Traceability: Definition and how to implement it successfully

Traceability ensures transparency, safety, and efficiency in operations across multiple industries. Having information about a product’s journey from start to finish empowers businesses to make informed decisions and react quickly to unexpected issues. More and more consumers want to know where their purchases come from and what processes they’ve gone through before reaching their hands.

In this post, we break down traceability and why it’s so crucial. Plus, we'll explore the various types of traceability, show you how to set up an effective plan, review the systems that power it, and share some real-world examples.

What is traceability?

Traceability is the process of tracking an item throughout every stage of the supply chain, from the receipt of the raw materials used in production to final delivery to the end customer. It involves recording each step along the way: manufacturing, processing, storage, sales, and distribution.

When we talk about product traceability, we mean the ability to gather and document key information at every step, making it possible to reconstruct the item’s entire history at any time. This may include the origin of materials and components, the processes involved in transforming them, and the location or distribution of goods once they’ve been delivered.

Food traceability, for instance, requires knowing the source and quality of ingredients while keeping a record of every stage they go through. In the electronics and automotive industries, traceability gives companies control over the parts and components they use, the machines involved, and even the workers who performed the process.

Why is traceability important?

Managing traceability provides visibility into a product’s origin, history, and distribution. This is essential for keeping supply chains running smoothly. These are the main benefits of traceability:

• Regulatory compliance. Many sectors must meet legal requirements to guarantee traceability to protect consumers, maintain quality control, and minimize risks.
• Product safety. Identifying batches affected by contamination, defects, or deterioration enables selective recalls instead of massive ones, reducing associated costs.
• Customer trust. Consumers increasingly want to know where their products come from, how they’re made, and whether they meet ethical and environmental standards.
• Operational efficiency. Traceability supports quality control and helps keep down costs caused by errors.
• Strategic support. Recording detailed information at each stage creates valuable data for analyzing trends, optimizing processes, and making smarter business decisions.

Types of traceability

A company’s supply chain involves many activities: receiving, order picking, shipping, and more. Depending on where products are in the process and the direction in which information needs to be traced, there are four main types of traceability:

• Upstream (backward traceability): Focuses on a product’s origin. It covers identifying the raw materials used, the suppliers that provided them, and the initial production processes applied.
• Downstream (forward traceability): Follows the product’s path from the factory or warehouse to the end customer, including transportation, shipping conditions, and delivery times.
• Internal traceability: Tracks product movements and transformations inside a company, from storage, handling, and mixing to component assembly. It records quantities, timings, and outcomes at each stage. While related to upstream and downstream traceability, its scope is specifically what happens within an organization.
• External traceability: Monitors the product once it leaves the company, covering its entire distribution process and final delivery to the customer. Like upstream and downstream traceability, it deals with the product journey; however, it groups the information differently, focusing on what happens outside the company.

How to implement a traceability plan

Rolling out traceability in your business requires a clear plan that usually includes these steps:

1. Initial analysis. Review company processes and evaluate existing systems to guarantee accurate, structured data recording.
2. Define the scope. Start with clear goals. If the focus is on customer-facing visibility, the system must pinpoint which clients, channels, or points of sale receive each batch. If the priority is compliance and product origins, the system must be able to trace suppliers, raw materials, and processes. In practice, a two-way approach is often the most effective.
3. Set control points. Decide where information will be captured. This is typically done during receiving, storage, packaging, and shipping.
4. Determine the data to collect. For inbound flows: product, supplier, date, lot, quantity. For internal operations: processes applied, mixtures, dates, and staff responsible. For outbound flows: recipient, quantity, date, and lot.
5. Centralize records in a management system. All collected data must be stored in a structured documentation system that organizes information uniformly and makes it accessible at any time.
6. Validate through simulations. Once the traceability plan is in place, test it. For example, select a batch and verify whether it can be tracked quickly and reliably. These simulations reveal how effective the plan is and highlight where adjustments are needed.

Traceability plan in action

Traceability plans apply across industries. In food and pharma, they cover every step from raw material intake to finished product shipment. This means tracking product lots, packaging dates, and distribution destinations while properly documenting each stage. If a health alert occurs, affected batches can be identified and withdrawn immediately — without halting the rest of production.

Types of traceability systems

Traceability systems are the tools and processes businesses use to track a product’s movement and history throughout the supply chain.

First, companies need data capture technologies at each stage. Barcodes are a quick, low-cost way to record goods in and out. RFID tags, meanwhile, enable contactless, remote identification. Internet of Things (IoT) sensors are increasingly common in warehouses. They monitor temperature, humidity, location, and other variables in real time, which is especially critical for perishable goods.

Once captured, these data must be organized and managed through software. ERP (enterprise resource planning) systems integrate traceability with other business areas, such as purchasing, sales, and production. However, when the goal is full, detailed traceability, a warehouse management system (WMS) is indispensable. This software functions as a dedicated traceability tool, recording every product movement from receipt to final delivery. This level of detail ensures data accuracy and availability at all times.

Examples of traceability in logistics

Logistics traceability isn’t just a theoretical concept — it’s implemented in real-world operations. Companies in various sectors have deployed traceability plans using the Mecalux Group’s Easy WMS warehouse management system to maintain complete control over their processes:

• IKEA Components. This company, which packages and delivers furniture accessories and components, has implemented a comprehensive traceability system at its logistics center in Malacky, Slovakia. At the inspection checkpoints, Easy WMS verifies that pallet dimensions and conditions meet storage requirements. After the slotting strategy has been rolled out, automation takes over: conveyors and stacker cranes transport pallets to their corresponding locations. “Once the goods are stored, Easy WMS monitors their status in real time, reporting any movement made,” says IKEA Components’ Operations Manager.
• Novartis. In the pharmaceutical industry, medications retain their properties thanks to strict and secure inventory control. At Novartis’ warehouse in Stryków, Poland, Easy WMS provides traceability for a wide range of generic medicines, vaccines, and cancer treatments. The software assigns each item a slot based on its characteristics. It sends instructions to the automated handling equipment (e.g., pallet stacker cranes), enabling staff to know the exact location of every product.
• ADA. In Paços de Ferreira, Portugal, Easy WMS meticulously tracks the materials of this global medical supply manufacturer. “We guarantee total traceability of our transformation, production, and storage processes to maximize the quality of our goods. This capability spans from the raw cotton to final product shipment,” says Paulo Andrade, ADA’s CEO. Easy WMS coordinates the movement of medical supplies from production to the warehouse and onward to customers. “We’re thrilled with Easy WMS because, through the interfacing with our ERP, we can monitor all inventory-related information.”

The value of traceability

Traceability is a must for competing in demanding, transparent markets. Beyond regulatory compliance, it drives innovation, builds trust, and strengthens supply chain resilience. In this context, advanced technology such as a WMS is vital. It ensures traceability by centralizing information, linking the warehouse with other business areas, and providing full control over inventory. This software offers operational transparency as well as a complete view of material flows, increasing efficiency. Traceability supported by a WMS enhances both competitiveness and adaptability, enabling companies to thrive in a constantly evolving global market.