Supply chain. What was once a vague term relegated to a a few niche professionals is now commonplace in the average person’s lexicon. In an increasingly global, connected world, the idea of “supply chain” (and what it really means) is changing just as rapidly as the world around it. As more and more people are attuned to where their food and goods come from, the more important it is for companies to not only understand where they’re sourcing their products, but share much of that information with their end customers. The companies who adapt to these growing changes will gain the trust of their customers in the years to come.
What it means to be Transparent
With the rise of social media and the influence of the internet over the past decade, customers have more information at their fingertips than ever before. And with Facebook, Twitter, and Instagram, to name a few, as megaphones, they have the ability to praise or shame companies to their liking.
Transparency in a supply chain is more than telling your customers: “Our products are manufactured in China.” That doesn’t cut it in today’s marketplace. If you’re producing in China, do you know where your factory is located? What are the working conditions like? Does your product cause a lot of pollution when it is made? Where are you suppliers getting their supplies?
According to an article by the Harvard Business Review, “customers will perceive easy access to such information as the norm. Revealing origins will become an essential part of establishing trust and securing reputation. ” As more and more customers expect this information by default, companies who don’t adapt will be left behind or worse: playing defence in the event that unflattering information about their supply chain becomes public before they know how to handle the fallout.
Why Transparency Matters
While customers may have spearheaded the call for transparency, companies who pull back the curtain on where their products come from can actually benefit from the increased visibility.
Consider a scenario where you’re sourcing product from a factory in Guangzhou, China. You know where the factory is, and you may have even visited once or twice. They run a smooth operation from what you can tell, and the workers seem to be treated well, too. Open supply chain, right? Not so fast. There’s a chance that your contracted factory is getting many, if not all, parts from smaller suppliers or factories. What do you know about these factories and their conditions?
From a PR Perspective
Consider the negative backlash Apple faced in 2009 when it was discovered that employees of its largest Chinese manufacturing partner, Foxconn, we committing suicide at unprecedented rates. This knowledge forced Apple to divulge part of its supply chain. In this case, they were caught off guard and needed to play defense on what became a PR, and humanitarian, nightmare.
On the other side of the coin, though, are firms that have embraced the public supply chain.. Take Unilever, for example. The English-Dutch company was ranked as Gartner’s #1 Supply Chain company in 2017. Part of Gartner’s scoring metrics involve “Corporate Social Responsibility” which “measures of commitment, transparency and performance” of all profiled organizations. Unilever scored a perfect 10/10 in this field, and through their “Sustainable Living Plan, [they] set ambitious goals, such as halving the environmental footprint of the manufacture and use of its products, even as its business grows.” Not too bad.
From an Internal Perspective
Not only does increasing supply chain transparency increase brand awareness and loyalty, supply chain transparency can also improve internal processes and communications. After all, if your organisation makes a pledge to have a transparent supply chain, it means that everyone in your organisation, from the C-Suite down to the rank-and-file employees, is committed to sustaining high standards of manufacturing.
The increased visibility also puts more pressure on your suppliers to be reliable, accountable, and transparent with you. When their name is in the spotlight for negative press, it can have massive impacts on their bottom line. Conversely, if they’re receiving positive press and coverage because they do their jobs exceptionally well, their business will benefit from that.
Clear and Open
If you’re just beginning to explore whether or not global sourcing is right for your company, the idea of a setting up a supply chain, let alone a transparent one, can seem daunting. But consider the economic benefits of not only sourcing globally but the other benefits, both in PR and sheer dollars, of transparent sourcing can have on your business. No matter where you stand on the spectrum of global sourcing, now is the time to speak to a professional to help you get your products from A to Z.