Supply Chain Transparency

Supply Chain Transparency

The concept of supply chain transparency was virtually unknown 15 years ago, yet today it commands the attention of mid- and senior-level managers across a broad spectrum of companies and industries.

The reasons for this increased interest are clear: Companies are under pressure from governments, consumers, NGOs, and other stakeholders to divulge more information about their supply chains, and the reputational cost of failing to meet these demands can be high. For example, food companies are facing more demand for supply-chain-related information about ingredients, food fraud, animal welfare, and child labor. Less clear, however, is how to define transparency in a supply chain context and the extent to which companies should pursue it: an MIT study that mapped definitions of supply chain transparency related to labor practices in the apparel industry found vastly differing definitions across organizations.

In a basic supply chain, sourcing is a key step in the process, and this is where most companies collaborate with suppliers to ensure that their procurement needs are met. Maintaining these partnerships is essential to help businesses adhere to their commitments of transparency, sustainability, and responsible sourcing.

There are certain areas of the supply chain management process that are covered by disclosures governing transparency. These include:

Sourcing of raw materials
Labour practices
Product quality and standards
Environmental sustainability and protection
The disclosure goes both ways. By choosing supply chain transparency, enterprises can build trust between suppliers, their subsidiary companies, and customers. Supply chain traceability solutions can consolidate all the information companies need from their chain partners into a comprehensive data framework that makes it easy to access and validate. A transparent supply chain envisages a business that is forthright and honest about its practices, and thus, trustworthy.

However, there is more to simply projecting an image of transparency to stakeholders, suppliers, and customers. Enacting genuine supply chain transparency requires fact-based information, and not simply motherhood statements.

As consumers become more aware and discerning about the brands they like and choose to support, they’re increasingly less likely to give the brand the benefit of the doubt if the brand refuses to be upfront about their products’ history. Data-driven transparency and supply chain visibility are keys to enable transparency.