Supplier participation is one of the most important success factors of any supply chain transparency initiative. To gain insights into the product details that consumers care about—how a product was made, where it was made, and its impact on people and planet—those involved in its production must be willing to share data.
The good news is that many suppliers want to share details about their supply chains. Many have taken proactive steps to implement more sustainable and responsible practices and are eager to communicate this progress with their customers.
Our experience has found that most suppliers are very willing to provide greater transparency into their supply chains. On average:
- 70% of suppliers provide complete visibility to their sub-tier suppliers
- 20% of suppliers provide partial visibility to their sub-tier suppliers. In this case, they provide proof that they meet their customer’s standards but withhold their sub-supplier names to protect the business relationship.
- 10% refuse all together
To maximize supplier participation and ensure a successful supply chain transparency program, organizations should keep their extended supply chain’s needs in mind. We have 5 recommendations for engaging with suppliers effectively.
1. Approach the project as a collaboration
Ambitious supply chain commitments often require upending old processes and implementing new capabilities. Supplier participation and collaboration, typically over months or even years, is essential. A request for greater visibility is more than a “requirement”—it is the start of a long-term collaboration that will help both the supplier and buyer achieve a common goal. Today, organizations throughout the extended supply chain are looking to improve the sustainability of their supply chains. Focus on how this can be achieved together.
2. Highlight how the supplier will benefit
To increase the likelihood of supplier engagement, the benefits must be clear. The benefits go beyond simply meeting customer requirements or maintaining existing business relationships. Suppliers who choose to be more transparent are in a strong position to meet evolving customer, consumer, regulatory, and investor expectations. Suppliers can leverage transparency as a competitive differentiator to help them gain a financial advantage, earn new business, and attract and retain top talent—ultimately setting them up for success in the immediate and long-term future.
3. Address practical concerns upfront
Supply chain partners will naturally have questions regarding the deployment of a transparency program. Make it easier for suppliers to opt in by candidly addressing common questions and concerns upfront. By addressing such topics proactively, organizations help build trust and understanding with their suppliers, an essential element for long-term success. Common questions include how a project will be funded, the overall project timeframe, and data security measures. Suppliers may also have questions about the specific project requirements or how a project might impact their existing business relationships
4. Provide flexibility
Flexibility is essential to maximize supplier adoption. Requiring suppliers to go “all in” deters those willing to provide partial visibility, ultimately resulting in less transparency. Before launching a program, consider what information is truly mandatory versus what is “nice to have.” Flexibility around data requirements allows suppliers to comply with requests while still maintaining control and ownership of their data. It demonstrates sensitivity to a supplier’s business concerns and available resources. Additional information can always be collected in a later program once suppliers are more familiar with processes and expectations.
5. Set expectations
Finally, create a mutual understanding with supply chain partners by setting expectations from the start. Weave transparency, sustainability, and responsible sourcing into every aspect of the supplier relationship; for example, disclose responsible sourcing goals at the start of every new relationship and integrate sustainability metrics into performance assessments. In this way, businesses can establish the expectation for transparency and increase the likelihood of supplier participation in future programs.
The success of a supply chain transparency program greatly depends on the extended supply chain’s willingness to share information. By providing flexible options, establishing transparency as a priority, and considering the needs of their suppliers, organizations can greatly increase supplier engagement to achieve more transparent, sustainable, and responsible supply chains.
