Supply chain transparency has been over and over in the news in the past 24 months. Be it at the 2011 RITE conference, at the back of Greenpeace’s Detox campaign and brands joining forces in the Roadmap to Zero as a consequence of it, or the issues that arose the 03/2011 Tsunami in Japan when many companies suddently figured out that they had no fall back scenarios in place.
Supply chain transparency is – as it happens – among the prime concerns of investors when considering their risk. The news is though, that it really isn’t any news at all. Supply chain transparency has been called for for at least a couple of decades – for reasons that are entirely aligned with profitability, customer service, competitive advantage, product quality and so on and so forth.
Video: Professor Richard Wilding from Cranfield Business School on the topic of Supply Chain Risk Reduction and the importance of transparency
In other words: The importance of transparency in supply chain has been known for long. The recent shift however adds a further dimension to an old discussion, and one that that is touching businesses where it hurts: not in the potential of money to be made, but rather in their certainty (and lack of awareness) that money is lost in the depth of its maze. Not the least on the customer (service) front.
The 6 dimensions of supply chain risk
These 6 dimensions of supply chain risk have recognised as those that not only help to identify issues with the supply chain at every level: stratic and operational risk, consumer relations and services, as well as on regulatory, compliance and reputation level.
- Location: Where is a product exactly? And at what point of time?
- Specificity: How many units of that product exactly?
- State: Where, in what circumstances, has the product been?
- Integrity: Has the product been handled? Has its [shipping] container been opened?
- Authenticity: Is the product exactly has it left the manufacturing site, i.e. in its original state? Does it comply with all the regulatory norms and requirements? Is the company in the position to do a recall on any arbitrary product it produces, ships, and sells? Does logistics have the capability to satisfy the regulatory import and export requirements at every moment?
- Control: What possibilities and opportunities exist to collect data and automatise product identification processes?
These dimensions have been proven to be at the heart not only to identify issues, but also to draw up possible solutions that cater towards what matters to shareholders at the end of the day – profitability – as they approaching the issue from two side: loss cutting on the one, optimisation and opportunity creation on the other.
But possibly more important than that, the list makes it clear that what is indispensable for effective supply chains operations is a collaborative and information sharing approach within the company. Not a single one of the above question can be answered from a single department within a company only. Even less so in fashion.
Supply Chain Transparency – How to get there
Unsurprisingly, the difficult aspect of supply chain transparency is the ‘how do we get there‘. Without, notably, engaging a whole set of highly qualified, but equally expensive consultants that is.
There are a number of conceptual options to this, most of which are not geared towards the fashion industry specifically, but heavily used by fashion companies and brands.
| Options | ||||
|---|---|---|---|---|
| Options of ‘How’ to get to supply chain transparency | ||||
| Time Based Process Mapping involves plotting all the steps involved in a process, the time they take, who does them, and then highlight all steps highlights areas of opportunity for improvement. It, at least initially, is a rather manual process that involves a member of staff – preferably management – doing the analysis. | ||||
| Specialist supply chain tracking systems are IT systems, which – far beyond what mainstream supply chain manegement systems do – run along the whole width and depth of the supply chain, colleting product data at every step of their way in real time. An example of such software is String by Historic Futures, implemented by Marks & Spencers, H&M and also Walmart (to varying extents).These systems make use of recent technologies on a large scale, among them RFID tags, online repositories, automated data verification etc. | ||||
| Use of public or member supplier data exchange services (data bases) such as available through Sedex orBSCI for example. | ||||
| Collaboration with other brands – possibly even competitors – that source from the same suppliers. There are everal option of how that can happen. 1) Some brands – such as Levi’s – have chosen to make their supplier list publicly available. 2) Ask your supplier, and get in touch with these brands yourself. They, just as yourself, have an interest in becoming betters if it servces their business goals. | ||||
To summarise: Supply chain transparency has very little to do with ethics or sustainability, and a lot which strategic, operational and reputational risk. The topic, the techniques as such is all but new. It is only relatively recently however that thanks to improved technological options there is a real opportunity that can be sought in this area. And this from several angles: customer service, product quality, regulatory compliance, security and the links to enhance import and export procedures, and finally maintenance of state-of-the-art practise in terms of environmental and social performance.
Video: ASU, the W. P. Carey School of Business and the Supply Chain Management Department. On the topic of Socially Responsible Supply Chain Management
Video: Future of Logistics. supply chain management, freight and manufacturing
