The issue of supply chain visibility has recently been a major area of concern for companies across the globe. Failing to enhance operational transparency can lead to legal ramifications, reputation damage and noncompliance fees. It also puts businesses at increased susceptibility for disruption. Unfortunately, being able to see into end-to-end operations is particularly difficult for operators in some markets.
The Sustainability Consortium, or TSC, recently published its 2016 Impact Report that revealed most manufacturers of consumer goods lack supply chain visibility. Of the 1,700 businesses that participated in the survey, less than 20 percent said they have end-to-end transparency. Furthermore, the majority, or 54 percent, of companies said they didn't have any visibility into their supply chain whatsoever.
A glaring problem with these findings is that, without being able to see into the supply chain operations, organizations can't identify, let alone resolve, any unethical or damaging areas. And for consumer goods manufacturers, this is especially troubling. According to the report, these products are the cause of more than 60 percent of greenhouse gas emissions worldwide. Additionally, when it comes to instances of forced and child labor in supply chains, more than 75 percent of cases occur along consumer good assembly lines.
Manufacturers must measure and monitor
"The Sustainability Consortium's findings are helping us solve a big challenge, which is how do we get our arms around our total supply chain," Wal-Mart Senior Vice President of Global Responsibility Sustainability Laura Phillips stated in the announcement. "And how do we really focus for impact in our supply chain with our partners? TSC's 'hotspot' analysis approach helps us do exactly that, together with the global community."
The report outlined three essential steps needed in order for manufacturing companies to improve the state of their supply chain:
- Retailers and procurement leaders should measure and track the sustainability of products
- Manufacturers must focus on enhancing visibility and performance throughout the supply chain
- Stakeholders should collaborate to create better scalability
In society's efforts to build a greener planet, a major priority is producing products that are sustainable and energy-efficient. And this eco-friendly initiative starts in the manufacturing process.
But, as the TSC report pointed out, it is not possible for companies to manage parts of the supply chain that they're not able to measure or even see. And, as Environmental Defense Fund Corporate Partnerships Managing Director Elizabeth Sturcken said in the press release, "Progress can only be achieved if companies are measuring performance within their supply chains."
Additional tips for increasing supply chain transparency
In an article for Green Biz, Adam Siegel, vice president of sustainability and retail operations for the Retail Industry Leaders Association, highlighted some of the ways companies can improve supply chain visibility. One strategy he suggested is leveraging a third-party partner that can ensure responsible sourcing practices. These firms can also help with risk assessments by conducting audits. Siegel added that organizations should train workers and suppliers and encourage them to be more transparent.
The importance of having a visible supply chain is obvious. But achieving it can be challenging. This is why it is critical that companies are proactive in their attempts to gain more transparency along end-to-end operations. Organizations that lack the resources, time, tools or experience needed to ensure the successful execution of such initiatives are highly encouraged to work with consulting firms and solutions providers that do.
Increased visibility can help companies reduce the risk of disruption, uncover cost-savings opportunities, demonstrate social and environmental responsibility and properly maintain compliance. As the pressure to enhance the efficiency of operations and crate a more sustainable organization intensifies, it will become increasingly necessary for supply chain leaders to embed transparency into their business models.