From SCDigest's On-Target E-Magazine
- Sept. 1, 2015 -
Supply Chain News: Manufacturers Should Embrace Transparency and Traceability, MIT Researcher Says
While Companies Usually Fight Related Regulation, That View Maybe Shortsighted, Says Alexis Bateman
SCDigest Editorial Staff
Manufacturers across the globe often feel they are under assault from governments worldwide pushing costly regulatory and reporting requirements.
US food manufacturers, for example, largely cheered recent legislation passed by the US House of Representatives that would remove state-level authority to require companies to show when a food product contains genetically-modified organisms, or GMOs.
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Bateman says that the costs of traceability initiatives often may be offset by operational efficiencies companies can gain from using visibility to improve supply chain processes. |
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If passed by the Senate and signed into law by the President - both uncertain events at best - the law would in fact pre-empt a state labeling law set to take effect next year in Vermont.
Proponents of the bill, including the Grocery Manufacturers Association, argue that GMOs are safe, and that product labeling requirements to document foods with GMO-based ingredients would impose unwieldy and costly requirements.
In general, manufacturers fight requirements for this type of transparency and traceability of what happens in their extended supply chains. And as the scandal relative to working conditions in apparel factories in Bangladesh and Pakistan a couple of years ago demonstrated, many if not most companies have little real visibility to what is happening in these far removed, non-company owned operations.
Just this week, for example, Nestle said its KitKat candy bars will become the first global chocolate brand to make all its products with sustainably sourced cocoa, as the chocolate industry faces allegations of child labor in the supply of raw materials.
Alexis Bateman, director of the Responsible Supply Chain Lab at the Massachusetts Institute of Technology’s Center for Transportation & Logistics, believes manufacturers ought to spend less time fighting the push for transparency and traceability and embrace them instead.
"Uncertainty over the trustworthiness of supply chains erodes consumer trust, a trend that should concern any enterprise," writes Bateman in the Wall Street Journal. "Companies should recognize that greater supply-chain transparency can allay consumer fears and capture commercial benefits."
Bateman says MIT research suggests three ways in which a more transparent supply chain can become a benefit to companies.
First, transparency helps organizations meet demands for responsible practices.
"Companies can inform consumers about their products, and reinforce the integrity of their operations with verifiable data. This can come in the form of product ecolabels, corporate sustainability reports, reporting to organizations like the Global Reporting Initiative, and media outreach," Bateman writes.
She cites, for example, the Marine Stewardship Council, which enables companies to verify the integrity of seafood shipments through its fishery sustainability standards, the "Track a Fishery" program, and a certified label that informs customers of positive practices perhaps literally upstream.
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Second, Bateman says transparent supply chains reduce risk by ensuring supply, improving vendor relationships, and facilitating effective risk management.