||Supply chain traceability systems are proposed as an effective means of tackling various supply chain issues, such as product recall, inventory inaccuracy and product authentication. Realization of an effective traceability system needs to consider technology characteristics, system’s economics, user acceptance and willingness to participate by all stakeholders. In this thesis, we establish a systematic approach to develop an optimal solution for supply chain traceability system design based on axiomatic design method with an operations management perspective. The axiomatic design approach transfers the functional requirements - cost minimization for supply chain deficiency control, to realizable design parameters. The independence axiom is then applied to appraise the design quality before implementation and guarantee the cost effectiveness for each self-interest party. The evaluation of each design parameter is supported by the operations management techniques at the back-end to minimize the costs and maximize the incentives to improve traceability. An example to design a four-stage supply chain traceability system to address shrinkage and product recall is provided as an illustration of the proposed method. Numerical studies with sensitivity analyses are also presented for validation. In a longer perspective, our larger goal is to provide a systematic method to better manage supply chain by incorporating new technologies to improve the traceability.