Interview: Practitioners on Supply chain traceability & transparency — what they wish they knew earlier

A 2025 survey by the European Commission found that only 23% of companies required to comply with the EU Corporate Sustainability Due Diligence Directive (CSDDD) had full traceability beyond their Tier 1 suppliers, despite 89% citing supply chain transparency as a strategic priority. The gap between ambition and execution is enormous, and practitioners who have lived through implementation know exactly where the breakdowns happen. We spoke with six professionals across industries including fashion, food, electronics, and automotive to understand what they wish they had known before embarking on supply chain traceability initiatives.

Why It Matters

European regulation is accelerating the urgency of supply chain traceability. The EU Deforestation Regulation (EUDR), the CSDDD, the Corporate Sustainability Reporting Directive (CSRD), and the forthcoming Digital Product Passport (DPP) requirements under the Ecodesign for Sustainable Products Regulation (ESPR) collectively demand that companies map, monitor, and disclose conditions across their full value chains. Companies that fail to achieve adequate traceability face penalties of up to 5% of global net turnover under the CSDDD, import bans under the EUDR, and reputational damage from increasingly sophisticated NGO and media investigations.

Beyond compliance, traceability creates operational value. McKinsey's 2025 analysis of 180 European manufacturers found that companies with mature traceability systems experienced 34% fewer supply disruptions, 19% lower quality defect rates, and 12% faster time to market for new products compared to peers without systematic traceability (McKinsey, 2025). The practitioners we interviewed confirmed these benefits but emphasized that reaching maturity is far harder and more expensive than initial business cases suggest.

Key Concepts

Supply chain traceability refers to the ability to identify and track products, components, and materials as they move through the supply chain from raw material extraction to final consumer. Transparency is the disclosure of this information to stakeholders including regulators, investors, consumers, and civil society organizations.

Mass balance tracking allows companies to trace the proportion of certified or sustainable material flowing through a supply chain without physically segregating it at every stage. Segregated traceability maintains physical separation of materials throughout the chain, providing higher assurance but at significantly greater cost. Chain of custody certification, administered by organizations such as the Rainforest Alliance, Forest Stewardship Council, and Responsible Jewellery Council, provides third-party verification of traceability claims. Digital product passports are standardized digital records containing a product's environmental, social, and circularity data, accessible via QR code or RFID tag.

What Practitioners Wish They Knew

Start With Data Architecture, Not Technology

Maria Gonzalez, Director of Sustainability at a major European fashion retailer with over 4,000 suppliers across 38 countries, described her first traceability initiative as a technology-first mistake. "We selected a blockchain-based platform before we had standardized our supplier data fields, our product hierarchy, or our material classification system. We spent 14 months and 2.3 million euros building a system that could not interoperate with our existing ERP because the data structures were incompatible."

Her advice: spend the first three to six months on data architecture before evaluating any technology platform. This means defining master data standards for supplier identification (using LEI or DUNS numbers), product classification (using GS1 standards), and material taxonomy. "The technology decision is actually the easy part. Getting 4,000 suppliers to input data consistently is the hard part, and that is fundamentally a data governance challenge, not a technology challenge."

Tier 2 and Beyond Is Where Projects Stall

Thomas Keller, Supply Chain Transparency Lead at a German automotive components manufacturer, reported that his company achieved 95% Tier 1 supplier mapping within six months but took three years to reach 60% visibility at Tier 2 and had less than 20% visibility at Tier 3. "The relationship dynamic changes completely once you move past Tier 1. Your direct suppliers often do not know who their own suppliers' suppliers are, or they consider that information commercially sensitive."

Keller's team found that the most effective approach was not to demand data directly from sub-tier suppliers but to work with Tier 1 suppliers to build their own traceability capabilities. "We created a supplier development program that trained our top 50 Tier 1 suppliers in traceability methodology. Those 50 suppliers collectively managed 800 Tier 2 relationships, and within 18 months we had mapped 73% of our Tier 2 base through them."

The financial investment was significant: approximately 1.8 million euros in supplier training, dedicated personnel, and data infrastructure support over two years. But Keller noted that the alternative of sending audit teams to hundreds of sub-tier suppliers across Southeast Asia would have cost three to four times as much with lower data quality.

Smallholder Engagement Requires Different Models

Annika Lindberg, Head of Responsible Sourcing at a Scandinavian food company sourcing cocoa, palm oil, and soy from smallholder farmers across West Africa and Southeast Asia, described the fundamental challenge of tracing commodities through fragmented supply chains. "We source cocoa from approximately 85,000 smallholder farmers in Ghana and Cote d'Ivoire, most of whom farm plots of less than two hectares. Traditional traceability approaches based on digital record-keeping assume that every actor in the chain has a smartphone, internet connectivity, and digital literacy. In rural West Africa, those assumptions are wrong for 40 to 60% of our farmer base."

