Is Supply Chain Transparency Achievable? Here Is What You Can Do
Best practices to boost oversight, cut risk, and stay compliant.
It is not only important for you to be able to track the steps of your supply chain, from extracting the raw materials to getting your product to market. External stakeholders, such as customers and investors, want to understand how your value chain operates too.
Customers appreciate supply chain transparency because they want to know that they are making sustainable choices when they shop. If you are open about how you source goods, this allows them to make a purchase decision in full confidence. Indeed, trust is essential in today’s market. Ashley Reichheld, John Peto, and Cory Ritthaler, writing for the Harvard Business Review, found that highly trusted companies outperform their competitors in market value by up to 400%.
Shareholders require transparency to reduce the risks associated with their investments. As Barclays’ responsible investment manager, Thomas Townsend, says, “with the proliferation of technology, especially mobile devices, and the pervasive use of social media, damaging malpractices far down supply chains can rapidly be exposed to the eyes and ears of the world.” Being able to track the whole process makes it less likely that a preventable issue could damage the value of their portfolio.
And full supply chain visibility is key for the business itself to create a more efficient process that reduces bottlenecks and allows for better quality control over raw materials and components. This practical guide explores ways to achieve supply chain transparency and the challenges you might face.
Key takeaways
- Gaining an overview of your supply chain operations is essential for compliance, efficiency, and meeting stakeholder expectations
How to achieve supply chain transparency
Step 1: Understand regulations and compliance requirements
Depending on your industry, business size, and other factors, there may be legislation in place that requires you to understand the workings of your supply chain in detail already. As these are compliance requirements, you should make sure you implement the correct measures as a priority. These include:
- Corporate Sustainability Due Diligence Directive (CSDDD): The CSDDD is gradually coming into effect across the European Union before the deadline of April 2026. It requires organizations to conduct due diligence into the effect of the business and its supply chain on the environment and human rights. It will initially affect companies with more than 5,000 employees and worldwide turnover greater than €1.5 billion in 2027, before smaller businesses gradually come into scope over the next two years.
Be sure to understand your obligations and comply with transparency-related legislation.
Step 2: Assess current supply chain visibility
You need to understand what level of supply chain visibility you currently have. Without a full overview on the operations of the chain, you can’t achieve true transparency. Map out your suppliers and assess where your windows are and where the blind spots are located.
Consider how the materials move from one entity to another and whether your current systems are accurately tracking and monitoring this process. Does your supply chain platform talk to your suppliers’ systems to provide you with an accurate picture of the materials’ journey?
Start with tier 1 direct suppliers, then move on to indirect suppliers in tier 2, 3, and so on. Be honest about how much you know about these entities and how engaged with them you are. Make sure to identify these gaps in visibility and track down any documentation you are missing that could help you gain a holistic understanding of how your components move around before they get to you.
Step 3: Identify key areas for improvement
Once you engage these suppliers effectively and gain the insights you need, you will be able to evaluate the risks within their operations that could reflect badly on you and your supply chain. You might want to request certifications and policies relating to their work or even send representatives to carry out audits at their sites. Another strategy is to search for news stories relating to the business, which can help uncover any underlying issues or concerns.
Firstly, assess their performance in relation to the specific compliance obligations on you and your supply chain. Meeting these requirements is essential to avoid potential legal and regulatory action. For example, are they using a Conflict Minerals Reporting Template (CMRT) to help you make comprehensive public disclosures about your sourcing of 3TG minerals?
After that, consider how ethical their operations are and how well they aligns with your internal environmental, social, and governance (ESG) strategy. Are there risks of suboptimal labor practices, high carbon emissions, environmental damage, and other sustainability concerns?
Step 4: Establish clear transparency goals and policies
To create transparency within your supply chain, you need to define what information you need from suppliers in order to pass it on to customers and investors. It could be data relating to the use of resources, labor practices, where they source their components from, or any other information that you feel is not currently clear.
Set out what you want to know in a supplier code of conduct, outlining your expectations in clear terms, explaining how you need the data reporting, and the method by which you will verify it.
Maintain engagement with the supplier to help them meet your expectations, providing training to help them understand the reasons behind your targets and align their operations to provide the transparency you require. As well as supporting suppliers to be open with their data, you could offer incentives to enhance their reporting systems, creating a framework for the accountability you need to become transparent and trusted by your stakeholders.
Step 5: Monitor, audit, and continuously improve
By working with your direct and indirect suppliers on your requirements, you should be able to achieve the end-to-end visibility needed for full transparency. Implement workflows to help achieve this, including using a supply chain management system that provides real-time data on inventory levels, shipping information, bottlenecks, and more.
Ensure that your suppliers are meeting your standards regarding ethical sourcing and sustainability. This means maintaining fair labor practices and complying with human rights standards. Are they reducing their environmental impact and doing all they can to look after the ecosystems and communities affected by their operations? This may require auditing to ensure you can verify the claims they make.
Require verification from third parties to be certain that the information you pass onto stakeholders about your supply chain is accurate and credible. Where there are discrepancies, work with suppliers to improve their processes or seek responsible and sustainable alternatives.
For full transparency, if your suppliers fall below the required standard, you should communicate this with stakeholders. Ensure you also inform them about how you intend to improve the sustainability and efficiency of your supply chain to reverse these failings.
Example: Companies leading in supply chain transparency
| Company | How it leads in supply chain transparency |
| Tony’s Chocolonely | The Dutch chocolate company aims to end exploitation in cocoa supply by being transparent over where it sources its cocoa, only using ingredients that are 100% traceable to ensure farmers receive fair payment for their goods. |
| H&M | Clothing chain H&M signed up to the garment industry’s Transparency Pledge, meeting and exceeding its disclosure standards by reporting the name, location, address, and number of workers per facility of its suppliers, as well as worker representation and gender breakdown data per facility. |
| Tiffany & Co | The luxury jewelry firm was the first global luxury jeweler to disclose where it sources newly registered diamonds and where they are cut, polished, graded, and set. It ensures they originate either directly from a known mine or from a supplier with a limited number of known mines. |
Challenges to achieving supply chain transparency
- Complex and global supply chains mean that it can be difficult to oversee all entities manually and to verify the data coming from each indirect supplier.
FAQ
Why does supply chain transparency matter?
Transparency matters because consumers increasingly demand ethically sourced products, regulators mandate compliance with stringent social and environmental standards, and investors and stakeholders expect clear proof that a company’s operations align with responsible, sustainable practices.
How does transparency differ from traceability and visibility?
Transparency involves openly sharing information about supply chain practices and impacts, while traceability tracks a product’s path from origin to end user. Visibility refers to having real-time or near-real-time insights into operational data across all stages, which can help with traceability and transparent reporting.
What are the risks of not having a transparent supply chain?
Without transparency in supply chains, companies face reputational damage, potential legal penalties for non-compliance, and a loss of trust from consumers, investors, and other key stakeholders.
Conclusion
Supply chain transparency is essential for businesses wanting to improve the efficiency of their processes, meet their regulatory obligations, and provide stakeholders such as investors and customers with the knowledge they need to inform their decisions. Although complex supply chains are difficult to manage with accuracy if you rely on manual methods, there are tech solutions that improve visibility and allow you to report transparently to increase trust in your organization.
Beebolt is an AI-powered global trade operating system that provides a secure platform for communication and collaboration with suppliers, giving you real-time AI insights on your shipments and a centralized document management repository to share with your partners. It helps you maintain compliance and fills the gaps in your visibility. Get onto the waitlist today.
