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What Are the Benefits of Supply Chain Transparency?

By Avetta Marketing
December 05, 2020
7 minutes
What Are the Benefits of Supply Chain Transparency?

What are the True Benefits of Supply Chain Transparency? 

You’ve heard the stories and witnessed the fallouts. Many companies and industries have experienced decades-long reputations going up in flames because of one misaligned link along their supply chain. Whether the misalignment had to do with bad labor practices, deforestation, conflict minerals, food safety, poor communication, or any number of other scenarios and conditions, the consequences were significant.

To combat complicated corrections before they topple your own company, you must implement full transparency all along your supply chain. Only then can you avoid the pitfalls and reap the rewards of brand trust, customer loyalty, and market leadership.

What Supply Chain Transparency Really Means

This is how the following percentages of consumers define transparency: 

  • 59% openness

  • 53% clarity

  • 49% honesty

  • 26% authenticity

  • 23% integrity

  • 19% communication

To get a literal definition of “supply chain transparency,” let’s break down each word:

  • Supply = The provisions and equipment necessary for people engaged in a particular project

  • Chain = A sequence or series of connected elements

  • Transparency = Easy to perceive and open to public scrutiny

When you put those three words together, you get a definition of “The necessary provisions and equipment that are connected with people through an easy-to-scrutinize sequence.” 

But what does supply chain transparency really mean?

The real meaning of supply chain transparency comes down to these four elements:

  1. Compliance: Are your products compliant with regional and market regulations?

  2. Quality: Do your products meet brand quality standards? 

  3. Sustainability: Can your brand’s social responsibility practices be improved? 

  4. Marketing: In what ways can you connect consumers with your brand?

For each of these elements, your brand must be able to back up claims and prove efforts through data, audits, and certifications at every link in the chain. Then, these statistics and certificates of excellence must be shared publicly so shareholders and consumers alike can gain trust in your brand.
 

Supply Chain Transparency

Why Is Supply Chain Transparency Important?

There is no doubt that supply chain transparency is very important and becoming more so every year. Consumers care about where their products come from and how they arrive. Customers want confidence, knowing that they aren’t contributing to the many negative global issues that plague the earth and her citizens. 

They are placing more and more value on responsible sourcing and will go out of their way to become fierce brand loyalists when they know their money is solving problems, not causing them.

Additionally, a bevy of new laws, regulations, standards, and guidelines are put in place regularly to help stymie issues that crop up all along the chain of supply. Your company must be up to date on them and able to provide documentation to prove you are following protocol. Otherwise, you could be in a world of reputational hurt and flooded with fines and fees. 

Supply chain visibility and traceability also empowers your organization to see potential bottlenecks, recalls, and hiccups. This allows for more accurate forecasts and timely resolutions. 

For these reasons, supply chain transparency helps your bottom line. 
 

What Are Some Common Supply Chain Transparency Problems?

As mentioned above, there are many scenarios and conditions that can cause problems along any point of the supply journey. There have been quite a few examples of supply chain transparency problems over the years causing an uproar throughout the marketplace. 

Here are just a few of the areas that can cause problems along your supply chain:

  • Environmental

    • A lack of sustainability practices

    • Environmental/Carbon footprint

    • Conflict minerals

    • Animal welfare

    • Controversial ingredients

  • Quality

    • Country of origin

    • Authentic materials

    • Food fraud

  • Safety

    • Operational risks

    • Toxic work environments

    • Expired safety certifications

  • Social

    • Discrimination

    • Exploited labor/Child labor

There are a wide range of specific practices that can fall under each of the above categories, but the idea stands that knowing exactly where and how your goods are sourced should be at the top of your priority list.


Supply Chain Transparency

The Benefits of Supply Chain Transparency

We’ve touched on a couple of the benefits of supply chain transparency, but let’s dive deeper into them now using data insights provided by SproutSocial

When it comes to your customers:

  • 86% of Americans believe transparency from businesses is more important than ever 

  • 73% of consumers are willing to pay more for products that guarantee total transparency

  • 89% of people say a business can regain trust if it admits to a mistake, resolves the issue, and takes steps to be more transparent in the future

  • 58% of consumers feel companies are morally obligated to be transparent

  • 45% of consumers expect transparency from brands

Ways that consumers believe demonstrate a lack of transparency include:

  • Withholding information

  • Ignoring customer questions

  • Ignoring employee questions

  • Avoiding relevant political/social issues

  • Not posting very often

Aside from winning your customers’ loyalty, transparency also benefits your status as a respectable employer:

  • 33% of employees expect transparency

  • More than 1 in 5 millennials say a transparent company would encourage them to consider a career there in the future

Also beneficial is the fact that transparency can improve your supply chain efficiency and resilience. Gaining visibility means you can spot weaknesses, inefficiencies, and risks before they happen. 

Finally, we can’t overstate the value of employing ethical practices end-to-end simply because it’s the right thing to do for our environment and our communities. The benefits of doing so are more significant than any of us probably realize. This is ultimately why supply chain transparency is important.

The Future of Supply Chain Transparency

First of all, let’s be clear. The future of supply chain transparency is here. Gone are the days when blind spots are forgotten about, whistleblowers are ignored, and consumers don’t care. 

Companies need to get ahead of the curve now before a controversy comes to light. This can be done through a variety of methods, including next-gen tracking and data gathering, that bring a greater awareness of every hand through which a product passes. Other ways to get ahead of the curve are by employing better risk management practices as well as using supply chain risk management software to identify and manage risks. 

Being a market leader means you have the opportunity to accommodate expanding expectations for ethical, sustainable, and responsible products. Making this a priority will shore up your bottom line, draw attention to your efforts, and put you head and shoulders above the competition. 

To learn about how Avetta facilitates supply chain visibility, visit our website, call 844-633-3801, or email [email protected].

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