What’s Propelling and Stalling the Industry’s Traceability Preparedness

When it comes to traceability, there is a gap between the industry’s intentions and their actions.

According to a survey conducted by Sourcing Journal in partnership with Oritain, 63 percent of industry executives indicate traceability is a strategic advantage, yet just 44 percent are actively tracing goods. The remaining 56 percent either have a plan in place but are not actively tracing goods yet or they have no plan in place. During a panel at Sourcing Journal’s Fall Summit, moderated by SJ and Fairchild Studio director Lauren Parker, speakers dove into the motivations behind traceability investments and what is still holding companies’ efforts back.

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Looking at the key drivers shaping traceability, protecting brand reputation came out on top with 40 percent of respondents. This was followed by consumer demand for transparency and expected regulatory pressures, reflecting the growing need for compliance preparedness.

“The cost of trading non-compliant or unethical goods significantly outweighs the cost of investing in a pretty robust due diligence program,” said Ben Tomkins, regional vice president, Americas at Oritain, which uses forensic science to verify raw material origins. “The longer the businesses take to implement a degree of traceability, the more acute their risk becomes as well.”

One piece of legislation spurring the industry to action on traceability is the United States’ Uyghur Forced Labor Prevention Act (UFLPA), which bars imports tied to China’s Xinjiang Uyghur Autonomous Region. Between 2023 and 2024, U.S. Customs and Border Protection’s shipment detentions rose 25 percent, and the detention increase was sharper in apparel, footwear and textiles, rising 33.4 percent the same year. “UFLPA was a huge catalyst for sort of moving the need of traceability from a nice to have to sort of a business necessity,” said Tomkins.

This crackdown on slavery and forced labor extends beyond the U.S. with the United Kingdom’s Transparency in Supply Chain Act and the European Union’s Forced Labour Regulation. Companies are also facing escalating due diligence requirements from regulations like the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD).

Further, EU legislation will soon mandate digital product passports. To create DPPs, companies must have knowledge about their supply chains and be able to disclose detailed product information. However, only 46 percent of those surveyed have visibility to Tier 4, or the raw material stage. Somewhat expectedly due to the scrutiny around cotton, including the UFLPA, the fiber is the most commonly traced raw material.

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Recognizing the need for traceability and actually investing in it are two separate things. Respondents named cost, supply chain complexity and lack of expertise or capacity as the top three barriers for traceability. Although regulation is heightening visibility needs, roughly a quarter (23 percent) of executives said regulatory uncertainty is holding them back.

For Grey Matter Concepts, which specializes in manufacturing basic apparel, traceability is a differentiator and “essential.” Robert Antoshak, the company’s vice president, global strategic sourcing and development, noted that while the business case for traceability is “sound,” across the industry, sustainability is a different story. “For many brands and many companies, [sustainability is] a nice to have. And in this environment, it’s expensive,” he said. “Unless the company management buys into it from the very beginning, and it’s essential to the business structure and the business strategy, a lot of companies are not going to be paying for that.”

In addition to the intention-action divide, the survey results show a verification gap. A mere 44 percent of respondents are always or often confirming the traceability data that their suppliers are self-reporting, while the majority (56 percent) only do this sometimes, rarely or never. Per Bjorn Bengtsson, chief product and supply chain officer at menswear brand Untuckit, to weed out forced labor, companies should be following up supply chain mapping and tracing with audits.

In the near future, the gap between intent and investment could narrow, as 56 percent of survey respondents said they plan to increase traceability spending either slightly or significantly over the next two years.

This investment could help prepare companies for escalating verification requirements and risks. Bengtsson expects CBP’s auditing to become more “aggressive.” In addition to UFLPA, another consideration is the elevated tariff rate on goods produced in Vietnam out of China-made inputs. He noted that CBP operates under a “guilty until proven innocent” model, requiring traceability to respond to any holds and get cargo released.

“It takes you at least three months to get [shipments] out of customs, and by that time, it’s too late,” said Bengtsson. “So if you want to risk that, fine, but that is a serious financial risk to the business.”

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