Lindberg's team partnered with Sourcemap and local cooperatives to implement a hybrid traceability model. Cooperative-level aggregation points serve as the primary data entry layer, with trained cooperative staff recording deliveries from individual farmers using ruggedized tablets with offline capability. GPS polygon mapping of farm boundaries, conducted by field teams using Meridia's technology, provides geolocation traceability for EUDR compliance. "The per-farmer cost of our traceability system is approximately 8 to 12 euros per year, which on a per-ton basis adds 15 to 25 euros to our cocoa procurement cost. That is a real cost that has to be absorbed somewhere in the value chain."

Interoperability Is the Unsexy Problem That Kills Scale

Pieter van den Berg, Chief Technology Officer at a European traceability platform provider, has seen dozens of enterprise traceability implementations and identified interoperability as the single biggest barrier to scale. "Every major brand has selected its preferred platform: SAP, Oracle, Sourcemap, Transparency-One, TrusTrace, or Altana. The problem is that a Tier 2 textile mill in Bangladesh may be supplying 15 different brands, each demanding data through a different platform in a different format. That mill does not have the capacity to maintain 15 different data feeds."

Van den Berg advocates for adoption of GS1 EPCIS (Electronic Product Code Information Services) as the common data standard for supply chain events, with UNECE's transparency standards providing the semantic framework. "The technology industry solved this problem decades ago with TCP/IP and HTTP. Supply chain traceability needs its equivalent of the internet protocol stack, and EPCIS is the closest candidate, but adoption is still below 15% among European manufacturers."

The Catena-X automotive data ecosystem in Germany represents one of the most advanced interoperability initiatives, with over 180 member companies sharing supply chain data through standardized APIs. Catena-X reduced data integration time from an average of 6 months to 3 weeks for participating companies (Catena-X, 2025).

Verification Without Physical Audits Is Risky

Sophie Laurent, ESG Assurance Director at a Big Four accounting firm in Paris, cautioned against over-reliance on self-reported supplier data without independent verification. "We audited traceability claims for 22 European companies preparing for CSRD disclosure in 2025, and found material discrepancies in 68% of cases. The most common issue was not deliberate fraud but data decay: supplier information that was accurate when first collected but had become outdated due to subcontracting changes, facility relocations, or ownership transfers."

Laurent recommended implementing a risk-based verification strategy. High-risk supply chains (those involving conflict minerals, commodities linked to deforestation, or regions with documented forced labor) require on-the-ground verification at minimum every 12 months. Medium-risk chains can rely on third-party certification audits supplemented by remote monitoring (satellite imagery, worker voice platforms). Low-risk chains may use self-assessment questionnaires with random spot checks covering 10 to 15% of suppliers annually. "The mistake companies make is treating verification as a one-time activity rather than a continuous process. Supply chains are dynamic, and a factory that was compliant in January may have subcontracted to a non-compliant facility by June."

Budget for Change Management, Not Just Technology

Henrik Sorensen, VP of Operations at a Danish consumer electronics company, estimated that his company spent 40% of its total traceability program budget on technology, 35% on change management and training, and 25% on ongoing data maintenance and verification. "If I were starting over, I would flip those ratios. The technology works. The challenge is getting 2,000 procurement professionals across 12 countries to change how they engage with suppliers, how they record transactions, and how they prioritize traceability data collection alongside their traditional KPIs of cost, quality, and delivery."

Sorensen's team found that embedding traceability metrics into procurement team performance reviews was the single most effective change management lever. "When we added supplier data completeness as a weighted factor in buyer performance evaluations, data submission rates from suppliers increased from 34% to 78% within two quarters. Incentives work."

What's Working

The EU Digital Product Passport pilot programs across textiles, batteries, and electronics have demonstrated that standardized product-level traceability is technically feasible at scale. The battery passport initiative led by the Global Battery Alliance has enrolled over 90 battery manufacturers representing 70% of European EV battery production, with passports containing verified data on carbon footprint, recycled content, and mineral sourcing (Global Battery Alliance, 2025). Satellite-based monitoring services from Starling (an Airbus and Earthworm Foundation partnership) now cover over 600 million hectares of forest area for deforestation monitoring, providing near-real-time alerts to commodity traders and food companies. Worker voice platforms such as Ulula and WOVO have reached over 4 million workers across 12,000 factories, providing direct feedback channels that complement traditional social audits.

What's Not Working

Industry-led voluntary transparency initiatives have produced limited results. The Fashion Transparency Index 2025, published by Fashion Revolution, found that the average score across 250 major fashion brands was just 24 out of 100, with only 12 brands scoring above 60 (Fashion Revolution, 2025). Blockchain-based traceability platforms have struggled with adoption: a 2025 Gartner assessment found that 78% of blockchain supply chain pilots initiated between 2020 and 2023 failed to progress to production deployment, primarily due to the challenge of onboarding sufficient supply chain partners to make the network valuable. Cost-sharing models remain unresolved, with brands typically bearing 80 to 90% of traceability costs while expecting suppliers to perform the majority of data entry and verification work. This asymmetry creates resentment and poor data quality.

