5 Steps to Supply Chain Transparency
The business case for transparency is compelling: a 2018 study found that 74% of consumers would switch from their usual brand to another brand that provides more in-depth product information, beyond what is on the physical label. Immediate benefits of transparency include regulatory compliance, safer and more ethical products, and more efficient, cost-effective procurement. In the long term, visibility strengthens brand reputation, increases consumer loyalty, and establishes leaders in corporate transparency.
Many brands and retailers today recognize the benefits of transparency and have taken steps to map their supply chains and engage with consumers:
- Mars Food has committed to 100% sustainably-sourced rice by 2020. To achieve this goal, the company mapped their basmati rice supply chains and used the data gathered to share detailed and intriguing product stories with consumers. Consumers can scan the product to immediately access supply chain maps, farm videos, recipes, and more.
- French retailer Intermarché identified and mapped over 4,200 suppliers in their green bean supply chain to ensure organic compliance. Using QR codes, they then shared product information by batch—including supply chain maps and country of origin—with shoppers.
Supply chain transparency is quickly becoming a must have—the time to act is now. But how do you get started? Follow these steps to supply chain transparency.
Step 1: Decide where to begin
Transparency is not an all or nothing endeavor. The transparency market, while growing, is still in the early stages. Today, transparency begins by addressing a specific project or risk:
- Are your consumers asking for more information about a specific commodity?
- Are you working to mitigate a recent PR crisis?
- Do you need to manage your suppliers’ compliance more efficiently?
- Do you have corporate sustainability goals to meet?
Achieving supply chain transparency is also beneficial for the long-term. With more knowledge about your supply chain, suppliers, and facilities, you will be well-equipped to address any future risks that may arise.
Step 2: Define Success
Regardless of your specific goals, it is important to determine what will define success. Defining what KPIs will indicate a successful transparency project will help you evaluate the results and determine ROI. This may include degree of visibility achieved, cost savings from improved compliance or operational efficiency, concrete sustainability improvements, or revenue growth following a consumer communication plan—but the definition of success depends on your business.
Step 3: Implement the Right System
Technology is an important piece of the puzzle. Today’s solutions consolidate and streamline supply chain data at all tiers. They can also synchronize across legacy infrastructures to minimise business disruption. Of course, implementing a new solution will shake things up short term, but doing so will support long-term strategic initiatives.
The right system will have features in place to effectively tackle three common challenges:
- Supply chains are evolving. An effective mapping system should be built on agile technology that can scale to meet evolving global supply chains. For maximum flexibility, the solution should be accessible worldwide and cloud-based.
- The truth may be hard to find. Accurate supply chain data is crucial for credibility. A system that incorporates third-party verifications and assessments can ensure data validity and integrity.
- Transparency is a new concept. Your supply chain partners may need additional support to provide you with the information you seek. An effective solution will assist your suppliers and partners to begin using your chosen tool.
Step 4: Collect the Data
With the right tools in place, you can begin collaborating and sharing data with your supply chain network. Begin by determining who your suppliers are and get in touch with them. To encourage participation, it is helpful to:
- Ensure brand sponsorship: Let your suppliers know what you are doing, and why. Keeping your suppliers informed encourages collaboration.
- Provide options: Suppliers may want to protect some of their data. Provide your partners with several visibility options to encourage information sharing at any level.
- Make it easy to share: Ensure your requests are clear and concise, and make the process as straightforward as possible.
Step 5: Analyze & Improve
Once you have successfully mapped one or more of your supply chains, it is time to analyze your data with a critical eye. Potential issues to consider include:
- Supplier compliance: Determine if your suppliers meet governmental regulations and brand requirements
- Supply chain resilience: Determine if your business can withstand a supply chain disruption due to a natural disaster, trade regulation, or other issue.
- CSR: Assess your level of exposure to modern slavery or evaluate your supply chain’s sustainability performance
Take advantage of this visibility by examining your supply chains with a critical eye. Your objectives can only be achieved through careful analysis and a willingness to make improvements.
Going a step further
Today, many brands and retailers are choosing to share the positive work they are doing with consumers to gain a competitive advantage and boost sales. By inviting consumers to learn more about a product and its journey, businesses can build a real connection with shoppers.
Technology is a key element for consumer communication. Mobile phones make it easier than ever to instantly share detailed product information, such as country of origin or quality certifications. On-pack labels and augmented reality are a popular way to convey rich data in a compact method. By engaging with consumers in an exciting and data-driven way, brands and retailers have the potential to transform the way we shop.
Worth the investment
There is no denying that transparent supply chains are an undertaking that require time, money, and resources. But as the market continues to trend towards radical product transparency, food businesses who invest in greater visibility will see long-term success. By committing to the process, companies can truly revolutionize the way they do business, drive sales, and transform the consumer goods industry of the future.
This post was originally published on GFSI as a guest blog by Transparency-One.