Supply Chain

Supply Chain Transparency: It's Time to Define It

What is Supply Chain Transparency? Lots of people speak about supply chain transparency, but most often they give very little context to allow people to understand what it means.

Grant Sernick

January 8, 2018

What is Supply Chain Transparency?  Lots of people speak about supply chain transparency, but most often they give very little context to allow people to understand what it means.  In fact, Inbound Logistics had a page (check out page 10) in their latest publication that asked people to define supply chain transparency:[caption id="attachment_5365" align="aligncenter" width="754"]

what is supply chain transparency

From Inbound Logistics (http://resources.inboundlogistics.com/digital/issues/IL_Digital_December2017.pdf)[/caption]The results were interesting...and disappointing.  I think it is time to get real and have a real definition of supply chain transparency.Merriam-Webster defines transparency in several ways, but the two most relevant ones are:

  1. Readily understood, and
  2. Characterized by visibility or accessibility of information especially concerning business practices

Let's dissect these meanings as it pertains to the supply chain.

Readily Understood

That we need to understand what is going on in the supply chain seems so basic.  There isn't a reasonable person out there that would argue with this statement.  But how many of us have real understanding of our supply chains?  How many of us have a system in place that maps the entire supply chain process, captures all the relevant information, interacts with the various third-party players in the supply chain to provide real understanding?   My sense is that the number is very few.What's more, understanding is only the first part.  Readily understood means that this understanding should be easy to get.  While it is good to have understanding, supply chain transparency requires this understanding to be easily achieved.  Let me re-ask the question: How many of us have a system in place that maps the entire supply chain process, captures all the relevant information, interacts with the various third-party players in the supply chain to easily provide real understanding?  My sense is that the number is much fewer than it was.Here's a test.  Let's imagine your company operates in the food industry.  And let's further imagine that several of your products had a defect.  How quickly would you be able to determine the extent of your problem?  (If you aren't in the food industry, imagine a similar challenge within your supply chain.)  Anyone that says they can get to the root and extent of the problem within one hour should get a gold star.  If it would take a day or two, you get a silver star.  Any longer than that then you have a serious supply chain transparency problem.

Characterized by Visibility or Accessibility of Information Especially Concerning Business Practices

This definition is longer, and a little more colorful.  Let's dissect.

Visibility

Visibility is a parameter that gets a lot of attention in the supply chain discussion.  (I will have a subsequent post on the definition of Supply Chain Visibility.)  Visibility means different things to different people.  To simplify our discussion, I'm going to propose a simple definition.  Visibility is the ability to see your information.  Now, visibility is on a spectrum.  You can have poor visibility: able to see little to no information.  Or it can be high: able to see all relevant information in real time.  The point here is that supply chain transparency is founded on your ability to see your information - and the better you are at it, the better you will be at achieving transparency.

Accessibility

The concept of accessibility is an interesting one, considering it has different meanings depending on your perspective.  Is the information available to you?  Can you access it?  Are you able to aggregate it?  Can you report on it?  Are you able to analyze it?  Are you able to spot patterns in your data?  Can you use the information within your system to make optimal decisions?  This is set of questions if very inward looking.But what if we look outside of you.  Is your information available to your superiors?  Are they able to access the relevant information in real time?  Do you have one version of the truth within your organization?Now, what if we look from 35,000 feet.  Is your information available to your supply chain partners?  Your freight forwarders, customs brokers, and third-party warehouses.Like visibility, accessibility is on a spectrum, from low to high.  The higher your accessibility, the higher your level of supply chain transparency you will have.

Putting It All Together

We have just discussed four parameters that seem to be essential to supply chain transparency:

  1. Understandable
  2. Readily (or easily)
  3. Visibile
  4. Accessible

Each of these parameters are on a spectrum from low to high, and the struggle to continually improve your supply chains on each of these dimensions is both real and humbling.  The first challenge is to understand each parameter, what they mean, and how they fit together to improve your supply chain transparency.So, how should we define Supply Chain Transparency?  I think it should be defined combining both definitions:

supply chain transparencynoun | sup·ply chain trans·par·en·cy | sə-ˈplī chān tran(t)s-ˈper-ən(t)-sēThe struggle to achieve a readily understandable supply chain that provides both visibility (both internally and externally) and accessible information to various parties, as required and on demand.