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Increased transparency in supply chain management systems could improve customer satisfaction and help ensure compliance

Customer Benefits of Transparency in Supply Chain Management SystemsARTICLE

By Christine Parizo

In supply chain management systems, transparency for the business means knowing where everything is at any given time. Such transparency is critical to ensuring compliance, as well as customer satisfaction. Adding transparency for customers, using emerging digital technologies such as blockchain and Internet of Things (IoT), could improve customer experiences and lead to a stronger bottom line.

But making a supply chain management system transparent enough for customers is no easy task. Just getting it up to speed for internal purposes takes a mixture of technical sophistication and human intervention.1 Thinking only about transportation, for example, data needs to be collected and aggregated from transport tracking devices, cross-referenced with events like natural disasters that may impact the supply chain, and analyzed to find the best routes, carriers, or methods for transport. Visibility into the supply chain depends on track and trace systems, like GPS tracking, radio frequency identification (RFID), and Bluetooth devices, as noted by professional services firm PwC in its report, Industry 4.0: How digitization makes the supply chain more efficient, agile, and customer-focused.2

Once these items are in place, supply chain management systems can make it easier to locate shipments and route them properly. But the increased visibility also has a much larger business impact. As the PwC report put it: “With the advent of the digital supply chain, silos will dissolve and every link will have full visibility into the needs and challenges of the others. Supply and demand signals will originate at any point and travel immediately throughout the network. Low levels of a critical raw material, the shutdown of a major plant, a sudden increase in customer demand — all such information will be visible throughout the system, in real time. That in turn will allow all players — and most important, the customer — to plan accordingly.”3

Blockchain May Help Light Supply Chain Management Systems from Within

Blockchain is a new tool supply chain managers could incorporate into their supply chain management systems to make the entire chain more transparent while providing anonymity, when necessary. As explained by the web magazine Innovation Enterprise, “Many larger producers do not want to reveal provenance of their goods for fear of losing a competitive advantage. Blockchain allows information to be transferred in a trustworthy and anonymous way, essentially providing a trust network that allows information to cascade down the chain from raw material onwards, without revealing who people are.”4

Thus, blockchain helps establish provenance of products, but without revealing the information indiscriminately. This makes the supply chain more auditable and can provide customers with the assurance that goods are fairly sourced and free of forced labor.5 Everledger, a firm that is working to pull back the curtain on the diamond supply chain, is using blockchain for transparency about the use of forced labor.6

The Food Industry Can Bolster Its Image Through Transparency in Supply Chain Management

In the food industry, blockchain-based supply chain management systems have the potential to transform the way consumers view companies. In many of the food-contamination crises of recent years, which have sickened hundreds of people in many states, damage to company reputations was worsened by their inability to determine the source of contamination. 7

SBlockchain supply chain management programs aim to change the way food is tracked by creating an auditable chain of custody from raw materials to the consumer. Each step in the chain requires data to be entered, but in the end, it provides greater transparency and security, and a better image in the minds of consumers when, if a similar crisis hits, the company can immediately identify the culprit as tomatoes from California or beef from Colorado.8

Another benefit of supply chain transparency in the food industry is the ability to ensure that a product meets the standards for organic or non-GMO labeling. The Safe and Accurate Food Labeling Act, which passed in the U.S. House of Representatives in 2015 but has not yet been enacted into law, was the result of consumers demanding to know food sources. Transparency in the supply chain helps build trust with consumers by providing verifiable data.9

Transparency Boosts Brand Image, Regardless of Industry

The benefits of transparency in supply chain management systems described for the food industry can extend to any industry. Labor abuse revelations, such as human trafficking and forced labor, can bring negative PR to companies and cast them in an exploitative light, even if they did not know their suppliers were engaging in these practices. Businesses that can prove the origins of their goods, including the absence of forced labor, not only boost their reputations with consumers but also demonstrate their compliance with laws that require disclosure of efforts to prevent human trafficking and forced labor, such as the California Transparency in Supply Chains Act. 10

The Takeaway

It can be challenging to create full transparency in supply chain management systems. But it helps companies comply with laws and, in the eyes of consumers, a transparent supply chain that can find tainted items for product recalls, ensure food is non-GMO, or verify that human trafficking and forced labor is not part of the process, can bolster a company’s image.

Christine Parazio - The Author

The Author

Christine Parizo

Christine Parizo is a professional writer specializing in business and technology. She's written for a variety of TechTarget sites, including searchSAP.com, searchSOA.com, and searchCloudApplications.com, as well as HPE's Infrastructure Insights and The Pulse of IT.

Sources

1. Industry 4.0: How digitization makes the supply chain more efficient, agile, and customer-focused ,PwC ;http://www.strategyand.pwc.com/reports/industry4.0
2. ibid
3. ibid
4. “How Blockchain Enables Supply Chain Transparency""Innovation Enterprise"; https://channels.theinnovationenterprise.com/articles/how-blockchain-enables-supply-chain-transparency
5. ibid
6. “Blockchain has the potential to revolutionize the supply chain,” TechCrunch;https://techcrunch.com/2016/11/24/blockchain-has-the-potential-to-revolutionize-the-supply-chain/
7. “Inside Chipotle’s Contamination Crisis,” "Bloomberg", https://www.bloomberg.com/features/2015-chipotle-food-safety-crisis/
8. “Blockchain Technology in Supply Chain and Logistics,” ” Let’s Talk Payments,Statistics Canada; https://letstalkpayments.com/blockchain-technology-in-supply-chain-and-logistics/
9. “Labels Aside, Companies Need Transparent Supply Chains,” MIT Responsible Supply Chain Lab; https://responsible.mit.edu/news/labels-aside-companies-need-transparent-supply-chains
10. “SB 657 in Review: Why Businesses Have a Stake in Supply Chain Transparency Sustainable Brands, http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/kilian_moote/sb_657_review_why_businesses_have_stake_supp

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