It is no easy task to gain supply chain transparency — identifying your suppliers below the immediate tier. Supply chains today are global and complex, and market demands require products to be brought to market faster than ever. This leaves businesses with little time to manage multiple levels of suppliers.
In addition, consumers expect brands and retailers to know much more about their products than in the past, such as where it was sourced, how it was manufactured, who was involved or what countries it passed through on its journey to the store. All this requires a deeper understanding of the supply chain.
While multi-tier supply chain transparency is challenging to achieve, it can reap serious benefits for businesses that invest the time and resources. Taking progressive steps to achieve visibility at multiple tiers can benefit businesses in five ways.
1. Improved supply chain efficiency and resilience
How do you make your supply chain more efficient if you don’t know who is involved? By gaining visibility into your suppliers beyond tier 1, you can have a better view of who participates in your supply chain and whether any weaknesses or inefficiencies exist.
For example, by identifying your tier 2+ suppliers, you may find that many of your suppliers are based in countries at high risk of natural disaster and/or forced labor. For example, if a tuna business finds that much of its fish is sourced from Thailand, it can take steps to ensure their suppliers comply with relevant labor and sustainability certifications or choose to switch to a different supplier.
With more in-depth supply chain knowledge, you can make well-informed adjustments and ultimately establish a reliable network of suppliers you can depend on.
2. More ethical and sustainable sourcing
Multi-tier visibility can be intimidating: While it can reveal the positive aspects of your supply chain, it can just as likely reveal the negative. Even though it’s daunting, this is ultimately good for your business. By gaining a deep understanding of your supply chain, you can gather information on the practices of your suppliers and sub-suppliers for corporate social responsibility (CSR) and sustainability to ensure more ethical supply chains.
Ethical and sustainable sourcing is quickly becoming the norm. More and more companies are using corporate social responsibility to stand out from the competition. With multi-tier transparency, you can ensure you are delivering on your claims at all levels, not just at the immediate tier. By identifying your tier 2+ suppliers, you can work with them to collect information important to you, such as sustainable palm oil certifications or detailed data on working conditions and wages.
3. Real, detailed data to back up your claims
If only one link in the supply chain is broken, any product claims you make fall apart. With multi-tier transparency, your business can ensure that the promises you are making to your customers are backed by real data. For example, an organic product is not truly organic if just one supplier — at any level — does not follow organic practices or has let their organic certification expire. Gaining transparency deeper into your supply chain enables you to collect the information you need, at the level you require, for stronger supply chain integrity.
This integrity can be leveraged for marketing purposes to help your brand stand out from a crowded marketplace. Create a campaign to highlight your company’s product quality down to the source. By showcasing your business’ achievements, you can demonstrate why your product is best and why consumers should choose you.
4. Better risk response
While the best risk management is proactive, every business should nonetheless be prepared to react in the event of a crisis. Multi-tier supply chain transparency means that if a product needs to be recalled for safety reasons, or is found to contradict product packaging claims, you can more quickly identify affected products and address the root issue.
Multi-tier transparency enables you to communicate more quickly and efficiently with your suppliers at any level, rather than relying on your immediate supplier to do so on your behalf. Quick reaction in the event of a crisis is critical for managing potential fallout. In the past, many companies have pled ignorance when safety, human rights or other product issues arise, but this is no longer acceptable today. With in-depth transparency, your business can ensure you are properly equipped to address risks.
5. Market leadership
Transparency is not simply a passing trend. The entire consumer goods industry is shifting to accommodate consumers’ new expectations for ethical, sustainable and responsible products. Brands and retailers today have the unique opportunity to lead the way and set the new gold standard for transparent business practices.
Adopting multi-tier transparency allows you to control the conversation around your business. Don’t wait for a crisis or issue to arise before promoting your progress toward your initiatives. Instead, draw attention to your company for your achievements in transparency, sustainability, responsible procurement or corporate social responsibility — and leave it to your competition to play catch-up.
Prioritizing multi-tier supply chain transparency sets you up to be a leader. It helps you manage risk more effectively and assure consumers of the sustainability and integrity of your products, from the source. Multi-tier transparency is an investment, but for any wise company, it is an investment worth making.
This article originally appeared on Spend Matters as a guest post.