Gone are the days when customers didn't question where businesses sourced products or how they were assembled, as long as the price was right and the product was on time. Supply chains were questioned only if they failed. Now, the attention paid to supply chains has increased, and businesses are waking up to the financial, operational and reputational threats that could be lying hidden in their supply chain.
Does it matter?
A recent survey found that 81% of global consumers take a company's corporate social responsibility (CSR), which includes its supply chain, into account when making buying decisions Cone Communications/Ebiquity Global CSR Survey, 2015.
Smart businesses are using their CSR credentials for competitive advantage, with a recent report citing 75% of consumers stating they would view a brand they already buy more favorably if it carried the FAIRTRADE Mark*2.
Other benefits from increasing the transparency of your supply chain include:
- Risk reduction - a thorough understanding of your supply chain can help identify issues early on so action can be taken.
- Performance improvement - greater visibility over your supply chain may help you spot opportunities to reduce lead times, boost efficiency or reduce waste.
- Quality control - changes or improvements may add value to the end product or ensure it meets the standards expected.
What's driving demand for greater supply chain transparency?
There are a number of factors behind the growing interest in supply chains. Certainly some of recent exposés have increased awareness. For example, in the wake of the horsemeat scandal, greater emphasis has been placed on information relating to the origin of the food we consume.
Other factors feeding into the trend are:
- Increasing environmental concern - a focus on cutting carbon footprint, managing waste responsibly and reducing the business impact on finite resources.
- Technology - greater access to information allows business activities to be picked over in much greater detail and for that information to be shared much more widely.
- Social change - enhanced sense of responsibility, a more cynical and less-trusting society and a millennial generation that prioritizes ethical behavior and is prepared to challenge existing ways of working.
- Ethics in the mainstream - movements such as Fairtrade, which seeks to stamp out unethical labor and unsustainable farming practices have gone from fringe to mainstream, offering consumer's more choice.
- Health and safety - a greater focus on acceptable working conditions and a culture that stringently enforces these.
6 ways to make your supply chain more transparent
Wherever you sit in the supply chain, communication is key to greater transparency. Within businesses, many functions still operate in silos, which is often replicated in supply chains operating across different businesses. Lack of communication creates mistrust and hampers having full view of the supply chain and the advantages that offers.
To avoid surprises and reduce risk, you need to take action. The following steps can get you started:
- Collect information - talk to your suppliers and begin to build a picture of your supply chain. Hard data helps you analyse the details and identify any anomalies or potential savings, but talking to your suppliers will help you understand what's happening in the chain and where any pinch-points are.
- Create more collaborative processes - by working more closely with your suppliers, you can coordinate processes. This can help you plan more effectively and reduce the risks of interrupted supply.
- Build relationships - the best supplier relationships are those where your suppliers are invested in your business and vice versa. Sharing information helps build trust, which is essential for transparency.
- Use technology -advances in data access and cloud computing make it easier to share information in real time, which can provide an overview of the entire supply chain.
- Share best practices - collaboration benefits both sides of the supply relationship and helps build a shared culture.
- Pool your resources - common in manufacturing, where large organizations allow smaller suppliers to access resources, this can also help smaller companies to build robust systems.
resources, this can also help smaller companies to build robust systems. Businesses of all sizes are vulnerable to the activities occurring in their supply chain. When it comes to the court of public opinion it is not a defense to claim that you were unaware - it is your business to know who your suppliers are, where they are sourcing materials from, how they are operating, what their working practices are and how they protect key data.
Transparency in the supply chain - both upstream and downstream - protects your business from financial, operational and reputational risk. Now is the time to develop your approach, gather that information and take steps towards having greater control over your supply chain.
For more information on managing your supply chain you might like: It's all about the Tech