Opinions expressed by entrepreneur Shareholders are theirs.
It has become my personal mission to grow brands and become a force for good in this world. For other companies to do the same, I think it is imperative that they engage in supply chain transparency.
When handled properly, SCT benefits consumers, brands, suppliers, and the planet. However, the consequences of ignoring it can be dire. For example, recent problems have occurred at airports causing airlines to cancel flights in droves simply because the jet fuel supply chain has suffered from dysfunctions linked to the pandemic. Moreover, one only has to look at shipping containers piling up in major port cities – such as Los Angeles or New York City – to see that the unrest won’t 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.
Related: 3 reasons why VRMs are a critical component of a business growth strategy
411 on SCT
According to Alexis Bateman of the Massachusetts Institute of Technology, supply chain transparency has two defining characteristics: visibility and disclosure. The former involves identifying and collecting information from every point in the supply chain, while the latter refers to the transmission of that information to stakeholders.
I would argue that SCT also has a third component: proactive correction. When chain defects are discovered during information gathering, proactive brands must implement a plan to correct these issues. Forward-looking brands align with consumers’ awareness of the importance of transparency and the impact of their products on the planet.
How is transparency related to the epidemic?
COVID-19 has led to the worst supply chain disruption since World War II. Industry insiders understand that moving goods from point A to point B is a complex process with multiple points and potential obstacles. Supply chains have been hit by factory shutdowns, flight cutbacks, and a dearth of containers. The average consumer experiences shipping delays for everything from appliances to toys, but is often unaware of the current, widespread challenges facing the industry. For example, two years ago, the same $2,000 shipping container could cost $25,000, or on-time delivery was a rare luxury. This is in addition to the massive increase in consumer demand, due in large part to the shutdowns.
By informing your customers about why they are experiencing delays and how your company is doing everything possible to mitigate them, your company can be in a better position to boost trust. This will help allow your brand to thrive in times of uncertainty.
Related: True transparency requires the sharing of good and evil
I know from personal experience that the path to complete transparency can be long and complicated, but the rewards are numerous.
About 94% of consumers stated that they are more loyal to a transparent brand. Companies often use social media to spread their transparency information, yet the information the company produces is often insufficient. I think consumers deserve to see compelling evidence, such as testimonials from independent organizations, and they should be prominently featured on their websites.
Why doesn’t everyone do it?
There are some common reasons, such as worrying about losing a market advantage by exposing too much information that competitors might use. There is also a fear of exposing the company to outside criticism if it shows deficiencies.
ROI is another consideration. If an executive believes that SCT does not provide a significant return on investment on a short-term basis, the SCT initiative may be canceled. Finally, there can be a logistical challenge. Historically, supply chains themselves have not been subject to transparency and it can be difficult to obtain reliable information.
However, the risks of not complying with Social Security compensation can be harmful. Consumers prefer spending their hard-earned dollars on responsible brands that consider the impact of their products on society. They also appreciate companies that explain the disruptions and assure them that they will do everything they can to mitigate delays. As the CEO of a company dedicated to such approaches, I’ve seen that suppliers – who are increasingly aware of consumer demands – also prefer working with brands committed to SCT.
Create an SCT . strategy
When I co-founded Schmidt’s Naturals, we had several independent certifications that prove the products are cruelty-free, vegan, and sourced with 100% natural ingredients.
If your company is willing to follow a well-crafted and intended roadmap, implementing SCT practices is not difficult.
Your company likely manufactures or sells more than just one product. Your supply chain map can be very complex, possibly detailing the sources of thousands of items. Be aware of the most pressing risks present in your supply chain.
Research using existing systems. For some companies, there may already be compliance-related databases that collect environmental impact data. You can then develop a plan for exposing unknown data about your supply chain.
Another milestone is information disclosure: Clearly identify to stakeholders the steps your company is taking to improve transparency and leverage these actions in your company’s marketing messages.
In order for a business to remain relevant and profitable, it must adapt to these new realities and one of the driving factors is emerging technologies. Companies are increasingly turning to cloud computing to modernize their information technology and facilitate efficient use of SCT data. Another promising innovation is the Internet of Things (IoT). Companies have started using sensors to collect data 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 transient vaccines.
As access to SCT increases, companies may need to create new roles to implement SCT strategies. For example, some companies may appoint a chief transparency officer. As public pressure continues in favor of greater transparency and the creation of new regulations, the CTO will need to ensure ongoing compliance.
Only time will tell when it comes to the true future of SCT, but one thing remains clear: a request for disclosure will not go away.
Related Topics: Key trends that will shape the e-commerce industry in 2021