Transparency is a key consideration throughout every facet of the supply chain, from product creation to transport, due to evolving consumer expectations.
A study from the University of Tennessee, Knoxville’s Global Supply Chain Institute has illustrated how companies can use transparency in the supply chain, e.g. by partnering with trusted air cargo carriers, for financial gain.
Titled Creating a Transparent Supply Chain, the research outlined six core practises that firms can adopt to reach this aim. This includes promoting sustainability, forming partnerships with sustainable providers, fostering a company culture of transparency, enabling transparency via promoting traceability, determine a “transparency sweet spot” and hiring outside auditing partners.
Commenting the Institute’s Director, Mike Burnette, was quoted by Global Trade Mag, saying: “Companies don’t need to have their sustainability practices completely figured out… Many see it as a work in process. But it is important to establish and stick to a set of ideals and goals on which they communicate progress.” The study added that firms must take up commitments to sustainability as a revenue driver and their executive leadership must spearhead efforts to foster a transparent company culture, to ensure supply chain integrity.
Supply chain risk
The study emphasised the importance of bringing sustainability into the supply chain. It noted that this is now highly demanded by consumers, so without sustainability, firms may facilitate risk in the supply chain. It advised that companies should partner strategies such as ensuring product materials are traceable, with raising their communications with the public, to promote their sustainability credentials among their target consumers, developing a positive reputation.
Going on, he said: “Consumers want to know where a product came from, all the way to the cashmere goat herd on the slopes of the Himalayas… A lack of ability to provide that kind of information in the face of safety or environmental violations can create a negative perception of the brand that may require immediate remediation and could take a brand years to recover from, if at all.”
The report added that forming good partnerships is key to promoting sustainability. But this typically involves proprietary business information, so it’s wise to figure out that communications sweet spot, which fosters trust for both providers and consumes. The paper cited The SC Johnson Company, a US-based household cleaning products supplier, as an example of a firm which has found this sweet spot.
Explaining, SC Johnson’s Senior Vice President for Global Corporate Affairs, Communication and Sustainability, Kelly M. Semrau, said: “Last year we took an unprecedented step in the industry by launching the first product with 100% of the fragrance ingredients disclosed… We believe consumers should know a product’s ingredients so they can make educated choices about what they bring in to their homes for their families.”
They drew on the expertise of the International Fragrance Association, to ensure that their ingredients were sustainable and safe. This fulfils the study’s last recommendation – hire outside auditing partners. Continuing, Semrau said: “Companies must choose these partners carefully… but they can never hope to replicate the databases of industry information that sustainability coalitions compile.”
We live in a world where consumers can find product information anytime, anywhere they want online, through devices such as smartphones. The increasing free-flow of information which has been facilitated by the onset of the digital age, has made consumers far more discerning. Now that many people know how some practises can harm the environment, as well as other people, they’re often unwilling to go against their consciences and buy products and services from businesses which engage in said practises, or partner with those firms that do.
At the same time, however, many consumers are often willing to reward businesses which align with their values. Therefore, if companies can leverage transparency in their supply chains effectively, they can foster trust, which is crucial. According to the 2015 Edelman Trust Barometer, a measure of the global impact of trust, compiled by marketing firm Edelman, 80% consumers will buy a product, because they trust the company behind it. Therefore, if businesses safeguard transparency at every part of the supply chain, including transport, they can actually potentially create new revenue.