Gone are the days when customers didn't question where or how businesses were supplied, as long as the price was right and the product was on time. Supply chains were a focus only if they failed. Now, the amount of 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.
What are the benefits?
Benefits of increasing transparency in your supply chain include:
- Risk reduction - a rigorous 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?
- Increasing environmental concern a focus on cutting carbon footprints, 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 - an enhanced sense of responsibility, a more cynical and less-trusting society and a millennial generation that prioritises ethical behaviour and is prepared to challenge existing ways of working.
- Ethics in the mainstream - movements such as Fairtrade have moved from the margins to mainstream, highlighting unfair and unsustainable supply chain practices and offering consumer choice.
- Health and safety - a greater focus on acceptable working conditions and a culture that stringently enforces these.
How can you make your supply chain more transparent?
Wherever you sit in the supply chain, communication is the key to greater transparency. Within businesses, many functions still operate in silos, which is an approach replicated in supply chains operating across different businesses. Lack of communication creates mistrust and a closed approach that hampers an overview of the supply chain and the advantages that offers.
To avoid surprises and reduce the risk of the unexpected, you need to take action. The following steps can help you get started:
- Dig deeper - talk to your suppliers and build up a picture of your supply chain. Hard data can help you analyse the details and identify any anomalies or potential savings, but talking to your suppliers will help you really understand what's happening in the chain and where any pinch-points are.
- Work as a team - 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.
- Get buy-in from your suppliers - the best supplier relationships are those where your suppliers are invested in your business. Educating your supply chain on your business's story will allow them to better understand your motivations, increasing their commitment to the partnership.
- Use technology - internet advances and cloud computing make it easier to share information in real time, which can provide an overview of the entire supply chain.
- Share best practice - openness can benefit both sides of the supply relationship and help build a shared culture.
- Pool resources - common in manufacturing, where large organisations allow smaller suppliers to access resources, this can also help smaller companies to build robust systems.
Know your supply chain
Businesses of all sizes are vulnerable to the activities occurring in their supply chain. It is no defence to claim that you were unaware - it is your business to know where your suppliers 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 - can protect your business from financial, operational and reputational risk. Now is the time to start those conversations, gather that information and take steps towards a transparent supply chain.