findings to life, showing how traceability drives transformation in circular supply chains. Companies like Patagonia, No Palm Ingredients, and C2CA exemplify the benefits of traceability in action.
Patagonia, for instance, has set a high standard for resource efficiency. By spring 2024, 98% of its product styles will use recycled materials, a move that has already prevented 8,500 tons of CO₂ emissions.
No Palm Ingredients offers another striking example. This company turns agricultural waste – specifically potato peels – into a sustainable alternative to palm oil using controlled fermentation. Their transparent traceability practices have attracted major players like Unilever and Colgate-Palmolive, securing €5 million in co-financing to scale the product.
In construction, C2CA is revolutionizing concrete recycling. By transforming construction waste into materials like cement, gravel, and sand, and partnering with Duravermeer to halve CO₂ emissions, the initiative has gained significant traction. This collaboration even led to the EU-backed CITADEL research project and a €10 million Series A funding round to expand globally.
As EY Management Consultancy aptly puts it:
"Without traceability, there is no accountability."
These examples show how traceability acts as a bridge between circular financing and supply chain collaboration. As companies move away from linear models to embrace circular supply chains, traceability systems become essential for managing reuse and recycling effectively. The increasing adoption of blockchain technology further supports this shift, ensuring data integrity and authenticity, which are critical for successful circular practices.
Minespider – The Future of Traceability & Circular Supply Chains
Technology Solutions for Traceability
Traceability technologies are becoming essential tools for supporting circular supply chains. These systems enable precise tracking and maintain data integrity, helping businesses meet sustainability goals while adhering to regulatory requirements.
Digital Product Passports (DPPs)
Digital Product Passports (DPPs) are transforming how products are tracked throughout their lifecycle. Acting as digital counterparts to physical items, they help identify issues early and maintain transparency across the supply chain. DPPs utilize blockchain, IoT, and AI-driven analytics to provide real-time, unalterable tracking data.
The market for DPPs is expected to grow significantly, from $185.9 million in 2024 to $1.78 billion by 2030, with a projected 45.7% annual growth rate. By 2030, over 62.5 billion DPPs are anticipated to be in use within the fashion industry alone.
Some companies are already leading the way. For instance, in February 2025, Victoria’s Secret & Co. introduced DPPs for collections like the Signature Cotton T-shirt Bra and the VSX Featherweight Max Sports Bra. These passports, accessible via QR codes on product labels, offer consumers insights into fabric composition, sourcing, manufacturing details, and environmental impact metrics.
The construction industry is also adopting DPPs. In January 2025, Madaster launched a specialized DPP platform for construction and manufacturing. This system tracks material composition, carbon footprint, reusability potential, and disposal options, helping businesses comply with new European Union circular economy regulations.
DPPs are accessible through QR codes, barcodes, or NFC tags, making it easy for stakeholders to retrieve product information in real time. Beyond compliance, they enhance customer engagement and promote circular economy practices.
These advancements pave the way for integrating blockchain and IoT solutions to further improve supply chain transparency.
Blockchain and IoT Applications
Blockchain technology forms a secure backbone for traceability systems by offering a transparent, tamper-proof ledger. Its decentralized nature ensures data security through cryptography, making it nearly impossible to alter recorded information.
When combined with IoT, blockchain enables real-time, automated tracking. IoT sensors feed live data into the blockchain, which can trigger smart contracts to automate supply chain processes. These contracts streamline operations, reduce reliance on intermediaries, and increase efficiency.
A notable example is the Eviden Digital Passport Solution (EDPS), launched in June 2024 through a partnership between Eviden and the IOTA Foundation. This system, built on IOTA’s distributed ledger technology, securely tracks data on product lifecycles, carbon footprints, and sustainability metrics. Its initial application focuses on automotive batteries, ensuring compliance with upcoming EU regulations.
Although blockchain offers unmatched data security, it has limitations like scalability and handling detailed product data. Integrating blockchain with DPPs and IoT addresses these challenges, creating a more effective system for sustainable supply chains.
Understanding the strengths and limitations of each technology is crucial for businesses looking to implement the right combination for their needs.
Comparison of Traceability Technologies
Each traceability technology has its own set of benefits and challenges. Choosing the right solution depends on the specific requirements of a business.
| Technology | Advantages | Limitations | Ideal Applications |
|---|---|---|---|
| Digital Product Passports (DPPs) | Tracks entire lifecycle, enhances consumer engagement, ensures regulatory compliance, supports real-time updates | High setup costs, complex implementation | Fashion, electronics, automotive, construction materials |
| Blockchain | Provides secure, immutable records; enables smart contract automation; decentralized | Scalability issues, high energy use, limited detailed data | Supply chain verification, contract automation, multi-party transactions |
| IoT Devices | Enables real-time monitoring, tracks environmental conditions and location, monitors product state | Short battery life, connectivity challenges, hardware costs | Perishables, high-value goods, temperature-sensitive products |
The real potential lies in combining these technologies. As Guy Vincent, Program Lead of Amsterdam Circular, puts it:
"Traceability enables circular chain collaboration. Companies that are looking to make their chain more resilient can get started by mapping out their ideal chain partnership, what we call a Minimum Viable Ecosystem, which creates enough value to drive commercial traction for all chain partners."
