Transparency needs of the modern consumer

Transparency is no longer an option; it’s a must!

Global threats such as climate change, supply chain disruption, food fraud, and food safety risks have increased the demand for transparency. It is more necessary than ever, especially in such industries as food, where issues like traceability and safety are so important. 

Consumers care deeply about transparency and favour food brands and retailers that share information readily, with an expectation that they share more than just ingredient lists and nutrition facts. Today’s consumers seek information about manufacturing practices, ingredient sourcing, company sustainability efforts, and more. They are no longer prepared to give a brand the benefit of the doubt if they cannot produce detailed information about their product's history.

It is crucial that consumers feel they can trust in what is one of the most fundamental human needs - the food we eat.

Why do consumers want more transparency?

Supply chain transparency requires businesses to know what is happening upstream in the supply chain and to communicate this knowledge both internally and externally. Researchers at the MIT Sloan School of Management found that consumers may be willing to pay 2% to 10% more for products from businesses that provide greater supply chain transparency. 

As customer demands have increased, so has the reputational risk for brands from the media. Over the last decade, numerous scandals have inflicted considerable damage on the reputations of many brands. Research by Kantar, on behalf of the AHDB, found that consumers exposed to negative news stories about red meat were 18% more likely to reduce their meat consumption compared with those who had not been exposed (Kantar Meat Reducers). As well as damaging brand reputation and most importantly a public health issue, food safety and or fraud cases have huge financial implications. The average cost of a recall to a food company is $10M indirect costs, in addition to brand damage and lost sales according to a joint industry study by the Food Marketing Institute and the Grocery Manufacturers Association.

Another study by EIT Food Trust Report showed that consumers voiced an increased demand for supply chain transparency from farm to fork, natural products, and better more informative labeling. This suggests that if agrifood businesses were to scale their transparency efforts and implement digital traceability technologies, they would be directly responding to consumer demands and likely to increase trust in their business.

“Over 90% of consumers say transparency by a brand is important to their purchase decisions.” Forbes 

Benefits of transparency

Perhaps, the most obvious benefit for supply chain transparency is compliance, with increasingly stringent regulations, transparent supply chains will reduce reputational risk and project an image of a business that is honest and upfront about its practices, and therefore, trustworthy.

Germany recently passed a law requiring companies to report human rights and environmental abuses along their direct supply chains. This will come into effect in 2023 for roughly 600 large companies.

Here are a few other benefits of achieving supply chain transparency - 

Brand loyalty - When you share information about your supply chain, you nurture consumer trust which, in turn, earns your brand greater consumer loyalty.

Customer assurance - Today’s consumers firmly believe that they have the right to know exactly where their products are coming from and how they are made. They want to be sure of the product’s safety and quality, and, increasingly, that the sourcing practices are in line with their values.

Strong partnerships - Having a transparent supply chain will create a culture of trust throughout all your partnerships, you are therefore more likely to attract like-minded suppliers and partners. 

Collaboration - Sustainable ways of producing food and optimising food supply chains are only possible through collaboration. Transparency is at this point, an essential tool for businesses to face challenges together.

Crisis mitigation - When your suppliers know that honesty and transparency are embedded in your business, they are much more likely to resolve issues with you directly instead of trying to get away with poor quality or unethical behaviour.

Examples of supply chain transparency

Many global brands are already increasing the levels of transparency in their businesses, with transparency platforms and communicating the journey they are on to customers. 

Transparency in supply chains is not achieved overnight, it’s a continuous effort that takes time. However, transparency makes trust possible, and trust is an essential foundation for any long-lasting relationship. The results of increased transparency, particularly for the food supply chain, will enable sustainable brands to set themselves apart from less responsible producers for years to come.

A comprehensive supply chain management solution can help you first establish internal supply chain visibility, by facilitating insight and action that will add value and decrease risk. This can then be leveraged into transparency for your customers, suppliers, and the wider industry. 

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References

Unilever’s Climate Transition Action Plan | Unilever; Sourcing.pdf (heineken.co.uk); TrustInFarming_210121_WEB.pdf (windows.net); EIT_Food_Trust_Report_2020.pdf (eitfood.eu); Supply Chain Visibility and Social Responsibility: Investigating Consumers’ Behaviors and Motives | Manufacturing & Service Operations Management (informs.org); Consumer Insights: Trust in farming and the environment 2020 | AHDB; Recall: The Food Industry's Biggest Threat to Profitability | Food Safety (food-safety.com); German Bundestag passes new law on supply chain ethics | News | DW | 11.06.2021

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