B2B Supply Chain Transparency = Competitive Advantage

[dot_recommends] June 7, 2022 Manufacturing Trends, Manufacturing Business Strategy, Manufacturing Challenges

Manufacturers deepen relationships with suppliers and customers by developing greater transparency in supply chains

B2B supply chain transparency milestones include 1) Code of conduct, 2) Standards and certifications, 3) Performance-based metrics, 4) Traceability, and 5) Full disclosure

Interest in B2B supply chain transparency has climbed in the wake of the disruptions caused by the COVID-19 pandemic. Certainly, consumer product marketers have felt the pressure toward transparent supply chains more keenly. But B2B manufacturers will also find a competitive advantage in pursuing supply chain transparency.

In this post I cover why and how manufacturers are building more transparency into supply chains. If you’re looking for reasons to increase transparency and ways to achieve it, read on. But, first, I offer a definition of supply chain transparency based on a Harvard Business Review article.

What do we mean by “supply chain transparency”?

Transparency and visibility in the supply chain relate, but they are not exactly the same. Visibility starts the process of awareness, and transparency extends it to full knowledge and performance sharing. Transparency both requires and builds mutual trust.

  • Transparency goes beyond knowing suppliers, where they are located, and getting periodic assessments of their performance.
  • End-to-end transparency exposes all aspects of performance throughout every part of the supply chain.
  • Transparency also opens up communication and data sharing among partners and stakeholders, including customers.

 

Benefits of Supply Chain Transparency for Manufacturers

Efforts toward supply chain transparency have been driven by two key goals:

  • 1. Compliance with environmental, social, and governance (ESG) expectations.
  • 2. Improvements in supply chain reliability.

Let’s look at each of these factors separately.

Benefits of supply chain transparency for ESG compliance

Essentially, when you, as a manufacturer, engage in ESG practices, you reduce some types of risk.

  • Global supplies may be turned back at ports if they lack proper origin documentation.
  • End-user customers may demand accountability from product manufacturers, so, as a B2B supplier your customers may need documentation from you.
  • Being a brand that respects and acts on environmental and social values protects you from negative publicity.
  • Customer loyalty may be preserved and enhanced by your ESG compliance choices.

 

Benefits of supply chain transparency for improved reliability

A supply chain infused with trust from end-to-end will foster better reliability for several reasons:

  • When suppliers all along the supply chain practice transparency, it cultivates trust.
  • Trust reinforces open communication.
  • Open communication forges partnerships.
  • Partnership leads to continuous improvement throughout the supply chain.
  • Employees prefer to work for responsible companies, so having a supply chain transparency policy may help with workforce shortages.

In the end, suppliers and customers will be more likely to come directly to you to resolve issues. This direct approach will avoid countless headaches and lost business.

How Manufacturers Tackle Supply Chain Transparency

Rather than being an end point, supply chain transparency is a continuous process with risks and benefits. Tackling this enormous task too quickly could lead to more risks than benefits.

Steps toward Transparency

If your company wants to move toward greater supply chain transparency, there are steps you can take.

According to the HBR article, these steps will move you toward your goal:

  • 1. Evaluate risks and set specific goals that fit your corporate values.
  • 2. Create a visual representation, for example a flow map, of your supply chain.
  • 3. Gather information about practices and performance that will shine a light on potential risks, areas for improvement, and gaps in your knowledge at each stage.
  • 4. Connect and communicate with suppliers to enlist their collaboration in monitoring for risks and the presence of ethical violations. Form partnerships to enhance access to knowledge and resources for alternative sourcing as needed.
  • 5. Disclose at the level that is comfortable for your company. In your disclosure planning, consider regulatory requirements, stakeholder interests, and verification of information you choose to share.

Think of these steps as a continuous process. Each subsequent iteration will yield more refined results.

Promote Your Level of Supply Chain Transparency

Once you develop transparency in your supply chain, communicate that out to your customers via digital marketing. Create content for your website and social media related to both transparency and sustainability.

B2B supply chain transparency will provide a competitive advantage inherently, and you can boost that advantage by finding ways to talk about your progress. 

Remember, progress, not perfection. We’re all learning from each other along the way. 

Do you have thoughts to share?

Let’s talk! Or, connect with us on LinkedIn or Tweet us.

–parin

Managing Partner

 

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