Pillars of Supply Chain Visibility: Transparency and Traceability  

Sustainability recently has become a high priority for businesses, individuals, and customers. The supply chain industry is no exception. There is no denying that the supply chain industry has been one of the largest contributors to carbon emissions which harm the environment on a large scale. The eCommerce industry contributes 66% of last-mile emissions, which includes parcel deliveries.  

With the growth of the eCommerce industry at a CAGR of 15.1% and and as the global parcel volume is expected to rise to 256 billion by 2027, supply chain’s contribution to carbon emissions will continue to rise.  

Building a sustainable supply chain management system and providing supply chain visibility has become one of the top priorities of corporations across the globe. Customers want to know where the raw materials are sourced from, how the product is made, packaged, and shipped, along with how the waste is recycled or disposed of. This adds pressure on corporations to be more responsible and accountable with their practices.  

Despite changing times, the focus on sustainability hasn’t changed. As per the “State of Supply Chain Sustainability 2022” report by MIT Center for Transportation & Logistics, 80% of the respondents stated that Covid-19 didn’t slow down their supply chain sustainability efforts but helped in increasing it, 23% stated that there was an increase in pressure from investors and customers to improve their supply chain sustainability efforts and 12% stated that there is an increase in commitment to mitigate climate change.  

The laws and regulations at a global level are also encouraging companies to comply with more sustainable practices, especially in supply chain. 

With the new regulations in play, whether it’s the Weaker Force Protection Act, New York Fashion Act, Green Deal, or the Anti Greenwashing Act, all these things, is forcing people to be accountable.

– Edward Hertzman Founder & President, Sourcing Journal & Executive VP, Fairchild Media

Supply Chain Visibility 

Supply Chain Visibility is one of the critical areas to look at when it comes to supply chain sustainability, specifically, in recent times.  

Looking at the data by Blue Ridge Global, 62% of organizations don’t have full visibility of their supply chain, 15% have visibility only for production, only 6% have reported full visibility, and 17% stated that they have extended their supply chain visibility. The numbers prove that while supply chain visibility is essential and one of the areas of strategic importance, it is not fully understood or implemented by all organizations across the globe. 

Before we dive deep into the two crucial pillars of supply chain visibility, let’s understand what supply chain means. Obtaining on-demand and real- time data or information on the product status, condition of the product, and the location of the materials, products, and inventory at any point and from anywhere across the globe in the supply chain journey is known as supply chain visibility.  

Moreover, other important aspects that aid supply chain visibility is event monitoring management, analysis of metrics performance, and risk management. And as with any other business, collaboration and communication lie at the heart of supply chain visibility.

Pillars of Supply Chain Visibility

The two main pillars of supply chain visibility are: Transparency and Traceability. While these two terms are used interchangeably, they are different concepts. So, let’s understand what these two concepts mean. 

a. Supply Chain Transparency

Supply chain transparency is the process of knowing what is happening throughout the supply chain and communicating it to stakeholders and customers. Business for Social Responsibility states, “Transparency is defined by what data you are going to be transparent about, to whom, and how often, or when.” Organizations striving towards transparency should ask themselves: 

• Who: Who needs to have access and visibility of the information, to what extent and for what purpose? 
• What: What information should be shared, with whom and in what format? 
• When: When will the information be shared and updated? 

One of the most effective ways of showcasing sustainability measures in supply chain management is through increased transparency. Organizations are increasingly becoming more transparent with their supply chain efforts to be more sustainable, achieve competitive advantage over other companies and as an effort where full traceability is not possible currently.  

b. Supply Chain Traceability 

On the other hand, traceability in supply chain is the process of tracking the origin and journey of products and inputs from the beginning of the supply chain to the very end. Traceability gives a more granular level of information about the product and the processes that are beneficial to the company and the customers.  

Concerning sustainability, it is essential to provide assurance and verification of the sustainable claims that the companies make regarding their supply chains. Many industries, especially in the food and agriculture sector, have been aggressively implementing supply chain traceability, as product safety is of utmost importance. It helps companies save costs, comply with regulations and build better relationships with suppliers and other stakeholders, and provide better customer service by enabling product tracking in various forms. 

Moreover, transparency builds trust among all sectors of the supply chain. It reduces the chances of potential disputes and uncertainties. For instance, when businesses can hold each other accountable for their shortcomings, it creates a more reliable and predictable operation. 

Transparency & Traceability: Conclusion

Transparency and traceability work hand in hand to provide an accurate understanding of the supply chain. If the system provides transparency, then attaining traceability is possible. When they work together, companies benefit from better supply chain visibility, compliance with safety, sustainability and ESG requirements, as well as the ability to provide better customer service which leads to an increase in revenue.

Having traceability and transparency into your entire business is extremely important. There’s plenty of technology and platforms out there that allow data to be shared there, to provide visibility. There are technology companies that are helping people just to trace their supply chain.

– Edward Hertzman Founder & President, Sourcing Journal & Executive VP, Fairchild Media.