Transparency and Traceability: An essential quality of sustainable supply chains.
Photo by Marcin Jozwiak on Unsplash
After a global pandemic and persistent supply disruptions across geographies, the case for supply chain transparency and traceability is evident and needs little introduction. The more important question is how to achieve it.
Before getting to some examples, it’s important to remember that this is not just an exercise in risk management. Governments and regulators are increasing the level of scrutiny around supply chain transparency, and consumers demand it. A company’s brand and operations are only as sustainable as your supply chain.
As the owners of supplier relationships and the gateway to the supply chain, Procurement plays a key role.
So, how to get started?
According to the MIT (Supply chain transparency, explained | MIT Sloan), there are two elements to supply chain transparency:
- Visibility: Collecting data from all players in the supply chain (and knowing who they are).
- Disclosure: Communicating the gathered information, internally and externally (you’re not transparent if you keep it all to yourself).
The level of detail and type of data to be collected, depends on the particular supply chain and the level of ambition. Therefore, to get started, the MIT argues that you must first define:
- Your North Star: what does transparency mean for your company and how ambitious do you want / have to be?
- Disclosure Decisions: Once the data is collected, how much are you willing to disclose? How much do you have to disclose due to regulations? A high level of disclosure might invite further scrutiny, but not doing it and being caught in a scandal down the line might be more damaging.
The upsides, however, outweigh the downsides.
Transparency improves an organization’s license to operate. Companies known for their transparency attract more talent and have lower turnover. ESG investing means firms with more transparent and sustainable supply chains have higher access to capital.
And finally, consumers care about it and that means increased revenues, according to MIT Sloan researchers.
Implementing such levels of transparency, however, is no easy feat.
In the next article of this series, we’ll explore how blockchain solutions can help increase transparency and traceability, while also providing other tangible and more traditional benefits to Procurement.
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