A CIPS survey published in 2018 discovered that just 6% of CPOs have full supply chain visibility. Although this number is likely to have increased since then, I’d wager that it’s still not as high as it should be given the current supply chain issues that could be improved should that transparency and traceability exist.
So what is traceability in a supply chain and why does it matter? Traceability refers to the ability to track products, at SKU level, through their full end to end supply chain. It covers how your product flows through your supply chain partners, down to the lanes being used to transport your products.
It used to be that examples of issues related to lack of supply chain visibility were few and far between – the horsemeat scandal of 2013, or the Leicester sweatshop discovery this year, but unfortunately the challenges of this last year with both Brexit and Covid-19 mean there are many more examples abound.
While supply chain transparency isn’t the magic bullet that would have avoided the shortages seen worldwide from milkshakes and paper to turkeys and chocolate, these shortages are exacerbated by this lack of visibility. Shortages are harder to anticipate and manage when you don’t have full visibility on the source of your products and raw materials, nor how they flow through your global supply chain.
It’s not just companies who want to understand supply chains, consumers are increasingly keen to know the source of their products, with a survey published by OpenText this year identifying that over half of UK consumers wouldn’t buy from a brand if it’s accused of working with unethical suppliers. As an organisation, you must therefore have a level of visibility to understand whether any of your supply chain partners are practicing unethical behaviors.
So how do you address this, and drive greater transparency?
- The first step is to undertake a mapping exercise. Developing a full end to end view of your products as it flows throughout your supply chain to set the scope of what you’re looking to address.
- Next, you need to define the level of transparency you both need, and want, to share with your customers. This will be partly determined by regulation in the market(s) you operate in, but is also driven by your company’s internal values and cost drivers.
- Once you know what level of transparency you’ll be driving to, you then need to understand what data you have, and what you need. Then you’ll have to work through both how do you obtain it and, perhaps just as importantly, how will you use it.
- Driving supply chain transparency will require collaboration with your suppliers. Some of the data identified in step 3 will need to come from your supply base, and you need to ensure you have agreement from your suppliers to work together towards supply chain transparency including their upstream suppliers. This collaboration will be aided by ensuring standardised terminology is used so you’re all talking the same language.
- Finally, there needs to be a focused effort on communication. As an organisation you should be able to clearly articulate why you’re doing what you’re doing, linked back to your company values, and communicated out to your full supply chain including your customers.
Please contact Mark Boswell, Head of Food & Beverage Practice at 4C Associates at mark.boswell@4cassociates.com or Gopal Iyer, Head of Supply Chain Practice at 4C Associates at gopal.iyer@4cassociates.com if you would like to understand more about supply chain transparency.
To contact 4C Associates, book a meeting with us here.
