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It has become my personal mission to both grow brands and become a force for good in this world. For other companies to do the same, I believe it is imperative that they engage in supply chain transparency.
When handled properly, SCT benefits consumers, brands, suppliers and the planet. The consequences of ignoring it, however, can be dire. For instance, recent problems occurred at airports causing airlines to cancel flights in droves simply because their jet fuel supply chain suffered pandemic-related dysfunctions. Furthermore, one only has to take a look at the backlogged shipping containers in major port cities—like Los Angeles or New York City—to see that disruptions aren’t going to be fully resolved any time soon.
Now, more than ever, we have to address the future of SCT and its impact on society as a whole.
The 411 on SCT
According to Alexis Bateman of MIT, supply chain transparency has two defining characteristics: visibility and disclosure. The former involves the identification and collection of information from every point in the supply chain, while the latter refers to the communication of that information to stakeholders.
I would argue that SCT also has a third element: proactive correction. When flaws are discovered in the chain during the course of collecting information, proactive brands must implement a plan to correct those issues. Forward-looking brands are attuned to their consumer’s awareness of transparency importance and the impact their products have on the planet.
How does transparency relate to the pandemic?
COVID-19 has ushered in the worst supply chain disruption since World War II. Those working in the industry understand that getting goods from Point A to Point B is a complex process with multiple points and potential obstacles. Supply chains have experienced factory shutdowns, flight reductions and container scarcities. The average consumer is experiencing shipping delays on everything from appliances to children’s toys but is often unaware of the current widespread challenges the industry is facing. For example, two years ago, the same shipping container worth $2,000 can now cost $25,000, or that on-time delivery is considered a rare luxury. This is in addition to the dramatic increase in the demand for consumer goods, due in large part to lockdowns.
By informing your customers of why they are experiencing delays and how your company is doing everything possible to mitigate them, your company can be better positioned to nurture trust. This will help allow your brand to thrive in times of uncertainty.
The benefits of SCT
I know from personal experience that the road to full transparency can be long and complex, but the rewards are numerous.
About 94% of consumers state they are more likely to be loyal to a transparent brand. Companies often use social media to disseminate their transparency-related information, yet company-generated information is often not enough. I believe that consumers deserve to see hard evidence, such as certifications by independent organizations and should be prominently featured on their websites.
Why isn’t everyone doing it?
There are a few common reasons, such as concern over losing market advantage by disclosing too much information that competitors may use. There is also a fear of exposing one’s company to outside criticism if they display deficiencies.
Return on investment is another consideration. If an executive believes that SCT does not offer a significant ROI on a short-term basis, the SCT initiative may be scrapped. Lastly, there can be a logistics challenge. Historically, supply chains have not lent themselves to transparency and reliable information can be hard to come by.
Yet the risks of not committing to SCT can be detrimental. Consumers prefer to spend their hard-earned dollars on responsible brands that are mindful of their products’ impact on society. They also appreciate companies that explain disruptions and assure them they will do everything possible to mitigate delays. As CEO of a company dedicated to such methods, I have seen that suppliers—who have become increasingly aware of consumer demands—also prefer to work with brands committed to SCT.
Create an SCT strategy
When I co-founded Schmidt’s Naturals we obtained multiple independent certifications proving the products are cruelty-free, vegan and sourced with 100% natural ingredients.
If your company is willing to follow a well-developed and intentional roadmap, implementing SCT practices isn’t difficult.
Chances are your company manufactures or sells more than just one product. Your supply chain map may be highly complex, perhaps detailing the sourcing of thousands of items. Be aware of the most pressing risks present in your supply chain.
Research by using already established systems. For certain companies, there may already be compliance-related databases that compile environmental impact data. You can then develop a plan to uncover unknown data about your supply chain.
The last milestone is information disclosure: Clearly specify to stakeholders the steps your company is taking to improve transparency and capitalize on these actions in your company’s marketing messages.
In order for a business to remain relevant and profitable, it must adapt to meet these new realities and one driver is emerging technologies. Increasingly, companies have been turning to cloud computing to modernize their IT and facilitate effective SCT data usage. Another promising innovation is the Internet of Things (IoT). Companies have begun using data-collecting sensors to ensure the safety of their products throughout their journey. Case in point: Internet-connected temperature-monitoring sensors are used to ensure the viability of vaccines in transit.
As SCT becomes ever more accessible, companies may need to create new roles to implement SCT strategies. For instance, some companies may hire a Chief Transparency Officer. As public pressure continues to mount in favor of greater transparency and new regulations are created, the CTO would need to ensure continued compliance.
Only time will tell when it comes to the true future of SCT, but one thing remains clear: The demand to divulge isn’t going away.