Staff being forced to work overtime to meet supplier demands… Employees being paid less than half the minimum wage… Staff not wearing masks during the COVID-19 pandemic…

These are the allegations levelled against UK online fashion retailer Boohoo, which is now facing a £100 million lawsuit from investors after modern slavery allegations wiped more than £1 billion from its value.

The claims that one of the company’s suppliers was mistreating workers came to light in 2020 – but as independent trade publication FashionUnited points out, controversies surrounding Boohoo’s supply chain are legion. “The past five years, in particular, have seen a period of turbulence take hold over the company’s production process, as mounting investigations slowly unveil the slew of seemingly broken promises made by the company to fix what it repeatedly says has not been fragmented.”

The fashion industry’s supply chain is notoriously complex. It’s a wide-reaching set of processes connecting countries, companies and individuals. Behind that T-shirt on the shelf lie tens of millions of people worldwide, most of whom are women. The industry’s inputs include water, crops, chemicals, and fossil fuels, says Remake, a non-profit campaigning for human rights and climate justice in the clothing industry. All of those inputs have the capacity to work for or against a company’s sustainability goals.

That may be why four fashion companies have reportedly appointed a Head of Traceability. Ralph Lauren, VF Corp, Chanel and PANGAIA have all created independent teams, departments and positions for traceability aimed at ensuring supply chain integrity and accountability.

What is traceability, and why is it important?

Other sectors’ supply chains might not be as complex as that of fashion, but that doesn’t mean traceability is not an issue. The food industry, for example, is also vulnerable to supply chain challenges. In the United States alone, one in six citizens falls ill from a foodborne illness each year, according to the FDA – and those illnesses could be caused by any one element in the supply chain.

According to management consultancy Bain & Company, traceability allows companies to follow products and goods as they move along the value chain and gather exact information about the provenance of inputs, supplier sourcing practices, and conversion processes.

Companies need to understand the nuts and bolts of their supply chain for both business and ethical reasons:

• Fast-changing consumer preferences require increased flexibility and speed. Leadership teams with a deep understanding of their supply chains can work to serve customers better, identify unnecessary resource consumption, respond faster to changes in demand, and fulfil orders more efficiently.

• A supply chain that reduces or reuses materials and remanufactures or recycles products lowers cost and creates less waste.

• Investors, consumers, and governments expect more sustainable products and processes, with certifications to prove companies’ claims. (One study shows that consumers value greater visibility regarding a company’s social responsibility practices in its supply chain).

• Companies that are confident about the provenance of their goods can minimise the impact of internal and external disruptions, whether those are interruptions in supply or being exposed to risk if the supply chain is problematic in some way.

What does a Head of Traceability do?

“Head of Traceability” (HoT) is a senior role, tasked with ensuring that every stage of the supply chain is documented and transparent. Key responsibilities include:

• Systems: Developing and integrating advanced technologies such as blockchain, AI, and barcoding to monitor and record the flow of goods from production to end-users.

• Compliance and transparency: Ensuring that the supply chain complies with various regulatory requirements and sustainability standards, in all jurisdictions the supply chain moves through. This includes being on top of data on environmental and social impacts like organic certification, carbon neutrality and fair labour practices.

• Risk management: Using traceability data to identify and mitigate risks within the supply chain. This can help speed up product recalls by pinpointing affected batches and locations.

• Sustainability: Aligning traceability efforts with the company’s sustainability objectives.

• Communication: Communicating traceability information to internal teams, suppliers, clients, and consumers. This helps build trust and supports the company’s brand reputation.

Where does traceability sit in an organisation, and what skills are needed?

The list of responsibilities that might fall under a Head of Traceability’s remit is wide-ranging, making it a cross-functional role, says the Institute of Environmental Management & Assessment. While the position (or department) covers the areas of sustainability, IT, product development, sourcing, legal, logistics and marketing, it is often placed in a sustainability department – which has limited leverage over sourcing and logistics. On the other hand, situating the role in sourcing, logistics or IT is sensible because of the technical aspects of the role (blockchain is an increasingly critical part of supply chain management), But that might mean that sustainability issues are not on the table. And none of this takes into account the marketing and communication aspects of the role.

The size and complexity of the role might be why think tank Planet Tracker found only 18 companies with a Head of Traceability in a 2023 LinkedIn survey (that excluded companies whose business is to sell traceability solutions and government agencies). By comparison, there were at least 10,000 Heads of Sustainability on LinkedIn.