Building effective traceability systems requires careful planning, collaboration, and a commitment to capturing accurate data. Protecting sensitive information is also critical as businesses adopt these technologies. With increasing environmental, social, and governance (ESG) reporting requirements, investing in traceability infrastructure is no longer optional.
Data management approaches vary, with decentralized systems often offering better interoperability and security. Companies that act early to comply with regulations and pursue voluntary certifications can gain a competitive edge as standards tighten.
Strategic integration of these technologies is setting the stage for continuous improvements in traceability systems.
Consumer Transparency and Purchasing Behavior
With advanced traceability systems now in place, product labeling has taken on a new role – helping consumers make choices that align with their sustainability goals. By providing detailed traceability data, brands are empowering shoppers to make informed decisions.
Transparency in Product Labeling
Traceability systems have made it easier than ever for consumers to access key product information. A simple QR code scan can reveal a product’s journey, building trust by showcasing a brand’s commitment to ethical and sustainable practices.
For example, Nestlé offers this feature with its Nescafé coffee products. By scanning a QR code, customers can trace the coffee beans back to specific farms. Similarly, H&M employs blockchain technology to track raw materials, giving shoppers insights into the origins and production of their cotton products.
The backbone of these systems lies in standardized data structures. GS1 standards, used globally, ensure consistent tracking and identification of products throughout supply chains. Vivian Tai, Director of Innovation at GS1 US, highlights the importance of this approach:
"GS1 standards, combined with high-capacity QR codes, allow key information to remain with a product throughout the supply chain, all the way to the consumer, with the assurance of authenticity and accuracy."
These standards not only reduce the risk of counterfeit goods but also improve quality assurance, boosting consumer confidence and loyalty. This increased visibility encourages shoppers to make more informed and sustainable choices.
Consumer Behavior Research
Research shows that transparency in supply chains can significantly influence consumer behavior. A study by the MIT Sloan School of Management found that consumers are willing to pay 2% to 10% more for products with transparent supply chains. Additionally, a meta-analysis revealed that consumers are willing to pay about 32% more for food products with traceability .
Generational trends also play a role. A 2023 NielsenIQ survey found that 73% of Gen Z consumers (born between 1997 and 2012) are willing to pay extra for eco-friendly products. Overall, 71% of consumers are willing to spend more on products from brands that offer transparency and traceability. Research in Vietnam further supports this, showing that ethical and accurate supply chain disclosures significantly enhance consumer trust and drive positive purchasing decisions. In Shanghai, traceability initiatives have seen promising outcomes – 46.25% of respondents purchased traceable pork, 92.73% trusted traceability labels, and 91.19% reported increased awareness of pork quality and safety when traceability data was available.
Challenges in Communicating Traceability Data
While consumer interest in traceability is growing, companies face hurdles in presenting this complex data in a way that’s easy to understand. Challenges include fragmented data systems, lack of standardization, high costs, and the intricacies of global supply chains. Communicating this information clearly remains a significant challenge, particularly in industries like fashion. For instance, Fashion Revolution’s "What Fuels Fashion?" report revealed that only 8% of companies disclose information about their raw material suppliers (tier 4), a drop from 12% in 2023.
Brands that succeed in simplifying traceability data often rely on specialized platforms. SAYE, a footwear company, has achieved 81% traceability in its supply chain. Patricia Bori, Product & Sustainability Specialist at SAYE, explains:
"Having the visibility of our supply chain has allowed us to see that all the extra effort that is made to look for a better material, a better supplier, a better quality and to be up to date with any innovation, is worth it."
Providing verifiable data is essential. For example, by 2024, Patagonia reported that 98% of its product styles were made using recycled materials, a milestone achieved through rigorous traceability practices. Similarly, Unilever uses blockchain technology to track raw materials, reinforcing its dedication to sustainability.
Verification adds another layer of trust. Christopher McArdle, Vice President of Polyolefin Strategy and New Business Development at Borealis, underscores its importance:
"Verification is essential. Even with a supply chain involving blockchains we want independent auditors for our system. And this is how we gain the trust and confidence of all our value chain members."
