Supply Chain networks need enhanced visibility – A post COVID19 perspective –

A growing number of organizations across the globe have come to understand and appreciate the need for gaining visibility in to their supply-chain networks.

They realize the importance of gaining clear visibility in to operational processes beyond the front tier (tier-1) down the entire supply network. Because with such an extended visibility comes an entire-network compliance to similar operational standards, performance excellence and certainty that the end customer will receive his/her order on time and in the utmost best condition.

Process visibility is essentially about; the ability for procurement (the buyer) to observe and understand -at any given time- operational procedures applied, from the beginning of the process to the end.

If properly and collaboratively deployed, Visibility provides transparency in to how arduous and usually complex processes of supply chain management are carried out.

However, it requires a lot of efforts for suppliers to be incentivized into becoming more transparent with their network members.

Now, how does a member of a supply-chain network get incentivized and become more collaborative, transparent and visible to the other, in pursuit of process visibility and operational excellence?

In this article we explore certain collaborative approaches that can incentivize supplier transparency and enhance visibility along the supply network.

There are a few collaborative efforts that can incentivize supplier transparency in this regard, namely:

·      Total collaboration in pursuit of performance excellence and mutual benefit.

Though this might sound easy to achieve, it is not. Total collaboration between parties in a supply network is the hardest to attain and mother of all supply chain challenges.

Lack of total or closer collaboration among supply network members often stem from lack of trust. Lest we forget, the relationship between parties in the supply network is actually that of buyer and seller, where by nature issues of tentative trust lurks around.

It is this lack of trust that leads to hesitation in the sharing of relevant information between members of the network. It results in concealment of vital information that results in to lack of transparency, the absence of transparency that blocks process visibility, the low or no visibility environment that is conducive to hasty and careless behavior, the behavior that breeds malpractice, abuse, and sheer incompetence - that cost all members across the network.

There are many examples relating to lack of collaboration into supply network visibility and the negative let alone costly impact it has on the entire supply network.

 We can for instance mention the fateful incident at Rana plaza - apparel manufacturers in Bangladesh, suppliers for top global brands including Benetton, Mango, Zara and Walmart, the disaster in which scores of people lost their lives due to poor working conditions.

The fact is; these mega brands were negligent and failed to closely collaborate with their suppliers at Rana plaza in order to gain necessary visibility into operational processes at the plant. As a result, the worker abuse at the plaza went on unabated, and their negligence or carelessness in this regard backfired, costing them several million of dollars in the end.

Likewise, the humiliating inquiry top computer manufacturers; Hp, Dell, Foxconn and Apple suffered, for sourcing from vendors who subjected their employees to horrible and harmful working conditions at manufacturing plants in Chengdu, Shenzhen and other places in China.

Not forgetting the fallout endured by H&M, Adidas, Puma and Nike for poorly or blindly deciding to source from suppliers who poured toxic chemicals into rivers in China, as claimed by the environmental organization Greenpeace, among others.

Ironically, all these scandals involved tier-1 suppliers. One can only imagine the enormity of disaster with tiers further down the network, a ticking time-bomb waiting to explode.

Total collaboration between procurement and supply, built on transparency, honesty, trust and mutual benefit, is a big incentive for any business that seek performance excellence, profitability and sustainable growth.

·      Blockchain technology

Another incentive that can motivate (or compel) supply network members to provide their utmost performance is the digital technology called; Blockchain.

 Blockchain technology is defined as; a decentralized distributed ledger technology that records the origin of a digital value or asset.

Distributed ledger technology (DLT) refers to; a digital database that records details of a transaction in multiple businesses, geographies or countries instantaneously.

The unique advantage of DLT is that; unlike the usual / traditional database, it has no central data store or central administration functionality. This means, any change made to a Distributed Ledger is reflected to all relevant parties - immediately.

The synchronized system and enhanced transparency Blockchain technology provides, increase operational efficiency and consensus between members of the network, because all relevant parties have access to the same data and version of the ledger account at the same time.

Above all, Blockchain technology is immutable, i.e. it cannot be manipulated or retroactively altered. It is therefore more secure.

This digital technology is vital for the complex Supply-chain management processes, whose activities usually span across the length and breadth of the global market.

This technology can incentivize suppliers (members of the network) to perform optimally knowing that their contribution in this regard is recorded for all to see and can never be manipulated.

In as far as process visibility is concerned, Blockchain is technology Supply-chain will ignore at its own peril.

·      Conclusion

In conclusion, it is incumbent on members of a supply network, particularly those nodes directly linked to each other, to negotiate and agree on how to strengthen their operational ties. This would not only strengthen these particular links, but lead to a cascade of tightly linked and transparent tiers throughout the supply chain.

Such tight links and close collaborations must be built on honesty, trust and mutual benefit. Because this is what will incentivize members of the network to uphold and adhered to the negotiated and agreed upon operational standards.

One of the many lessons COVID-19 has taught Supply-chain is; the need for preparedness and agility in response to disruptive disasters or sudden occurrences that disrupt the free flow of vital necessities along the supply network.

There can never be a better way for supply-chain to prepare for potential disruptive occurrences than to adequately equip itself with strong and relevant technologies that enhance its network visibility and strengthen its collaborative efforts with key members of the network.

The enhanced transparency and visibility technologies like Blockchain provides, can only lead to improved operational efficiency that result in to well coordinated and efficient flow of raw material, parts, products and related information, from point of origin to that of consumption.

It is indeed transparency and visibility in to supply-chain network processes that promote a culture of care, responsibility and excellence in workers. The performance excellence that bring about customer satisfaction, attract more orders, increase profitability, higher return on investment and lasting growth.