When you pop into a shop to buy yourself a new outfit, do you question who made the clothes and if the process was sustainable? Do you care if the cosmetics you use are cruelty-free? As you nibble away at your favorite chocolate bar, do you wonder if the laborer who picked the cocoa beans was paid a fair living wage? Are the conditions at the factory in which your latest smartphone was produced safe and free from child labor?
Ultimately, how important is it to know where the products we buy are coming from?
Consumers demand transparency
Today, the resounding consensus is that transparency is very, very important. More than 80% of consumers want brands to help them be more environmentally friendly and ethical in their daily lives, and 94% said they would be more likely to stay loyal to a company that offers complete transparency.
But brand reputation isn’t the only factor compelling procurement professionals to focus on improving supply chain transparency. Other benefits include:
- Improved product quality – Having visibility into the practices of your second, third, and fourth-tier suppliers means you’re able to ensure they follow the best quality practices, have the necessary certifications, and adhere to health and safety regulations.
- Risk mitigation – Supply chain transparency improves procurement’s ability to mitigate risk, predict events that might impact production and implement contingency strategies. For example, it becomes easier to identify elements of the chain that depend heavily on a single supplier, or whether you have any suppliers based in areas at risk of natural disasters.
- Compliance – Managing compliance can feel like a burden, but regulations are necessary to ensure social, environmental, safety, and other risks are managed. To ensure their business is compliant, procurement professionals must be able to monitor and collect compliance data for their entire supply chain.
In the age of complex, global supply chains and increased consumer scrutiny, achieving complete transparency is easier said than done. It requires an investment in technology, time, effort, talent and money.
Here are five ways to get started.
Invest in technology
You can bet the organizations with the best supply chain insights are the ones investing in the right technology. This might include supplier analysis tools, blockchain, or investments in network infrastructure, which can each provide procurement professionals with better control of their end-to-end operations.
Technology will also help with gathering real-time information and the ability to make accurate forecasts. A recent Gartner survey found that 65% of supply chain professionals believe emerging technology will help them to gain a competitive edge when it comes to delivering transparency and more sustainable supply chains.
On-site inspections and audits with suppliers
Technology can only get you so far. Achieving true supply chain transparency requires a human touch in the form of dedicated teams of on-site inspectors. Some organizations create full-time positions to carry this out, whilst others use third-party consultants. Research found that 84% of high-visibility companies conduct on-site inspections to track operations and production to ensure that suppliers are held accountable for their practices.
This is also an opportunity to collect valuable data on the origin of parts moving through your supply chain. Inspectors will produce a report detailing any concerns or compliance issues. Procurement professionals can then decide how to address suppliers who are failing to meet expectations.
Implement a comprehensive Corporate Social Responsibility (CSR) policy
Establishing a clear code of conduct for your business and suppliers sets a minimum standard by which to operate. Research shows that 90% of companies with high supply chain visibility have launched (or are in the process of launching) CSR initiatives. Implementing CSR policies and ensuring your suppliers are compliant requires significant investment but will ultimately increase productivity and reduce costs. Look to recognized standards such as the International Labour Organization (ILO) for guidance.
Nurture your supply chain relationships
Making positive, social changes and improving your supply chain operations is so much easier when you have established meaningful, lasting relationships with your suppliers. Take the time to get to know your suppliers, listen to them, and ultimately foster a relationship that is collaborative. Suppliers who see the relationship as a partnership will be far more receptive and accommodating to your transparency mission and willing to innovate together.
Be honest and open with your customers
They say that everyone loves a trier, and in the case of supply-chain transparency this certainly rings true. Consumers don’t necessarily expect you to have all the answers to enormous challenges such as sustainability. But what they do expect is for you be open, admit where the problems lie and communicate your plans to address them. Similarly, empty promises won’t wash; consumers today expect you to clearly articulate and define your commitments and goals.
It’s the difference between the statements: “sustainability is an absolute priority for us in 2020” and “our business operations will be carbon neutral by 2025”. It’s also important to provide proof that you’re compliant and adhering to regulatory requirements, and share reports on your journey towards better supply chain transparency.
Una is dedicated to fostering meaningful relationships with our members and becoming your true partner in procurement. Visit us now to learn more.