Despite the challenges, companies that prioritize clear and honest communication of traceability data can foster stronger connections with today’s increasingly conscious consumers. Transparency not only builds trust but also drives demand for products rooted in sustainable practices, reinforcing a circular supply chain model.
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Implementation Challenges and Solutions
As consumer demand for traceability continues to climb, businesses face a variety of hurdles in implementing these systems. Tackling these challenges head-on with practical solutions is key to building effective circular supply chains.
Barriers to Adoption
Global supply chains are inherently complex, spanning multiple countries, involving countless intermediaries, and navigating diverse regulatory landscapes. This complexity makes achieving full traceability a daunting task. Take the fashion industry, for example. According to the Sustainability Directory, "The intricate, multi-layered nature of fashion supply chains presents a considerable hurdle to achieving full traceability." Tracking materials from their origins to their end-of-life stages is no small feat.
Cost is another major obstacle. Over half of small and medium-sized enterprises (55%) report that the expenses tied to technology, training, and system integration are simply too high. Smaller companies often lack the resources to invest in the necessary infrastructure and staff development.
Power imbalances between large brands and their suppliers also present a challenge. Suppliers may hesitate to share data openly, fearing exposure of inefficiencies or potential changes to contracts. The Sustainability Directory highlights this issue, stating, "Power imbalances between brands and suppliers can inhibit open communication and data sharing." On top of that, non-standardized systems add another layer of difficulty. Many companies rely on incompatible technologies and data formats, which hinders smooth information exchange and reduces the overall effectiveness of traceability initiatives.
Legal requirements differ from one jurisdiction to another, further complicating things. Companies must navigate a maze of regulations around data collection, storage, and sharing, all while ensuring compliance with local privacy laws. This patchwork of rules makes it tough to implement consistent traceability practices across global operations.
In response to these challenges, businesses are turning to collaborative frameworks and industry standards for solutions.
Collaborative Approaches and Standards
Standardized frameworks and collaborative models are helping to address these barriers. GS1 standards, for instance, have become a leading tool for ensuring consistent product identification and tracking across global supply chains. These standards provide a shared "language" for data exchange, improving system interoperability and communication between stakeholders.
A good example is Wholechain, a platform that leverages GS1 standards to enhance visibility into chain-of-custody, track material movement, enable system compatibility, and consolidate data across partners. By addressing technical barriers, Wholechain makes collaboration more achievable.
Guy Vincent, Program Director at Amsterdam Circular, underscores the importance of aligning incentives for successful collaboration:
"Traceability enables circular chain collaboration. Companies that are looking to make their chain more resilient can get started by mapping out their ideal chain partnership, what we call a Minimum Viable Ecosystem, which creates enough value to drive commercial traction for all chain partners. When financial incentives align, successful chain collaboration follows."
These collaborative approaches emphasize that traceability isn’t a solo effort. Success hinges on coordination across jurisdictions, shared standards, and aligned economic incentives.
Implementation Best Practices
To strengthen traceability systems, businesses are combining standardized practices with strong supplier relationships. A crucial first step is comprehensive supply chain mapping, which involves identifying all stakeholders and pinpointing where traceability data needs to be collected, stored, and shared.
Standardized data protocols are equally important. By using common data formats and setting clear guidelines for data entry and reporting, companies can minimize errors, improve data quality, and ensure smoother integration between systems.
Real-world examples show the power of these practices. In 2020, Walmart teamed up with IBM to use blockchain technology for food safety. The IBM Food Trust platform cut the time it took to trace food items from days to mere seconds. This breakthrough improved food safety, reduced waste, and boosted consumer trust.
Similarly, Nestlé’s coffee traceability initiative, launched in 2020, allowed customers to scan QR codes for detailed supply chain information. The result? A 30% increase in consumer trust and a 25% rise in sales of traceable coffee products.
The numbers back up the business case for investing in traceability. Companies with advanced systems are 50% more likely to manage supply chain risks effectively. Those focusing on transparency are 60% more likely to meet regulatory requirements and avoid penalties.
Building strong supplier relationships is another cornerstone of success. Companies that foster open communication and incentivize data sharing see a 20% boost in supply chain efficiency and a 15% reduction in lead times.
Regular auditing and assessments also play a vital role. Businesses with robust documentation practices have reduced recall times by 40% and cut compliance costs by 25%. Regular audits improve compliance rates by 30% and uncover 25% more opportunities for operational improvement.
Finally, employee training and education are critical. Staff involved in supply chain operations need thorough training on traceability systems and their importance. This ensures that the technology is not only implemented but also maintained effectively.
To measure progress, companies should set up key performance indicators (KPIs) that track the performance of their traceability efforts. These metrics help identify areas for improvement and demonstrate the value of traceability investments to stakeholders.
