As David Cameron prepares for the UK’s presidency of the G8, the issue of supply chain transparency is already gaining considerable momentum, driven largely by high profile supply chain disasters and scandals. Even UN secretary general Ban Ki-moon has called for companies to take responsibility for their supply chains in a comment reacting to the recent Bangladeshi garment factory collapse.
It is interesting to note that there are some businesses that claim to have product traceability in their supply chains but more often than not this tends to be about electronic label tracking rather than actual understanding of supplier sustainability. More businesses need to take this issue seriously.
However, understanding suppliers, their ability to be consistently responsible and to ensure they are running their businesses efficiently and not passing on unnecessary cost and risk to customers can be a difficult and costly process. So what role can open data have in helping businesses get to grips with suppliers and suppliers’ suppliers?
We would argue that unless businesses adopt a policy of open data and collaboration, any attempts to forge a long term supply chain plan will be short lived. There has to be leverage in the supply chain too. Businesses must start mandating their suppliers to openly report as this is crucial to transparency in the long term.
A recent comment on Twitter from BT’s CSO Niall Dunne said that supply chain transparency without open data was “like Ginger without Fred.” Like all great double acts, transparency and open data can and should work in tandem to form the perfect storm. Energy data in this instance is at the eye of the storm, as it can get companies used to the idea of reporting openly, eventually leading to other metrics such as diversity, building certification and even child labour.
According to a Deloitte report released earlier this year, energy data is one of the key elements of understanding the true nature of a business. Measuring and reporting energy data openly should be a baseline requirement for any modern business that takes reputation and risk seriously. There is also a hard economic reason why this should happen. With energy costs rising, emerging market supply chains increasing and competition putting pressure on products and pricing, anything that can offer competitive advantage has a value.
Analysing energy and carbon data to identify cost benefit is the first stage in building a sustainable business future, something which should have immediate impact on profitability.
If this is extended into the supply chains it is possible for businesses to quickly build a picture of potential issues but also opportunities. Understanding suppliers in terms of energy consumption and emissions would clearly identify areas of waste and inefficiency, enabling institutions to shave unnecessary costs off of the inventory.
A PwC survey revealed last week that 81 per cent of businesses who rate sustainability as important favour collaborating with their suppliers to create a responsible supply chain footprint and procurement framework. Is this enough? How do you get suppliers to participate?
Money talks, and in this case, the tired old mantra “what gets measured gets managed” is transformed into “what gets measured, connected and communicated, gets done”. By promoting transparency through open data and having businesses starting to mandate their suppliers to report, we start to develop a powerful mechanism through which transparency can evolve.
It won’t happen overnight but when you see the images in Bangladesh and Cambodia it should at least make everyone even more determined to try.