4 Elements of a Successful Supply Chain Transparency Strategy

Matt Gottron

March 01, 2018

As corporate priorities evolve, large enterprises have realized that supply chain transparency is not only a critical aspect of brand image, but is also of paramount importance for the bottom line. However, achieving transparency at first appears to be a daunting task, as most companies have little to no visibility of their supply chains beyond their direct suppliers.

As a global business, how can you systematically and successfully achieve transparency within your own network? We have helped numerous Fortune 500 companies, certification bodies, and commodity traders understand the who of their supply chains (traceability to the source) and the what of their suppliers (what are the policies, practices, and quantitative attributes of all the suppliers in the supply chain). With this, companies can engage with their suppliers and improve responsible sourcing strategies. We wanted to share some of the key elements we have seen work in different supply chain transparency efforts.

Transparency is more than just being able to see further into a supply chain. It involves seeing where your efforts are falling off, getting a deeper understanding of the data flowing in, prioritizing supplier collaboration, and ultimately, sharing the process with stakeholders in a way that makes sense for your organization.

1. Multi-Tier Visibility: Getting to the Who

A comprehensive sourcing strategy can’t get off of the ground without an understanding of where materials are coming from beyond the primary tier. Consumers want to know the origins of products and services, and there is virtually no way of truly understanding risk hotspots without knowing where and how your sub-tier suppliers are operating. Companies struggle to obtain this information using traditional means, most commonly email and Excel questionnaires, which require a substantial investment of time and effort for data collection, supplier reminders, and information consolidation. SupplyShift embodies the technology that greatly simplifies the pain points, and reduces the efforts involved.

Suppliers want to easily forward surveys along their usual channels, but many are stuck using internal procurement systems that make this process difficult, so they are forced to run the gamut of emails and “dead” surveys time and time again. SupplyShift is already managing the exchange of multi-tier information. Suppliers can send assessments to all of their suppliers with the click of a button, and responses throughout the chain will roll up into an aggregate without having to juggle dozens of workbooks. The necessity to understand your suppliers at every tier is the core element in supply chain transparency. Next, is understanding the data.

2. Deeper Analysis: Understanding the What

Companies running manual analysis on supply chain data are in the early stages of their transparency efforts. A recent Hackett Group study has found that while 94% of organizations see how critical digitized analytics are, less than half of them actually have a strategy ready to generate them. Even if they were able to collect every data point within their network, they wouldn’t be able to achieve any systematic, real-time insight without a digital approach. Frequently, customers come to us with lots of excel spreadsheets, and at the same time, virtually no visibility into their supply chains.

Manual analysis can sometimes shed light on glaring areas of risk or non-compliance, but that’s only scratching the surface. Transparency requires the ability to navigate your data network with ease and extract the information needed to achieve your goals. The shift to smarter, more dynamic tools will continue to move the needle toward greater global supply chain transparency and data availability.

3. Suppliers as partners: Engage

Frequently, supply chain assessments are a one-way street. Because large buyers often have complex reporting requirements to satisfy, they structure surveys in terms that often make responding difficult for their suppliers. Buyer time is spent generating a one-time report instead of on a productive, long-term plan. Success and longevity are much more likely with strategies that treat first-tier suppliers as partners who help implement plans, collect data, and relay standards forward.

A productive engagement strategy helps establish this kind of partnership. By reaching out to your suppliers, communicating expectations, offering to help fix pain points, and cooperating, you contribute to a relationship rooted in mutual improvement and transparency. This type of relationship with your suppliers, where they share your goals and work to see them achieved upstream, is essential to successful transparency efforts. This critical element is often dropped from supplier assessment programs due to perceived large time requirement for meaningful feedback loops. With the right technology solutions, feedback loops and corrective actions should be natural and easy to implement in any supply chain transparency strategy.

4. Information Sharing: Drive Improvement

Transparency strategies that place an emphasis on information sharing will see tangible results. Whether it’s internally, with suppliers, or with the public, sharing outcomes or progress toward initiatives will contribute to a more cohesive and informed supply network. Suppliers want to know what their customers are doing with their data, and consumers want to keep track of which commitments are being met. Being transparent with information helps move your company towards a better, more compliant supply chain overall, and your customers will increase their trust in your brand. Engagement with all stakeholders through rapid and meaningful information sharing not only communicates your progress, but also drives improvement within your supply chain.

Companies of all sizes are recognizing the importance of communication of supply chain information both internally, as well as to the public. A few days ago, Unilever announced that they are publicly disclosing all of their palm oil plantations, a contentious commodity with substantial potential environmental risks. When stakeholders know corporate priorities, and they are clearly communicated, the resulting products are more valued, more responsible, and more profitable.

As the transparent supply chain becomes a new standard for global business networks, it’s important to know how you can best achieve it in your own network. Incorporating these elements into a focused plan of action, and using technologies purpose-built for the job, will help facilitate an efficient, effective, and lasting transparency approach.

 

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Matt Gottron

March 01, 2018