Transparency in supply chains strikes most people as a good thing to do. For the bulk of stakeholders it should declare irresponsible behaviour, focus on poor performance and non-compliance whilst disclosing how a firm is interacting with the entire length of its supply chain. We are witnessing the beginning of an endless pursuit by businesses around the world to simplify the increasingly complex picture of their supply chains and how sustainable they are – or are going to be. But what are the real challenges here and is supply chain sustainability really that opaque?
What we know to be true is that in order to know the sustainable aspects and impacts of your supply chain you will need data on your suppliers. Some of them are perhaps more strategically embedded than others but fundamentally they supply customers with ‘product’ for a price, at a time and to a standard that is contractually tied. If you’ve signed and are fulfilling the deal why, then, is gathering the increasingly important sustainability data so difficult? And once you do have it, does it present a clear image of your supply chain – especially when dealing with so call ‘soft’ non-financial metrics?
In the first instance we’ve yet to see sufficient expectation setting on a global scale. The prevailing customer-supplier dynamic means that buyers interact with vendors in a space that is only partially defined by sustainability requirements. Therefore, whilst supplier organisations are still unfamiliar with measuring and reporting this type of data we need to collectively work on what’s expected – going beyond frameworks, protocols and guidance and towards a culture where openness is integral to a commercial relationship.
Secondly, we’ve yet to address and remove ‘generation fear’ where suppliers believe that reporting sustainability performance could jeopardise their contracts. Given that for most organisations sustainability is still a nascent, and marginalised, set of activities they often feel insecure about reporting data. Correcting this requires supplier confidence which must stem from a shared belief that collaboration will benefit all and that it is acceptable not to have the information immediately as all businesses are on a learning curve. Clearly a challenging topic as confidence and collaboration cannot exist in mutual exclusivity nor are there shortcuts to achieving this.
Whilst willingness plays a key role for some suppliers it could, and should, be one of the key drivers for participative input across every tier of the supply chain. To achieve this requires a multi-dimensional stakeholder dialogue outside of the conventional linear and binary relationships between customer and supplier. Sharing data in a radial sense should become the norm. Thinking in a ‘radial’ sense will enable us to appreciate the needs and pressures on all stakeholders whilst providing a platform for transparency based on redefined values.
The big question then is can we achieve complete transparency in supply chains? It will undoubtedly depend on multiple factors not least defined by better regulation and reporting frameworks. However, supply chain transparency must rest on a foundation of trust and certainty; in both providing and consuming information. Those who use the data – whether it’s customers, investors, regulators, public interest groups or civil society – must trust the information whilst helping to build smart feedback loops that add value for those reporting organisations. Clearly this cannot be achieved in the very short term but a continued commitment to shared values will need to be delivered against.
For now, many supply chains are more than opaque – they mostly operate with the lights out.
Written by Ecodesk’s COO, Damien Smith
July 14th, 2016