Supply Chain Transparency: What It Is and Why You Need It

Supply chain transparency

February 18, 2020

The trend toward supply chain transparency introduced a new paradigm, one that has penetrated just about every aspect of retail and logistics. From the raw materials supplier to the factory floor to the customer’s door, every stage of the product journey is accessible, improving brand confidence and optimizing business processes along the way.

Today, supply chain transparency goes a step further, adding product traceability to its long list of capabilities. For industries like agriculture, food and beverage, and luxury goods, traceability reduces risk, eliminates fraud, supports compliance, improves customer satisfaction, and strengthens brand image, all of which are essential components of a healthy brand relationship.

What Does Supply Chain Transparency Mean?

Customers, vendors, and governments are putting a lot of pressure on companies to reveal details of their supply chain practices. Where clothes are made, fishing practices, and where the ingredients in their prepared foods come from are top-of-mind. Leveraging supply chain transparency, these details are accessible to the buyer, helping them make informed purchasing decisions.

Why You Need Supply Chain Visibility

In the effort to provide transparency, companies communicate what is happening upstream and disclose this information to all stakeholders, both within the company and downstream in the market. This knowledge satisfies both consumer demand as well as company policies around the environment, sustainability, corporate responsibility, and provenance.

Consumers Demand Transparency

Case in point, some studies indicate that consumers are willing to pay up to ten percent more for products they can trace through the supply chain. The trend among consumers today is to favor companies that support ethical practices, and this is likely to rise as competition continues to increase.

Significant events that invigorate the need to discover more about a brand include

Supply Chain Transparency Supports Compliance

Supply chain transparency also helps companies remain compliant with government regulations, both domestically and around the world. With today’s rapidly changing regulatory landscape, traceability is critical to business continuity. If products are delayed at their destination for any reason, companies face potentially significant losses and a negative impact on their brand as a whole.

Technologies Driving Supply Chain Transparency

Digital transformation enables a great many exciting technologies that support supply chain transparency in industry. Blockchain, for example, is an essential component of traceability. As an unalterable ledger that tracks every step along the product journey, it assures provenance, and eliminates fraud, counterfeiting, or tampering along the way.

Let’s look at the fishing industry, for example. Information that would be captured includes the name of the fisherman and his vessel, the method of catching the fish, and exactly where and when it was caught. This information, embedded in an RFID tag or a QR code, stays with the product through to its destination.

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