Traceability Investments on the Rise for Compliance and Recall-Related Efficiencies

by Richa Gupta, on June 20, 2016

Screen_Shot_2016-04-20_at_9.30.54_AM.png(VDC Research guest blog post for Loftware)

VDC Research recently wrapped up a study focused on traceability requirements and investments within automotive, food & beverage (F&B), and pharmaceuticals.

A string of food-borne illness outbreaks, faulty automotive parts, and damaged pharmaceutical drugs paired with poor recall execution and the inability to track-and-trace products effectively through the supply chain have caused significant long-term damage to many major brands in these industries in the past 18–24 months. Track-and-trace systems are put in place to address including cost containment, anti-counterfeiting, constantly evolving policies, operational inefficiencies, mandatory recalls, and the threat of increased government oversight. Manufacturers reported consumer liability (64%), financial costs (55%), and trust (45%) to be the factors most affected by an inability to trace items in the supply chain.

Primary factors impacted by an inability to trace items through the supply chain.


Strict regulatory compliance standards along with the need to improve recall preparedness and support expanding, globally distributed operations will drive greater investments in traceability solutions across the three industries of focus. In fact, 59% of respondents indicated having increased budgets for track-and-trace systems for the year 2016. This projected budget increase can also be tied to a shift towards the use of 2-dimensional barcodes in alliance with approaching regulatory deadlines for provisions of the DQSA (Drug Quality Security Act) in the pharmaceutical industry and FSMA (Food Safety Modernization Act) in F&B.

With the adoption of traceability solutions expected to grow within supply chains driven by an overarching need for standardization, vendors have a significant opportunity ahead of them to engage and align go-to market and distribution strategies with market requirements. For software vendors, this means developing solutions to keep up with the evolving industry-specific regulations and standards, and capitalizing on the growing push for traceability across all verticals. Companies across industries are investing heavily in software solutions to not only keep track of their products but also improve operations and communications across their distributed supply chains.

Enterprise labeling solutions by vendors like Loftware integrate seamlessly with organizations’ existing investments in application suites by the likes of Oracle and SAP, thereby making it possible to streamline regulatory compliance with the FDA and other international regulations and standards such as the EU 1169. These serve to enhance overall labeling accuracy to avoid common labeling errors, delays, penalties, and fines associated with non-compliance to regulations mandated in, for instance, the FSMA. Addressing the desire and need for a more centralized information system, enterprise label-generating software such as Loftware’s Spectrum allow for enterprise collaboration between partners while improving supply chain efficiency.

An interesting development in regards to the challenge of data management and security in the supply chain is the concept of blockchain. Blockchain is a digital ledger that uses cryptology to allow participants on the network to use the ledger and record transactions to enable granular traceability, minimizing the risk of fraud. This concept remains largely theoretical in nature outside of the financial services sector. As a new topic of discussion, it has the potential to enhance traceability software by improving accuracy and accountability, while also creating a chain of custody for every product. New technologies and IT software solutions will continue to play a crucial and expanding role going forward as more organizations dash to meet industry regulatory requirements or enhance supply chain operations.

For more information and insights from VDC’s latest report – “Connecting the Dots: What is Driving Traceability Solutions Investment?” – download the Executive Brief or send an email to