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Focus: Manufacturing

Feature Article from Our Manufacturing Subject Area - See All

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.

SCDigest Says:


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.

(Manufacturing Article Continued Below)




Second, Bateman says transparent supply chains reduce risk by ensuring supply, improving vendor relationships, and facilitating effective risk management.

For example, Bateman notes that poor wages, high costs and low plantation productivity are forcing many farmers out of the cocoa business, causing an overall shortage of supply. Cocoa buyers are finding that by introducing farmer training programs and increases prices paid they can secure supplies over the long term.

Third, 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. Examples include: eliminating steps and actors in the supply chain, verifying the efficiency of practices upstream and smoothing price volatility by working directly with suppliers instead of using middlemen.

These direct sourcing models have been happening recently in the coffee industry, Bateman says, and have led to higher productivity and improved product quality.

Naturally, technology plays a role here. Bateman says genetic food markers, RFID tags, and mobile phone compatible bar codes can be used to track product movements and verify sources and practices along the supply chain.

"This information can be stored with the product or sent to data storage systems, feeding software tools that integrate supplier data, rank areas of risk, and maintain records." Bateman notes. "Mobile phone assessment tools can further inform social practices upstream."

More regulatory requirements relative to transparency and traceability are sure to be coming down the road. Companies should strongly consider getting the ahead of the curve, Bateman says, and for example maybe start labeling for GMOs whether the government says you have to or not.

Should manufacturers be more ooen to additional supply chain transparency and traceability? Let us know your thoughts at the Feedback section below.

Recent Feedback

Completely agree with your article! Transparency should always be offered, in order to relate to the more morally conscious buyer. Although this article  refers to UK consumers, the principles still apply. According to this article, 66% of consumers would switch from their favourite products if they were found made using modern slavery. Through offering supply chain transparency, companies can reassure consumers that their products were produced in ethical conditions. 

Copy Writer
Axon Garside
Sep, 02 2015