Let’s Clear the Air: The Benefits and Challenges in Supply Chain Transparency
What was once a luxury for many companies has now pivoted towards a customer’s expectation. Many companies have shifted their business models throughout our ever-evolving world to include transparency within their supply chains because it’s highly sought after. Supply chain transparency has become of vital importance to many companies throughout all industries allowing them an opportunity to know what they’re spending money on and ensuring it’s being produced ethically and authentically. While companies continue to work hard to provide their customers with maximum visibility, there remain concerns if disclosing too much information negatively affects their competitive advantage or, worse, their reputation?
April 22, 2021
First, Let’s Understand Supply Chain Transparency
A current phrase used by businesses to address how much information is given to those involved internally and externally in a company. Now, more than ever, companies are altering the way they operate to include maximizing visibility within their supply chain. Why? Because customers are demanding it.
Customers are seeking transparency due to many reasons, including compliance with evolving government regulations, production of quality products, ensuring fair labor and environmentally friendly practices, as well as securing safe and proper production standards are being met.
Supply chain transparency invites businesses and customers to collaborate more efficiently, manage orders and shipments, enhance data sharing and increase the turnaround time for solving problems. So ask this question: Is it worth a company’s time and efforts to divulge this information to a customer, knowing there are potential consequences that could follow?
Enhance Your Supply Chain Experience: Benefits of Being Transparent
Sure, customers are demanding the information, but that doesn’t mean you have to provide them with it. However, if a customer is willing to pay extra on your product because you accommodate their visibility requests, here is your competitive advantage!
With new laws and regulations pertaining to supply chain transparency, it’s most likely more accessible for companies to release this information than retain it. Customers appreciate those companies who provide information regarding production status, the materials or ingredients being used in their product, the country of origin, and perhaps, the production conditions of their product. Providing specific product and shipping information lessens the risk that products are turned away at port. Holding these suppliers and companies accountable for providing proper documentation reduces the potential to cause expensive disruptions and ripple through the entire supply chain.
Fortunately, supply chain transparency can benefit many companies by:
- Increasing customer loyalty and satisfaction
- Encourage customer confidence in their chosen suppliers
- Ensure products are acquired honestly and genuinely
- Increase customer trust by providing traceable evidence of proper documentation
- Improve operations and minimize cause for disruptions
- Allow collaboration between companies and customers
- Identify risks and disruptions in its early stages, reducing large and expensive eruptions
- Enhances the production experience overall
- Attract and invite employees looking to work for qualified and honest companies
Fears of Being Transparent
While a transparent supply chain may sound glorious to some, complete transparency isn’t for everyone. Divulging too much can have adverse side effects on a company that’s not ready to share information with its customers. What companies need to understand is, once released, companies are exposed to criticism, and unfortunately, no one can control how customers will respond. In some cases, the information released may be incorrect, misleading, or unreliable, putting companies at the risk of damaging their reputation and costing them their livelihood.
Challenges of Opaque Supply Chains
Unfortunately, low visibility in today’s business world raises concern for unethical or illegal practices. However, some companies may not have this type of information readily accessible or in a good state financially to access it. While it may not be by choice, companies that cannot provide customers with details regarding their supply chain and manufacturing details are in a complicated situation. As today’s business world shifts towards transparency, companies may fall behind and lose their competitive edge if they don’t invest in adapting to the ‘new norm.’
Consequently, companies that choose not to share information with customers are perceived as ignorant and can lead companies to false accusations and negligence. An opaque supply chain ultimately leads to increased formulated opinions rather than facts.
There are more opportunities for compliance issues, and the potential to damage reputations is complicated and expensive to overcome in today’s society.
How Can a Transparent Supply Chain and HBI Help Your Business?
As a global manufacturing agency, HB International’s team takes great pride in knowing we can provide our customers with reliable, transparent information no matter where you are in the supply chain. From product development and management consultations to supplier audits and product inspections, our team is dedicated to offering high levels of transparency throughout each of our departments. Our goal is to deliver confidence to our customers and ensure you receive the utmost professional quality care, trust, and customer service.
How can we help get you started in the right direction?
