The New Imperative in Supply Chain Management: Embracing Transparency
In recent years, the supply chain industry has undergone a seismic shift in its perception of transparency. Historically, supply chain management was often shrouded in secrecy, with businesses guarding their processes and partners like closely-held secrets. One of the most critical reasons for this behaviour was the fear that such disclosures might negatively impact their competitiveness. Supply chain industry is highly competitive and the difference between two good companies might just come down to price. In such a situation disclosing processes and sources would increase the chances of losing advantage and exposing yourself to criticism.
However, today, the landscape is transforming rapidly, with top leaders in the supply chain industry recognizing the significance of transparency in business processes. Today consumers and businesses alike demand transparency in the supply chain right from the raw material sourcing to delivery of finished goods.
According to a recent study it was found that 94% of the customers are more likely to be loyal to a brand that offers complete supply-chain transparency. Similarly, it was found that consumers do not mind paying extra for this.
As the consumer is more aware and looks for sustainable products, the onus is on the company to provide complete transparency and this cannot be achieved without the whole supply chain service providers being transparent about the practices, processes, operations, labour laws, regulations and more.
What is the impact of Supply Chain Transparency on Businesses and Freight Forwarders?
- Risk Mitigation
Top leaders in supply chain management now recognize that transparency is a powerful tool for mitigating risks. By fostering open communication with suppliers, they can better identify and address potential issues before they escalate. As businesses and supply chains become complex, ambiguous answers about delivery and poor management will lead the freight forwarder nowhere. Sudden disruptions demand agile thinking and a clear vision about the material availability or delivery, to ensure smooth operations. Without transparency the data is usually available in siloes and this complicates business decisions. Warehouse management tools, clear reporting about goods in transit and real-time updates about their status can help businesses plan better.
- Ethical Responsibility
In an era of heightened social awareness, supply chain leaders understand the importance of ethical responsibility. Transparent supply chains allow companies to ensure their partners adhere to ethical and sustainable practices, which can be a powerful selling point for conscious consumers. In a recent report it was observed that customers were ready to pay upto 10% extra for brands with greater transparency. The customers are aware and reject poor working conditions in which their products are made, or deforestation etc. and these can be highlighted with supply chain transparency.
- Efficiency and Cost Reduction
Transparency can lead to significant cost reductions. Leaders understand that sharing information on demand forecasts, inventory levels, and production schedules with suppliers can optimise operations, reduce wastage, and enhance efficiency. It also ensures that partners like freight companies have the necessary supply chain clearances handy and efficient modes identified to move the goods at a faster rate. Freight forwarders with deep understanding of the business can help in forecasting, thereby ensuring businesses remain competitive.
- Technology for Transparency
The rise of technology has been a driving force behind the adoption of transparency in supply chain management. Technology can assist in understanding the real time status of goods, the temperatures in which they are stored, stock forecasts and more. By leveraging technological advancements to its full potential, companies and their partners can have complete visibility of the products.
Apart from this new age technologies like blockchain, IoT, and data analytics can provide the tools needed to create transparent supply chains.
Distributed ledger technology allows for the secure and transparent recording of transactions throughout the supply chain, enabling data integrity.
- IoT (Internet of Things)
IoT sensors can provide real-time data on the condition and location of products in transit, ensuring quick decisions in times of disruptions.
- Data Analytics
Data analytics can process vast amounts of data to identify patterns, forecast demand, and optimise operations.
Challenges to achieving transparency
Like every new change, while the benefits of supply chain transparency are undeniable, the challenges too are real and need to be handled with care. It is important that businesses and supply chain companies navigate issues like data security, and resistance to change within their organisations smartly. The high cost of implementing new technologies is another factor that the businesses need to consider and act on.
It is important to realise that transparency is not just a trend; it's the future. By embracing it, companies can reduce risks, enhance their reputation, improve efficiency, resonate with their audience and ultimately gain a competitive edge in an increasingly complex and interconnected world.