Key Players

Established: SAP (integrated supply chain visibility through SAP Business Network), Sourcemap (multi-tier supply chain mapping for Fortune 500 companies), TrusTrace (fashion and textile traceability platform used by H&M Group and PVH), Catena-X (automotive supply chain data ecosystem with 180+ members)

Startups: Altana (AI-powered supply chain visibility platform, raised $200M Series B in 2024), Textile Genesis (fiber-to-retail digital traceability using fiber-level tagging), Meridia (smallholder farm mapping and verification for agricultural supply chains), Tilkal (blockchain-based traceability for food and luxury goods)

Investors: Mubadala Capital (lead investor in Altana), Salesforce Ventures (investments across supply chain transparency platforms), European Investment Bank (financing DPP infrastructure development), IKEA GreenTech (supply chain sustainability technology investments)

Action Checklist

• Conduct a data architecture assessment before selecting any traceability technology platform, defining master data standards for supplier identification, product classification, and material taxonomy
• Map your supply chain to at least Tier 2 for all product categories and Tier 3 for high-risk categories within 12 months
• Implement a supplier development program that builds traceability capability at Tier 1 suppliers to enable cascading visibility to sub-tiers
• Adopt GS1 EPCIS as your supply chain event data standard to minimize interoperability friction with trading partners
• Establish a risk-based verification strategy with on-the-ground audits for high-risk supply chains and remote monitoring for medium-risk chains
• Embed traceability data completeness metrics into procurement team performance evaluations to drive behavioral change
• Budget at minimum 35% of your traceability program spend on change management and training
• Prepare for EU Digital Product Passport requirements by piloting product-level data collection for your highest-volume SKUs

FAQ

Q: How much does a comprehensive supply chain traceability system cost for a mid-size European manufacturer? A: Based on practitioner interviews and industry benchmarks, a mid-size manufacturer (500 to 2,000 direct suppliers) should budget 1.5 to 4 million euros for initial implementation over 18 to 24 months, plus 400,000 to 800,000 euros annually for ongoing operation, data maintenance, and verification. Technology licensing typically represents 30 to 40% of total cost, with the remainder split between internal personnel, supplier engagement, change management, and third-party verification. Companies with complex multi-tier supply chains spanning multiple commodity categories should expect costs at the higher end of these ranges.

Q: Which traceability standard should European companies adopt for CSRD and CSDDD compliance? A: There is no single mandated standard, but the emerging consensus among practitioners is to build on GS1 standards (GTIN for product identification, GLN for location identification, EPCIS for event data) as the foundational data layer, supplemented by sector-specific standards such as the ZDHC Gateway for chemical management in textiles or IRMA for responsible mining. For EUDR compliance specifically, companies need geolocation data (GPS polygons) for production plots, which requires integration with geographic information systems. The EU DPP standards currently being developed under CEN/CENELEC will define additional requirements that companies should monitor closely.

Q: How do we handle suppliers who refuse to share sub-tier supply chain data? A: Practitioner experience suggests a graduated engagement approach. Start by explaining regulatory requirements and shared risk (suppliers face losing business if their customers cannot comply with CSDDD or EUDR). Offer technical support and co-investment in data systems. For persistent refusals, include traceability data provision as a contractual requirement in supplier agreements with clear timelines and consequences. Several practitioners reported that 5 to 10% of suppliers ultimately required replacement due to inability or unwillingness to provide adequate traceability data, and recommended beginning the qualification of alternative suppliers early in the process rather than waiting for deadlines.

Q: What role does satellite monitoring play in supply chain traceability? A: Satellite monitoring is most mature for deforestation-linked commodities (soy, palm oil, cocoa, cattle, rubber, coffee, wood). Services such as Starling (Airbus/Earthworm), Global Forest Watch (World Resources Institute), and Planet Labs provide change detection at resolutions of 3 to 5 meters, sufficient to identify deforestation events on individual farm plots. For EUDR compliance, satellite monitoring combined with GPS polygon farm mapping provides the geolocation evidence required to demonstrate deforestation-free sourcing. Limitations include cloud cover in tropical regions (reducing usable imagery to 60 to 70% of acquisition attempts), difficulty distinguishing between legal land management and illegal deforestation from space alone, and the need for ground-truthing to confirm satellite-detected changes.

Sources

• McKinsey & Company. (2025). Supply Chain Traceability in Europe: From Compliance Burden to Competitive Advantage. Munich: McKinsey.
• European Commission. (2025). Corporate Sustainability Due Diligence: Implementation Readiness Assessment of EU Companies. Brussels: European Commission.
• Fashion Revolution. (2025). Fashion Transparency Index 2025. London: Fashion Revolution CIC.
• Global Battery Alliance. (2025). Battery Passport: Pilot Results and Roadmap to Scale. Geneva: GBA.
• Catena-X Automotive Network. (2025). Annual Report: Data Ecosystem Performance and Adoption Metrics. Berlin: Catena-X.
• Gartner. (2025). Hype Cycle for Supply Chain Strategy: Blockchain Traceability Reassessment. Stamford, CT: Gartner Inc.
• GS1. (2025). EPCIS 2.0 Adoption Report: Supply Chain Visibility Standards Implementation. Brussels: GS1 AISBL.