This note brings to the fore another aspect of supply chains, transparency. The basic classification of supply chains are as being efficient or efficient and functional or innovative. Supply chains are also classified as being responsive or not responsive, flexible or not flexible and in another classification as being agile or not. Flexibility is more concept based while agility is more action based. All of these classifications are not reflective of the contemporary pressing needs of the society relating to sustainability and lean manufacturing processes indicative of low resource needs.
What do we really understand by the term supply chain transparency ? Is it related to tracing the source and path of the item in the supply chain and the level of the voluntary disclosure one carries out ? Does it go further than that ? Can a Supply Chain be more transparent and open to the stakeholders and public alike ?
Supply Chain transparency can mean different things to different SC players. This can distort the true meaning. When we buy an item from a provision store, for example bread, how many of the retailers are able to disclose factual information to us other than from where that bread was baked. Does the customer get to find out the farms where the wheat was grown, the fertiliser details, watering patterns, climatic conditions and the rainfall patterns in that land etc. Absolutely nil.
This introduces two new terms relating to the supply chain: supply chain transparency and supply chain opacity. Represented as ratios, supply chain opacity ratio is subtracting supply chain transparency ratio from one (unity). This is measured with the Supply Chain Transparency Index (SCTI).
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| courtesy Philips .. |
Supply Chain transparency can mean different things to different SC players. This can distort the true meaning. When we buy an item from a provision store, for example bread, how many of the retailers are able to disclose factual information to us other than from where that bread was baked. Does the customer get to find out the farms where the wheat was grown, the fertiliser details, watering patterns, climatic conditions and the rainfall patterns in that land etc. Absolutely nil.
This introduces two new terms relating to the supply chain: supply chain transparency and supply chain opacity. Represented as ratios, supply chain opacity ratio is subtracting supply chain transparency ratio from one (unity). This is measured with the Supply Chain Transparency Index (SCTI).
It is in this direction that we need to look to understand supply chain transparency better. One interesting document that came up in HBR in 2010 highlighting the sweatshops of Apple and Mattel in different parts of the world. (click here for the document).
A more recent 2019 article in HBR from the MIT supply chain lab throws more light and comes up with a quantitative graphical classification mechanism of the different stages of supply chain transparency. The attempt was to understand how the different supply chain practices of tracing the origins of products and raw materials on one axis to the level of openness on the x-axis to reflect on the level of innovativeness of organisations.
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| Courtesy HBR.org |
Accordingly we rarely find organisations that have very good traceability right upto the raw material suppliers stage and full voluntary disclosure of highly difficult to collect and store supplier related information, form the most innovative supply chains. These supply chains are quite difficult to be designed for operation as voluntary information disclosure and collection upstream the supply chain is quite an arduous task. In fact, these Supply Chains by virtue of being highly innovative are highly effective to end customers.
On the other hand we find in the above figure, majority of organisations are near to the origin, where at the most only internal process details of the supply chain are disclosed to the regulatory authorities and that too not voluntarily, more as a code of conduct.
On the other hand we find in the above figure, majority of organisations are near to the origin, where at the most only internal process details of the supply chain are disclosed to the regulatory authorities and that too not voluntarily, more as a code of conduct.
How can an organisation move from being a very low level process supply disclosure agent to a high level disclosure player from the internal operations right upto the RM supplier stage ?
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