What does it mean to have supply chain transparency?

What is supply chain resiliency and transparency?

Supply chain resiliency is the ability of a supply chain to continue operating in the face of disruptions and can be achieved through supply chain transparency.

Supply chain transparency varies across companies, industries and geographies. However, there are two elements to supply chain transparency according to Alexis Bateman of MIT’s Centre for Transportation and Logistics - visibility & disclosure.

• Visibility means accurately identifying and gathering data covering the breadth and depth (i.e. multi-tier supply chains) of connections in your supply chain. Firms can achieve this by creating a graph illustrating their supply chain.
• Disclosure means sharing the information at the level of detail necessary, both internally and externally, based on your corporate values.

The level of detail firms seek depends on the type of business the operate and disclosure depends on corporate values and regulatory requirements.

What is the right level of transparency for my business?

Your team must first determine what level or risk are you willing to accept based on your past experiences with supply chain problems, anticipated risks, code of ethics and corporate culture.

• What are the non-negotiable information you want from your suppliers?
• Determine what data you already have and the insights can you generate from the existing data.

You can then identify your organisation’s gaps and decide how you will share the information to customers, regulators and wider audiences. Once established, you will have a clearer direction on the level of visibility and disclosure you should pursue.

 Is it worth the investment?

Of course, because while pursuing resiliency and transparency may be costly, the benefits outweigh the costs especially when using cost-effective products and services that leverage the latest technologies.

Companies struggle to understand their exposures to particular industries, geographies and suppliers and are unable to quickly react to the market and execute mitigation plans. Businesses need to shift their supply chain management from being reactive to being proactive in order to achieve resiliency.

Supply chain transparency can lead to improved customer perception, competitive advantage, a reputation as a trustworthy company, more efficient and cost-effective operations, stronger governance and alignment with your corporate values that appeal to customers and regulatory requirements.

Through Natural Language Processing AI, we can not only enable you  to identify red flags in your supply chain but also equip you to find alternative suppliers using one of our tools, companyconsole.versed.ai. 

What do I need to consider as I map my supply chain?

As you evaluate your supply chain, you must consider external, supplier, distribution and internal enterprise risks.

Firms should consider the following to identify risks:

• Location of suppliers. Is your supply chain dependent on a specific geography? What are their addresses? Are there suppliers in countries where there is civil instability, terrorism or drug trafficking, or high levels of corruption?
• Shipment speed. Is there opportunity to speed delivery schedules, reduce lead time and have more efficient sourcing by consolidating sourcing and reduce carbon footprint?
• Number of suppliers. As you go down tier levels, are your suppliers exposed to a specific company? Do suppliers have similar parent companies?
• Value, volume and sources of shipments. Do higher volume and value of shipments pose additional risks?
• Regulations and contracts. How will current regulations impact your supply chain? Does your business specify controls and procedures for suppliers? How do contract terms change?

Sources:

• https://hbr.org/search?term=alexis%20bateman 
• http://www.scrlc.com/articles/Supply_Chain_Risk_Management_A_Compilation_of_Best_Practices_final[1].pdf
• https://mitsloan.mit.edu/ideas-made-to-matter/supply-chain-transparency-explained