The Future of Traceability in Circular Supply Chains
The future of traceability is being shaped by rapid advancements in technology and significant market growth. For example, the traceability software market is expanding at a 15.1% compound annual growth rate (CAGR), while the global food and agriculture traceability market is projected to reach $28.4 billion by 2030. This growth is especially important given that Scope 3 emissions account for about 90% of total CO₂ emissions. These developments are paving the way for innovations that will redefine transparency in supply chains.
A host of technologies – 5G, digital twins, artificial intelligence (AI), machine learning (ML), blockchain, Internet of Things (IoT), RFID, and QR codes – are now providing unprecedented, real-time visibility across supply chains. AI and ML, in particular, are revolutionizing predictive analytics and automating complex decision-making processes.
Take Digital Product Passports as an example. In a collaboration between Biosphere Solar and Circularise, these passports are setting new benchmarks for transparency by enabling companies to track product origins, ESG (Environmental, Social, and Governance) data, carbon emissions, and end-of-life management in real time. This system not only ensures transparency but also facilitates secure data sharing across the value chain while safeguarding sensitive business information.
In another example, Chipotle has piloted RFID labels to monitor ingredients like meat, dairy, and produce from suppliers to restaurants. This initiative allows the company to quickly address food safety and quality issues.
While technology plays a crucial role, collaboration is equally vital to advancing traceability. Guy Vincent from Amsterdam Circular highlights this point:
"Circular financing is evolving to support chain collaboration, and traceability technology brings it all together. In the coming years, we will see chain financing innovations that enable supply chains to become more resilient and profitable. Circular supply chains have an exciting decade ahead."
The benefits of collaboration are already evident. For instance, No Palm Ingredients secured €5 million in co-financing to supply samples to Unilever and Colgate-Palmolive. Similarly, C2CA’s concrete upcycling efforts led to a €10 million Series A funding round and the establishment of CITADEL, a major EU-backed research project.
Consumer expectations are also playing a pivotal role in driving innovation. A study by Accenture reveals that over half of CEOs are prioritizing better sustainability data collection across their supply chains, while nine out of ten CEOs cite inadequate technology as a barrier to building business resilience. Growing demand for ethical sourcing and transparency is pushing companies to incorporate regenerative, organic, and certified ingredients into their supply chains.
Rishi Banerjee, head of the SmartLabel program at Consumer Brands Association, captures the momentum of these changes:
"Unlocking all the supply chain data and using it as a force for good is going to be really exciting. It will reveal new applications that further enhance supply chain efficiency."
This shift toward localized value creation is prompting businesses to rethink traditional supply chain models. Meanwhile, progress in blockchain standardization is helping to resolve earlier interoperability issues. Together, these trends are reinforcing the principles of circular supply chains, emphasizing resource efficiency and minimizing environmental impact. As technology evolves and partnerships grow stronger, traceability is poised to become the backbone of supply chains designed for a more sustainable future.
FAQs
How does traceability improve the efficiency and sustainability of circular supply chains?
Traceability is a cornerstone of circular supply chains, offering clarity and responsibility at every stage of a product’s journey. It allows companies to monitor materials and products from their creation all the way to their end-of-life, ensuring they can be effectively reused, repaired, or recycled.
This approach minimizes waste, boosts resource recovery, and aids smarter decision-making. By doing so, traceability not only helps businesses achieve sustainability targets but also builds stronger consumer confidence. Unlike the traditional linear supply chain model, circular systems thrive on this improved transparency, paving the way for lasting environmental and economic advantages.
What are the biggest challenges companies face when implementing traceability systems, and how can they address them?
Companies face a range of hurdles when setting up traceability systems, such as dealing with incompatible technologies, managing data silos, minimizing human errors, tackling high implementation costs, and finding the right balance between transparency and data privacy.
To tackle these challenges, businesses can focus on adopting integrated, standardized systems that enable smooth data sharing throughout the supply chain. Strengthening data management practices and putting in place solid privacy protections can safeguard sensitive information while still promoting transparency. Opting for scalable and cost-efficient technologies can also help ease financial constraints.
How do consumer expectations shape the adoption of traceability in supply chains?
The Role of Consumer Expectations in Traceability Systems
Consumer expectations are a major force behind the growing adoption of traceability systems in supply chains. Today’s shoppers are looking for more than just quality products – they want transparency, ethical sourcing, and accountability from the brands they choose to support. This shift in priorities pushes companies to embrace traceability practices to stay aligned with what their customers care about.
Introducing traceability systems doesn’t just build trust with consumers. It also helps businesses meet sustainability standards and streamline supply chain operations. When a brand aligns its practices with consumer values, it creates stronger loyalty and contributes to the movement toward more sustainable and circular supply chains.
