Trust is a core component for any business to establish a long-term relationship with its target audience. Trust is what keeps a customer coming back to a business with more demands, and this results in higher profits for the business. Establishing trust with the consumer is difficult than ever. Most customers prefer to stay loyal to a company that operates with transparency.
Trust is a core component for any business to establish a long-term relationship with its target audience. Trust is what keeps a customer coming back to a business with more demands, and this results in higher profits for the business. Establishing trust with the consumer is difficult than ever. Most customers prefer to stay loyal to a company that operates with transparency.
Here is all you need to know about supply chain transparency:
What is Supply Chain Transparency?
Supply chain transparency refers to a stage when a business is aware of the status of the product at each step of its journey throughout the supply chain and makes a conscious effort to share this factually backed, data-driven information with internal and external stakeholders.
Some disclosures pertaining to raw material sourcing, environment protection, product quality, safety standards and labor practices are examples of supply chain transparency. A business may choose to make fact-based disclosures regarding any or all of the processes it follows for its supply chain.
Supply Chain Transparency vs. Supply Chain Visibility
Supply chain visibility and transparency are two terms that are often used interchangeably. However, it is important to note that supply chain visibility is primarily for internal stakeholders, wherein an organization wants to gain complete visibility of each stage of the supply chain. Supply chain visibility is mainly used for various teams to have better coordination at the manufacturing, storage and sales stages.
On the other hand, supply chain transparency is the next logical step in the supply chain journey in any industry. It involves sharing relevant information about a product with customers. In simple words, supply chain visibility is internal, while supply chain transparency is external. A business may have complete visibility of its supply chain, but it may choose to not share that information with customers or any other external stakeholders.
Benefits of Supply Chain Transparency
There are multiple benefits for a business ensuring transparency of its supply chain processes. Some key benefits of supply chain transparency are as follows:
Increased Customer Trust
The modern consumer is more aware than ever and wants to opt for brands that are transparent with supply chain practices. As businesses decide to share the ethical labor practices followed or ethical sourcing of raw materials, customers display an increased level of trust in such brands. An increased number of customers are likely to opt for a brand that maintains a high level of supply chain transparency as compared to a brand that is not at all transparent with its supply chain practices.
Improved Brand Loyalty
It is a known fact that acquiring new customers is always more expensive than retaining existing ones. As a result, it’s in the interest of businesses to maintain high supply chain transparency. If a business can build a competitive edge with a high level of transparency in supply chain practices, it can increase the number of loyal consumers associated with a brand. Furthermore, as consumers take pride in associating with the business due to its ethical practices and willingness to share, the potential to create an army of brand ambassadors that can drive positive word-of-mouth advertising for the business increases exponentially.
Helps Build Strong Partnerships
It’s not enough to have a strong relationship with the end customer. A business needs to have a trustworthy relationship with its suppliers and vendors as well. The very act of proactively sharing supply chain information with suppliers and vendors enables a business to gain better trust and transparency among its partners. At the same time, the business can attract like-minded suppliers for its requirements. When vendors are confident that the business they are working with rewards honesty and transparency, it is expected that they would walk the extra mile to find the right solution rather than taking a shortcut to reach the end goal unethically or fall short of expectations.
Promotes Industry-Wide Changes
Supply chain transparency helps in establishing an industry reputation for the practices followed by a business. As competition notices the proactive approach to maintaining high supply chain transparency, an enterprise can drive industry-wide change. This journey is relatively long compared to the other benefits; but as the competition starts taking note of the strong position that your business can command, they will soon follow suit and build transparent supply chain frameworks themselves.
How to Achieve Supply Chain Transparency
Now that the benefits of supply chain transparency have been made clear, it is time to focus on how to achieve supply chain transparency. Here are some effective tactics to build supply chain transparency in an enterprise:
Achieve High Visibility
You need to have the right tools on your side to have a high supply chain visibility. It is only then that an enterprise can decide on the level of transparency it wants to have in into its operations. An efficient supply chain software such as GEP NEXXETM can help you achieve high visibility.
Standardize Processes
You need to focus on building standardized processes for manufacturing, inspection, and auditing to stay on top of quality, safety and ethical compliance. As you standardize processes, you would be able to share meaningful information with external stakeholders.
Map Supply Chain Process
You must have solutions that can help you map the entire supply chain process. Any blind spots in this stage can prove to be detrimental to an enterprise’s reputation. By mapping the entire supply chain process, you would be able to handle violations, if any, that do not match with the values that you want to convey to the external stakeholders.
Opt for Supplier Scoring
As you capture information in real time with the help of supply chain software, you would be able to score suppliers based on the parameters set by the organization. This can also help in setting the right template for future partners and the expectations of the organization.
Conclusion
Supply chain transparency is a good way to build trust between internal and external stakeholders. However, all the disclosures made to increase transparency in supply chain management must be based on factual information and not on assumptions or guesswork.
Any external stakeholder would not trust a business without fact-based information. Therefore, businesses must have proper visibility and reliable data to ensure supply chain transparency.
