
We all know that supply chain transparency and compliance are crucial for efficient and responsible business operations. Optimized visibility, underpinned by reliable and comprehensive data is vital for organizations seeking to achieve lasting sustainability and resilience in their supply chain operations. And creating transparency is crucial for identifying inefficiencies, mitigating risks, and fostering trust with customers.
From a consumer perspective, for example, data from a 2022 Food Industry Association report, demonstrates that 65% of shoppers said they would switch from a brand they usually buy to another brand that communicates more openly about its supply chain, including information on animal welfare and fair trade.
Similarly, research from Avery Dennison shows that 60% of customers want the ability to trace items they purchase from fashion brands, while 86% of shoppers want more information from beauty brands about where product ingredients come from, according to the British Beauty Council!
And, according to a 2020 survey by Zeno, consumers are four times more likely to trust companies that are purpose-driven and that clearly communicate the conditions in which goods are made. By providing verifiable information about their supply chain practices, companies can build trust and loyalty with their customers.
In addition to the consumer impact, companies that proactively and effectively track and share supply chain information can more easily comply with a growing number of regulations such as the EU’s Corporate Sustainability Reporting Directive, which requires companies to use common standards when they measure how supply chains affect the environment, workers, and communities.
Getting there requires constant access to accurate information. The good news is that information governance best practices like metadata management, version control mechanisms, the institution of standardized processes, and having effective policies and procedures and training can go a long way towards that goal!
Let’s look into this a bit further…
Metadata management. Metadata management is a key driver for effective information governance. By meticulously cataloging data related to each stage of the supply chain using cutting-edge technologies like blockchain, companies like Chipotle have effectively enhanced visibility and traceability – and, in turn, consumer confidence. These processes and tools help organizations track suppliers and materials, weed out unethical suppliers, and promote compliance with global ethical standards and regulatory requirements. Unfortunately, Chipotle is an outlier, and relatively few companies map their data effectively. In one recent survey by Deloitte Global, for example, only 13% of respondents reported having a fully mapped supply chain network, while 72% have limited visibility beyond Tier 2 suppliers!
Version control and standardization. Instituting effective version control mechanisms helps companies to ensure that all supply chain documents are up-to-date, correct, and accessible. This practice is particularly important for maintaining compliance with evolving regulations such as the U.S. Dodd-Frank Act, which requires companies to ensure that their suppliers aren’t sourcing minerals from nations that tolerate human rights abuses. Instituting effective version control mechanisms also helps companies comply with their retention policies and dispose of personal data or PII when no longer needed. Key practices include implementing version control systems to manage document updates among supply chain partners, promoting and reviewing retention schedules, and using secure record disposal methods.  In one example, P&G’s use of cloud-based platforms to collect and standardize supplier data across the approximately 50,000 suppliers within their supply chain has been shown as a critical factor in enabling the company to meet regulatory requirements and manage its vast supplier network efficiently.
Regular auditing. Regular auditing is another practice that is critical for maintaining supply chain transparency and compliance. Audits should be viewed not as policing exercises but as opportunities to build relationships and foster mutual understanding with suppliers. Supplier audits can assess compliance with standards and regulations, promote supply chain practices that align with ethical and legal expectations, identify compliance issues and areas for improvement, and reveal inefficiencies and risks related to environmental and social standards.
Policies and procedures. Establishing clear policies and procedures is fundamental to supply chain governance. These policies should cover all aspects of the supply chain, from sourcing raw materials to final product delivery. Standardized processes make it easier for suppliers to comply with requirements, thus improving overall supply chain efficiency. From a supply chain management perspective, these procedures should enable staff to understand how data is collected and how to use scorecards to track key supply chain metrics such as on-time delivery, cost, order accuracy, sustainability compliance, and financial stability.
Training. Continuous training ensures that all stakeholders understand and adhere to supply chain policies and procedures. Training programs should cover the importance of transparency, ethical sourcing, and compliance with environmental and social standards. By fostering a culture of accountability and responsibility, businesses can enhance supply chain transparency and compliance.
By integrating IG practices and tools such as metadata management, version control, retention compliance, auditing, policies and procedures, and training, businesses can improve their operations, reduce risks, and build trust with customers and stakeholders. Embracing these strategies not only ensures regulatory compliance but also contributes to a more sustainable and equitable global economy. Through continuous improvement and innovation, companies can navigate the complexities of supply chain transparency and compliance, ultimately leading to more resilient and sustainable operations.
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