Supply chain traceability and Dynamics 365

For apparel and fashion brands striving for sustainability, knowing where to start can feel overwhelming.

Supply chain traceability is a hot topic right now. Consumers are more concerned about the environmental and social impact of the products they buy, while brands are under increasing pressure to demonstrate that their supply chains are transparent, ethical, and sustainable. Complex global supply chains, questions around who owns sustainability initiatives in an organization, and a lack of industry-wide standards make demonstrating sustainability difficult. Traceability is one way to inform more sustainable practices and help guide decision-making and technology is a powerful tool for starting your traceability journey.

At Sunrise, our experience working with apparel, fashion, and consumer goods brands has shown us just how vast and overwhelming these industries’ supply chains can be. But we’ve also uncovered small, actionable steps brands can take to start improving supply chain traceability.

What is supply chain traceability?

Supply chain traceability refers to the ability to track the journey of a product or component through every stage of its lifecycle, from raw materials to finished goods. For example, in the apparel industry, this means being able to trace the origin and environmental impact of fabrics, dyes, and other materials, as well as the conditions under which products are manufactured and transported.

Why is supply chain traceability important?

An apparel company might decide to implement traceability measures for several reasons. They might be interested in more responsible sourcing and monitoring where and who they source from. It may stem from a need to maintain compliance with certain regulatory requirements. Or ensuring product quality by applying consistent standards to finished products. Implementing better traceability helps organizations improve their ability to respond to disruptions, better manage risk, and improve the customer experience.

Case Study: Traceability project for apparel

A great example of how Dynamics 365 can enable basic supply chain traceability is through one of our customers, a global, multichannel apparel brand. The organization had a complex supply chain, selling its products in multiple countries online, in stores, and wholesale via 3PL distribution centers. As product regulations vary from country to country, product attributes need to be tracked in greater detail. For example, a jacket with the same SKU could contain materials that are eligible for sale in some countries, but not others. To add even more complexity, most of the customer’s products were seasonal, narrowing the selling window even further. These requirements meant adding additional logic to the customer’s ERP system to ensure goods that are eligible for sale in fewer countries were picked first.

Global supply chains make supply chain traceability complex.

Orchestrating the flow of goods from a manufacturer to the end customer is complicated. The parties involved in making a single t-shirt include farmers, spinners, dyers, finishers, sewists…and that’s just to make a single garment. Once it’s time to ship that t-shirt to a retailer or end customer, the packaging, transportation, and storage for said t-shirt involves a whole new group of vendors. All along the way, there are several dimensions across your supply chain that contain traceable information:

• Raw materials: where are you sourcing your raw materials from? Do you know if fabrics like cotton or polyester adhere to industry standards?
• Production: what do you know about the factories and production facilities that you work with?
• Storage: Do the warehouses you use adhere to any standards regarding emissions and sustainable practices?
• Transportation: Do your transportation options have a low carbon footprint?

At first glance, trying to track all this data seems overwhelming. The good news is that each of these areas represents a small way to get started, which could involve:

• Tracing the origin of raw materials.
• Evaluating the sustainability of the chemicals used to finish fabrics and dyes.
• Identifying more sustainable packaging solutions or using recycled materials.
• Evaluating more sustainable transportation practices.

At its most basic, implementing better supply chain traceability is about improved data quality and capture. Traceability lends itself to sustainability initiatives by creating a solid foundation of data.

By gathering data around how your products are sourced, produced, stored, and transported, you are creating a paper trail and a set of proof points for your customers. Traceability can give you a fact-based picture of your supply chain that also supports your sustainability initiatives – and your brand’s promises.

How Dynamics 365 can help you capture traceability data.

As an ERP system, Dynamics 365 is an excellent platform for managing and tracking your product data. It also integrates with existing traceability platforms. Even if you aren’t using a traceability solution or partner, the options for tracking supply chain data in Dynamics 365 can provide a goldmine of specific information you can use to back up your brand’s claims regarding product sustainability, safety, and origin.

Ways to use Dynamics 365 to support supply chain traceability

• Dynamics 365 includes tracing features to see how an item or raw material moves through its production and sales processes.
• Place shipping restrictions on items by transaction attributes.
• Implement shipping restrictions to prevent products with restricted materials being sold in certain countries.
• Use text fields for serial and lot number tracking of finished goods.
• Attach documents to vendor master records that prove a vendor is using ethically sourced raw materials, or meets certain industry certifications, or is using recycled materials in their packaging.
• Purchase orders can reflect that you’re using vendors that have certain industry certifications.
• For retail sales and returns, a production order or MPO value can be captured as an information code on a retail sales order or return order to facilitate product recalls. The same thing can be done on retail inventory adjustments.
• Adjust production BOMs to capture substitutions.
• Record audits can be set up that regularly flag vendors or raw materials that need to be reviewed to check that they are still in compliance with your standards or outside regulations.
• Power Platform tools like Power Apps and Power BI can make capturing, synthesizing, and distributing data across your organization easy.
• The interconnected nature of an ERP system like Dynamics 365 means all your product data, from your purchase orders to your BOMs to your vendor information, is in one place and easily accessible.

Every organization is different. Wherever you are on your journey to building a more sustainable brand, there are options to start improving your supply chain and traceability data. While implementing supply chain traceability can be a daunting task, it’s important to remember that every small step towards sustainability counts. By starting with one area for improvement and leveraging technology solutions like Dynamics 365, brands can make meaningful progress towards their sustainability goals.