The Key to Supply Chain Visibility: Sustainability Software

A new report from Verdantix predicts that the supply chain sustainability software market will balloon to $7 billion globally by 2029.

Increasing legal requirements and consumer demand for sustainable products are both driving this shift. As companies strive to ensure that their products aren’t contributing to unethical practices, they’ve discovered that supply chain transparency depends on sustainability software.

Let’s look at how we got here.

Why is supply chain visibility important?

Several key trends are shaping the push for supply chain transparency, each addressing critical ethical and environmental concerns. Chief among them are regulations focused on eradicating forced labor and other human rights abuses, curbing deforestation, and promoting sustainability.

Forced labor

Governments worldwide are intensifying their efforts to combat forced labor. The US forced labor ban requires companies to provide evidence that their products are not made using forced labor, as do laws in Canada, Australia, and the EU. Companies trading in these markets must conduct rigorous scrutiny of their supply chains to prove that forced labor is not implicated in their products.

Deforestation

New regulations such as the EU Deforestation Regulation (EUDR) require businesses to trace the origins of additional raw materials, such as timber, palm oil, and soy, to ensure that they are not contributing to deforestation. Companies must adopt practices such as certification schemes and satellite monitoring to verify the sustainability of their raw material sources. As of December 30, 2024, the EUDR will require that large companies submit a due diligence statement to the EU Information System for every in-scope product, certifying that it did not originate from newly deforested land.

Sustainable textile strategy

The fashion industry is under significant scrutiny for its environmental impact and labor practices. In response, regulations to promote sustainability and ethical labor in textile production aim to reduce the environmental footprint of textiles and ensure fair labor practices throughout the supply chain. This includes measures to increase the use of recycled materials, reduce waste, and improve factory working conditions. Brands must provide transparency about their sourcing and manufacturing processes to comply with these emerging requirements.

Conflict minerals

Minerals such as tin, tungsten, tantalum, and gold are known as conflict minerals because they are often mined in areas subject to armed conflict and human rights abuses. Sourcing minerals from conflict zones can finance armed groups and perpetuate violence. The US Dodd-Frank Act and the EU Conflict Minerals Regulation require companies to adopt traceability systems to verify the sources of their raw materials, report on the origin of minerals, and perform supply chain due diligence.

How can companies that manufacture hundreds or thousands of products achieve full visibility into their global, multifaceted supply chains — especially for natural materials like minerals or lumber?

Sustainability software enables tracking of complex supply chains

The level of supply chain transparency required today would not be possible without modern technology. Companies adopting sustainability software should look for tools that allow them to automate their processes, increase their data consistency, and digitize information and workflows.

Process automation

Automating supply chain processes reduces the risk of human error and enhances efficiency, allowing for better tracking and reporting of materials and labor practices. Automation can streamline data collection and analysis, ensuring that decisions are based on accurate and up-to-date information while reducing the time and effort required to log and analyze information at each stage of the supply chain.

For instance, some systems automatically analyze supplier data and compare it against internal goals to allow continuous monitoring of their compliance status. Not only does this speed up the due diligence process, but it also improves data accuracy.

Data consistency

Using a standardized data format and language across the supply chain ensures that all stakeholders are on the same page. Consistent data formats also enable seamless system integration and easier information sharing between supply chain members. A common language is crucial for maintaining transparency and ensuring that everyone involved understands the data being shared.

Consistency is especially important for large manufacturers with tens or hundreds of millions of indirect supplier transactions. A platform’s ability to collect, integrate, and unify data from common supplier and order-management software is crucial.

Digitization

Digitizing documentation and processes allows for real-time visibility and traceability so potential issues can be identified and addressed quickly. Digital platforms can store vast amounts of data and make it easily accessible to all relevant parties, streamlining the audit and compliance check process.

Leading platforms with transaction traceability collect corroborating evidence and metadata to ensure that all volumes are accounted for through every step of the supply chain. These tools offer machine learning capabilities that can examine every shipment for fraud, adulteration, waste, or abuse, ensuring that every shipment has a verifiable clean bill of health.

Improve your supply chain visibility with modern technology

As the push for supply chain visibility intensifies, investing in sustainability software will be crucial for companies that want to stay both compliant and competitive.

Sourcemap offers real-time supply chain mapping and monitoring tools that can verify the ethical sourcing of materials. Sign up for a free demo today to learn how our technology enables the supply chain visibility you need.