For many years it didn’t matter to consumers if the origins of a product were pretty unclear or unknown. However, modern supply chains seek to achieve cost savings, greater efficiency and increased transparency and therefore there is much more interest vested in quality, safety, ethics, and environmental impact of where a product has come from.
Why is the transparency of supplier, manufacturing and logistics processes so increasingly important?
1. Greater visibility of the different elements of the supply chain allows companies to manage risk effectively, reduce supply chain failures and the risk of complex recalls.
2. Transparency is an increasingly important capability for organisations so that they can learn from and act on supply chain information.
3. Brands are more exposed to the public than ever through social and online media and these have increased opportunities to build trust and openness directly with consumers.
4. Supply chains are increasingly regulated through different legal bodies meaning manufacturers and suppliers must focus more on the prevention of supply chain problems rather than acting in response to issues, when it may be too late.
5. Without the ability to track and trace through the entire supply chain, it is impossible to ensure that contamination has not occurred at some point in the process.
6. Consumers are increasingly health conscious and cautious of the environment, meaning they prefer to know the roots of the products they consume so transparency is no longer just about ensuring efficiency; it is becoming a market-driven necessity.
7. Despite problems in the supply chain not necessarily lying with the manufacturers, consumers will always blame the end supplier regardless of the true source of the problem, so it’s better to reduce the risk of this occurring.
8. The reputational and financial consequences can be devastating for a company if consumer trust is lost.
9. Consumer trust is more important than ever, with customer brand loyalty at all-time low and a rapidly increasing “switching economy”. The ability to show transparency in the supply chain is one of the best ways to increase consumer trust and loyalty.
10. Tracking technology is now widely available and a sophisticated way for supply chain managers to trace materials along the supply chain, meaning it is even easier for companies to closely monitor their supply chain activity.
Although it is almost impossible to completely eliminate supply chain risk, by having a more transparent supply chain companies can manage risks much more effectively and build a more resilient operation.