The ISO 8402 definition states that traceability is the ability to trace the history, application or location of an entity by means of recorded identifications.
A part, marked with a unique identifier at an early stage in its production life cycle, can be scanned at every crucial point in production. Collecting this data can establish proof of process for specified requirements ensuring that correct production procedures were followed and exonerating liability for incorrect process implementations.

With good Statistical Process Control methods, traceability can quickly identify problematic processes that cause production variations and defects. Once a part has been determined to be defective its identifier will prevent it from ever returning to the production line; all but eliminating costly recalls.

And with Just In Time management philosophy striving to eliminate sources of manufacturing waste by producing the right part in the right place at the right time, traceability can play a key role. Unique identifiers can ensure product availability and correct implementation through multi-tier vendor and manufacturer systems preventing financial penalties for downstream bottlenecks and production delays.