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Supply Chain Transparency Remains Elusive for Procurement Organizations

Oct. 24, 2022
Supply chain visibility and transparency have become key priorities for organizations, but achieving one or both of these Holy Grails of supply chain management isn’t always easy.

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The tracking of in-transit parts, components and products from manufacturer to final destination, supply chain visibility helps improve and strengthen the supply chain by making data readily available to all stakeholders—including the customer. As supply chains become increasingly global and interconnected, having good supply chain visibility has become table stakes for companies across most industries.

Good supply chain visibility is particularly critical for companies that outsource to third parties and, as a result, lose both control and visibility over their supply chains. The more geographically-dispersed those partners are, the more elusive supply chain visibility is for procurement and other departments that require it.

Going a step further, companies are also concerned about supply chain transparency, which represents the next step (after visibility) in information sharing. It’s about offering manufacturing details of interest to the public. “The external aspect is key,” QIMA explains in “4 Benefits of Supply Chain Transparency,” “a business may have 100% visibility into its supply chain operations but it cannot claim supply chain transparency if it shares none of that knowledge externally.”

Wanted: More Visibility and Transparency 

According to a new Ivalua survey, just 31% of procurement professionals are satisfied with their current levels of supply chain visibility. In Data-Enabled Supply Chain Transparency, the procurement software provider says that while companies’ visibility into Tier 1 suppliers is generally good, the data gets decidedly murkier as they move down the rankings into Tier 2 and 3 vendors.

“Although supply chain transparency has been a longstanding challenge for procurement teams, recent supply disruptions stemming from black swan events such as the Covid-19 pandemic and Russia’s invasion of Ukraine have placed the issue firmly in the spotlight,” Ivalua says in its report.

“In a volatile, uncertain, complex and ambiguous environment,” it continues, “gaining access to supply chain information could prove a vital source of competitive advantage and the businesses that understand this have elevated supply chain transparency to a board-level concern.”

Who Can See What?

According to Ivalua, 59% of companies have visibility into 80% or more of their top-tier suppliers but just 7% say the same about their suppliers’ immediate vendors. Additionally, about 20% of survey respondents have no visibility over supplier fair labor practices; environmental profiles; or inclusivity, equity and inclusion. The survey also found that:

  • Less than one-third of respondents are satisfied or very satisfied with their organization’s current supply chain visibility.
  • 37% of respondents reported that their organization assigns a “critical level of importance” to supply chain transparency while another 40% said the business considers it to be highly important.
  • Data quality issues and data accessibility were identified as moderate or severe challenges to obtaining greater transparency by over 80% of respondents (81% and 82% respectively); technology gaps followed (57%).
  • To overcome these obstacles, procurement teams are planning a number of investments over the coming 12 months, especially into new tools (62%) and data quality initiatives (57%), as well as adopting new data sources and revising role scopes for procurement staff (44%).
  • 62% of respondents said they have a sufficient budget to achieve all or most of their supply chain visibility and transparency objectives. Another 24% indicated that they have enough resources to meet some of their objectives.

Data is the New Oil

Ivalua sees high-quality data as the answer to procurement teams’ visibility and transparency woes and says a holistic approach to data accessibility, quality and governance will yield the best results. More importantly, bridging the gap between current and desired levels of supply chain visibility requires a recognition that existing processes simply aren’t working.

Many organizations still rely on conventional data sources such as contracts, invoices, and audits to support their supply chain transparency initiatives,” said Ivalua’s CMO Alex Saric in a press release. “Such data is broadly available but insufficient to empower procurement teams to make informed decisions regarding their suppliers, nor does it provide them with the agility they need to respond to future supply chain shocks.”

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.