Supply chain transparency is a trend that has spread throughout organizations over the last few years. It has been brought about not only through lawsuits and the financial crisis, but also through an awakening of consumers to the questionable manufacturing processes of their products.
A more connected world has allowed news to spread quickly from areas that would not have been particularly accessible in the past. If the production of a particular product is found to be unethical, the chances are that sales for that product, or even products across an entire brand, will decline. This can haunt the brand for years, even if they have cleaned up their supply chain following the initial discovery.
However, the major problem for companies is that they are rightly held accountable by the public about the actions of their contractors over seas. For instance, despite Foxconn only making certain elements for Apple, it was Apple who had the major blowback over reports of forced 15 hour days in their factories and several suicides attributed to the extreme working conditions in these factories.
With a modern supply chain, keeping track of these kinds of things is increasingly difficult, but are vital to get right. For instance, if the dye used in a subcontracted factory is made by a company who are using child labour, it comes back to effect the company who sell the final product. People do not want to look at their new t-shirts and think that it has been made in unethical ways.
The problem with these is not only in brand value and perception, but also in the future of the supply chain itself. If a company is found to be using unethical or dangerous methods to create its products, the first point of call is to break the relationship with the offending sub contracted company. This means manufacturing stops and often time consuming moves are made to transfer this process to another supplier, who then need to be thoroughly audited to avoid this kind of practice in the future.
Despite all of this, your company’s brand has been damaged to the extent that certain consumers are likely to avoid using your products in the future.
The only way to stop this is through making your supply chains as transparent as possible, making sure that everybody has the chance to see what you are doing and communicating this widely. With the prevalence of information on every company through the web, it is possible to see almost everything they are doing, and the words and promises that come from organizations themselves are often presumed to be untrue. Therefore simply saying that you have an ethical supply chain is not enough, it needs to be fully open and transparent.
Having this kind of open approach to supply chain management is not easy though as it requires complete knowledge of how every element of your product is sourced and also making sure that you are being genuinely open. This seems easy, but the reality is that if an element seems unclear then it could be perceived as trying to hide something, rather than simply not having information about it.
Alongside this comes a need for strong supply chain and manufacturer management, as your company needs to make sure that with developments in your supply chain, that you are also making sure these changes are ethical, even when they are not necessarily decisions you are not involved with i.e changing suppliers of certain materials in the factory. This means that communication throughout the supply chain is key.
Creating and maintaining a transparent supply chain is not easy, but the business landscape is littered with the reputations of companies who have not put in the hard work.