Planet Tracker notes though that the relative scarcity of HoTs might be due for change – with regulation being an important driver of transformation. The think tank lists the following examples:

• The EU’s deforestation regulation, which requires EU importers to confirm that cattle, cocoa, coffee, oil palm, rubber, soya, wood and derived products are deforestation-free

• The FDA’s increased traceability requirements in the US, which covers domestic as well as foreign firms producing food for US consumption, “along the entire food supply chain in the farm-to-table continuum”.

• The EU’s Corporate Sustainability Reporting Directive (CSRD), which requires large companies and listed companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment.

Meeting these challenges is not easy. Shanel Orton , Director of Traceability and Responsible Materials at VF Corp, has told Vogue Business that neither she nor any of her traceability colleagues had direct previous experience. That said, she notes that people with a range of sector experience can move into traceability roles provided they are “flexible, agile and open to creating new processes as (they) go”. She says strong communication skills are also crucial. “Traceability is a new function for both internal stakeholders and suppliers, and that requires ongoing education.”

When do you know it’s time to hire a Head of Traceability

Hiring a Head of Traceability can be a strategic decision for many organisations, especially those in industries where supply chain transparency and compliance are critical. To determine if it is time for your organization to hire a Head of Traceability, consider the following factors:

1. Regulatory Requirements

Are there stringent regulatory requirements for traceability in your industry?

Are you facing increased scrutiny from regulators or industry bodies?

Is compliance with these regulations becoming more complex and resource-intensive?

2. Customer Expectations

Are your customers demanding greater transparency about the origin and journey of your products?

Is traceability becoming a key differentiator in your market?

Are you seeing increased demand for detailed product information from consumers, especially regarding sustainability and ethical sourcing?

3. Supply Chain Complexity

Has your supply chain grown in complexity, making it harder to track and trace products effectively?

Are you sourcing materials from multiple suppliers across different regions?

Are you experiencing challenges in identifying and addressing supply chain disruptions or recalls?

4. Quality and Safety Concerns

Are there increasing concerns about product quality and safety?

Have you faced incidents where traceability issues led to significant operational or reputational damage?

Is there a need to improve response times and accuracy in addressing quality or safety issues?

5. Technological Advancements

Are there new technologies (e.g., blockchain, IoT) that can significantly enhance your traceability capabilities?

Is there a need for specialized expertise to integrate and manage these technologies effectively?

6. Competitive Pressure

Are your competitors investing in traceability capabilities?

Is there a risk of falling behind if you do not enhance your traceability systems?

7. Internal Readiness

Does your organization have the internal resources and expertise to manage traceability effectively without a dedicated leader?

Are current traceability efforts fragmented or lacking clear ownership?

Is there executive support and budget allocated for improving traceability?

Traceability is not just a box-ticking exercise

In the same way that diversity, equity and inclusion need to be integrated across an entire organisation, traceability is an organisation-wide project. It’s closely allied to DE&I efforts because of its focus on ethical labour practices, and is the backbone of a sustainable product system to verify social and environmental claims. But, says Business for Social Responsibility, verification is not the end goal. “It’s vital that companies deliberately specify sustainability objectives,” the organisation says.

{The Institute of Environmental Management & Assessment](https://www.iema.net/articles/a-new-role-for-traceability-in-supply-chains) quotes Nicole Rycroft, founder and executive director of not-for-profit Canopy, which works to make forest-related products more sustainable, as saying that having someone senior overseeing traceability is not an answer in itself. Firstly, the person needs to be able to bring the rest of the company along to meet targets. And those targets need to be ambitious. “A Head of Traceability gives you a clear line of sight on a product, but that doesn’t inherently reduce your risk,” she says. Think of a lifejacket made from cement – someone may have full oversight of its production, but the product does not serve its purpose.

Benefits of Hiring a Head of Traceability

Improved Compliance: Ensuring adherence to regulations and standards.

Enhanced Customer Trust: Building confidence through transparency.

Operational Efficiency: Streamlining processes and reducing errors.

Risk Mitigation: Quickly identifying and addressing issues in the supply chain.

Strategic Advantage: Differentiating your brand through superior traceability practices.

Examples of best practice in supply chain management

• Nike is arguably the pioneer of supply chain transparency (according to Business for Social Responsibility), as the first company to publish its supplier list. The Nike manufacturing map provides insights into its supplier base.

• The Apple Supplier Responsibility Progress Reports shares progress and challenges.

• Walmart decided to leverage blockchain to increase the safety of its food supply in response to a series of devastating E.coli outbreaks in 2018. The company says it can now track a head of lettuce from a store all the way back to the farm where the lettuce was cultivated by the farmer in just seconds, according to Foley & Lardner LLP.