Historically, businesses haven’t had a demand to divulge much information about their supply chains and the origins of their products, beyond the supply chain function, no one seemed to care. This has all changed in today’s ethically-conscious consumer culture, where transparency is the norm and expected.
Not only are consumers demanding new levels of transparency, but governments are also placing businesses' sourcing practices under scrutiny, In November 2020 several high-profile brands were called before the UK parliament to address claims that their suppliers might be using forced labour. With business sourcing practices under such scrutiny, supply chain transparency is shifting from the norm to imperative.
How have purchasing decisions changed?
Consumers are more frequently making purchasing decisions based on environmental and social factors, according to the 2020 food and health survey sixty percent of global consumers cite sustainability and social responsibility as essential considerations when choosing which products to buy. They are also not afraid to call out cynical marketing ploys of those that claim to be sustainable or have ethical sourcing practices.
While there is a demand from consumers, there is also a pull factor from businesses that realise a transparent supply chain reduces reputational and supply continuity risk and enhances their standing in the marketplace.
Opportunities and challenges
The rise of transparency presents both opportunities and challenges for businesses in the food and beverage industry. To be successful brands are being required to share more granular information than ever before, this must go beyond mandatory compliance and regulatory requirements.
According to KMPG, improved supply chain transparency, trust, customisation, and agility enable organisations to deliver on customer value levers. To meet this growing market demand, organisations need to provide product information transparency throughout the supply chain. They need to have the capability to associate information with products and maintain that association through multiple tiers across the supply chain.
Benefits of getting it right
An ability to understand the origins of your product, collaborate with your supply base, and proactively manage risk has numerous benefits, including:
- Improved supply chain visibility allows you to meet consumer demand for understanding the ingredients, provenance, and sustainability of products
- Improved product tracing performance
- Accurate and aligned data sharing enables process improvements and decreased errors to maximise workflow
- Brand reputation - make informed decisions that impact brand reputation, improving trust in your product
- Increase consumer confidence and loyalty with ‘proof’ of your product claims
- Meet minimum tracing standards
- Identify and prioritise risk mitigation from regulation and supplier-related issues
- Visualise these risks by mapping your entire supply chain, this is a crucial approach to keeping on top of ethical sourcing risks
- Deliver on legal food safety requirements (HACCP)
- Reduce the time spent and likelihood of a recall; knowing where your product comes from and the risks in that area can allow you to change supply or audit those suppliers more, to decrease the chance of recall
In practice, creating a transparent supply chain is not simply a matter of determining what information to disclose to consumers; you must first gain visibility into your supply chains and then take action on the insights gained through greater visibility to manage risks more effectively. While many technologies have been hailed as the solution to supply chain transparency, any viable option must include the ability to capture, assess and translate useful data to support informed decision-making.
Does your supply chain meet customer transparency demands?
just-style.com/news/uk-holds-hearing-on-exploitation-of-forced-labour-in-xinjiang/; Food insight, Food and health survey 2020; Mintel - global food and drink trends; KPMG future supply chain data consumers goods retail; Harvard Business Review - supply chain transparency really matters