Supply Chain Transparency – What is it and why do we need it?

March 10, 2020
Dave Brady

As with all disciplines, “hot topics” in supply chain ebb and flow, but one area gaining momentum is that of supply chain transparency.   Two primary forces of change drive this agenda – people’s increased awareness and desire to know where products they are buying originate from and the continued increase in regulatory requirements.  Underneath all of this is the speed of technology advancement and data readiness.  Given this, the industries that have been affected most by a call out for supply chain transparency are closest to the end-user – the consumer.

What is supply chain transparency?  Most literature focuses on social responsibility.  However, another aspect would be visibility to the delivery security of a risk-free supply chain.  And one cannot speak about transparency without understanding the impact on consumer and product safety.   This last element has certainly made food supply chains the most high-profile targets of a drive towards full visibility and products' provenance.  In 2015, Chipotle faced a crisis when a series of highly visible outbreaks of E. coli, salmonella, and norovirus were linked to unsafe food handling at several restaurants.  The effect on Chipotle’s reputation, customer confidence and satisfaction, revenue, and share prices was significant, leading them to make appropriate changes to ensure the security and visibility of their supply chain and handling processes by investing in new talent and technology.

But the food industry is not the only area where an outcry for transparency has been made.  When it was widely reported in the media that Foxconn, a large supplier to Apple, had unusually high incidents of worker suicides in 2010 and subsequently in 2011 had an explosion at a factory leaving 4 people dead and 18 injured, with further reports of underage workers and significant wage exploitation, Apple, in turn, addressed the negative publicity with developing an annual Supplier Responsibility Progress Report.

No industry is immune to the continued need for supply chain transparency.  At the very least, the move towards creating visibility will help de-risk the supply chain longer term.  The current Covid-19 impact on the supply chain reminds us again of how helpful it would be to know the full supply chain of purchased materials and finished goods. The increased requirements in the regulatory environment will also support the need for supply chain transparency.  The good news is that pioneering companies have advanced themselves proactively, and technology tools have been developed to support these goals.  In the next article, we will talk about some of these companies and tools to help your efforts to create real-time visibility to your full supply chain.

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