What is Supply chain transparency?
Supply chain transparency means that a business knows exactly what is happening in every stage of its supply chain. The information about what is taking place is communicated factually internally and externally. The information that should be communicated includes product quality and safety standards, raw material sourcing, labour practice, environmental protection, and sustainability. With supply chain transparency, it is easy to build trust between suppliers, companies and customers since a transparent supply chain provides an image of a business that is not only honest but is also straightforward in its operations and practices.
However, a genuine supply chain transparency can only be achieved if the information is factual information and not statements which are expected to be taken in faith. Unlike in the past, today’s consumers are no longer ready to give a brand the benefit of the doubt if there is no detailed information regarding the history of the product.
Steps of ensuring supply chain transparency
The first step before anything is to ascertain where your organization falls with respect to transparency. If you find holes in transparency, you have to identify strategies to seal them and ensure you get the necessary trust from the customers. Here are a few ways to do so.
Gauge risks and set goals
There are various tools and approaches available to gauge the risks you might encounter. You can do this from past disruptions, supplier-related problems or existing regulations. This step may entail plotting internal and external stakeholder interests through materiality assessment. This approach allows you to understand the risks better. After understanding the risks, set goals that you want to achieve.
2. Visualize the supply chain
After identifying and prioritizing risks, you can visualize the target supply chain. This will allow you to understand the flow of goods, map suppliers and processes, and expose existing information. Visualizing allows you to understand the flows, suppliers involved and the processes. Visualization should align with the stipulated goals.
3. Collect actionable information
Mapping the supply chain is not the end of everything. Rather, you have to gather information on practices and performance to get insights into the potential risks, opportunities to improve your operations and information gaps. You may need to track units, batches or lots of products and profile them accordingly. After identifying the chain of custody, you will need to verify the practices. Labour practices and best practices can only be established with proper information.
With actionable information at hand, you can easily choose the right approach to engage in the supply chain. This will involve developing a program designed with critical key performance indicators. The aim of engaging is to address specific issues like labour-related risks, environmental impacts and the supplier sites and sources of origin that are not known clearly. The engagement process will include contacting suppliers, collaborating, supporting and monitoring. Engagement may also necessitate third-party partnerships to gain expertise, which is sometimes unavailable internally. An example is Starbucks has for years partnered to build an ethical sourcing program with Conservation International for its coffee, covering various social and environmental programs.