Will 2014 Be the Year of Transparency in Global Supply Chains?

A few days ago, we shared our somewhat cynical response to an article in Apparel that suggested 2014 will build on the momentum of 2013 in terms of the frequency and depth of supplier audits throughout Asia. Of course procurement organizations value transparency in multiple supplier chain tiers – for a range of reasons, not the least of which is general supplier risk reduction (from multiple angles beyond just the media-friendly CSR ones). But creating lasting change requires redefining what the role of sourcing and supplier management is for procurement and supply chain organizations – and a commitment to putting visibility (in the form of spend analytics, supplier master data management and supplier management capabilities) at the heart of programs.

No doubt we agree with the enthusiasm of the statements of Sebastien Breteau, CEO of AsiaInspection, who is quoted in the article when he notes that “the common situation when a Western buying office does not know precisely where the products they purchase are manufactured and what's going on in their outsourced factories is doomed … Major names like H&M, Apple and HP have published the list for all or part of all their approved suppliers. We will see more of such initiatives with major brands taking back full control and enforcing visibility over their suppliers. Expect 2014 to be the year transparency becomes a reality in global supply chains."

Yet, to make this a permanent reality will require more than just picking up the phone and calling an audit company. There’s nothing quick about a recipe for success with supplier management. It starts with defining what will be the ultimate responsibility of category leads and operational managers rather than a dedicated risk management function (potentially within finance). Hint: there is room for both to play a significant role. And then it cascades to the use of the right technologies, partners, and even an overall supplier communication policy (not just having a code of conduct, but implementing one with teeth that are constantly grinding away.

Here’s to 2014 as the year of transparency in global supply chains. Let’s hope that more than 10 percent of the Global 2000 get there (we’re not so sure more than that will).

If you’re curious about the topic of supplier management, I would encourage you to check out our research on the topic (contact us for a one-time trial if you’re not already a Spend Matters PRO subscriber).

Here are some of the research brief titles we’ve published in recent quarters:


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