Supply Chain Transparency – The New Competitive Advantage


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One thing Jeff Bezos, CEO of Amazon, and John Mackey, CEO of Whole Foods Market, can agree on is the need for supply chain transparency. It is one of Whole Foods Market’s  founding principles. And Amazon is in the process of making the supply chain for each individual product they sell fully transparent, as shown in the new Amazon Elements product line.

Amazon is arguably the most customer-centric organization on the planet and unarguably serves the largest number of consumers on the planet. What consumers want – Amazon delivers! And what consumers are increasingly demanding is an understanding of the origin, quality and means, by which the products they consume are sourced.

In a recent interview Jeff Bezos commented:

“There’s a subset of customers—I think it’s a pretty big subset—that when you’re talking about things that go in or on your body, or in or on your children’s bodies, they really care about that supply chain.” 

Unfortunately, as illustrated in a recent report from the Economist Intelligence Unit, “No more excuses. Responsible supply chains in a globalized world.”, this line of thinking is not prevalent in a considerable number of C-suites and boardrooms of the largest global corporations.

Report Findings

  1. 30% of firms have decreased their focus on supply chain transparency and responsibility over the past five years.
  2. Responsible supply chain management has moved up on the agenda of most firms in China, Germany, South Korea and the US.
  3. China leads the world in addressing workplace health and safety issues in supply chains with 76% of companies doing so. The US is in third place just behind South Korea with 62%.
  4. China leads the way again with 66% of firms addressing environmental impact issues.
  5. The US is number one in addressing child labor in supply chains with 40% of US organizations prioritizing this issue.
  6. The US is also most likely to address ethical issues of corruption, bribery and sourcing from areas affected by conflict and violence, with 52% of companies doing so.
  7. Japan is the country most likely to address issues of gender equality in the workplace at 40%.

Feeling the Pressure

These are not stellar results. Only 22% of global corporations address child labor, 23% address climate change and carbon footprint, and only 28% address gender equality. What does it take for global organizations to create ethical and transparent supply chains?

The Pivotal Event

The collapse of the Rana Plaza 8 story garment factory in Bangladesh on 24 April 2013 resulted in 1129 fatalities. It was the pivotal event that triggered the need for global corporations to monitor and police their supply chains much more effectively. Walmart, JCPenney, Benetton and Carrefour were just some of the organizations that sourced garments from Rana Plaza whose brands suffered serious whiplash as a result. It was also the pivotal event that woke the silent majority of consumers up and triggered their interest in how products are sourced and manufactured.

No More Excuses

The “No More Excuses” report identified the four biggest factors which influence global corporations approach to responsible supply chains:

  1. Company culture – 50%
  2. Customers – 43%
  3. A champion in the organization – 33%
  4. Government regulation – 29%

In a quote from the report:

“Companies seeking credibility with an increasingly well-informed and critical consumer base need to stop making excuses and get out ahead of this issue. They must recognize that in the digital era, they can neither control the agenda, nor who can access information on their supply chains. Pressure on them for transparency and responsibility will only increase.”

And to conclude:

“Our argument is that there should be “no more excuses”: in a world in which 69 of the world’s 100 largest economic entities are corporations rather than countries, responsible supply chains are a moral imperative. In the context of a growing backlash against globalization, rising consumer expectations and the rising economic impact of climate change, they are increasingly a business imperative. The millennials being recruited into corporations understand this and look for responsible behavior in their employers; but it is down to today’s corporate leaders to act on it.”

Hopefully this is a wake-up call to all global corporations. Will consumers finally get to see “ingredients and sources ” labels on everything they buy from loudspeakers to lounge chairs? The jury is out. But the sooner they get ahead of the curve, the sooner they will understand something that Jeff Bezos and John Mackey have understood for a long time – supply chain transparency is the new competitive advantage.

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