What You Can’t See Can Hurt You – Is Your Supply Chain Really Transparent?

Increasing scrutiny of labor practices requires supply chain technology that proves accountability and compliance. 

Key Takeaways 

  • Consumers are demanding greater transparency and want more information about worker treatment in the supply chain. 
  • Lack of transparency also carries a huge reputational risk.
  • Companies are using social audits, which are often ineffective without essential support. 
  • Technology, particularly corporate social responsibility solutions supported by AI and machine learning, increase transparency by identifying employment practices and enabling corrective action. 

True supply chain transparency means your company knows exactly what is happening upstream in the supply chain and can share this knowledge internally and externally. This is not only the right thing to do but also good for business. 

Consumers are demanding greater transparency. A recent study showed they are willing to pay 2% to 10% more for products from companies that provide it. In particular, consumers want information about worker treatment in the supply chain and want to know what sellers are doing to improve working conditions. 

Transparency, or lack thereof, carries a huge reputational risk for companies. Incidents like the Rana Plaza factory collapse in Bangladesh have led to new laws, but laws are not always followed which makes it incumbent upon your business to ensure your supply chain is ethical.  

The stakes are high. Shipments without origin documents are being turned away from ports, creating expensive disruptions and inventory that doesn’t reach its destination, affecting the overall supply chain and your business health.  

Improve Your Audit Process

Supply chain leaders can only ensure compliance through the use of technology that traces every tier in their global supply chain and supports corporate social responsibility goals. 

With the adoption of the UN Guiding Principles on Business and Human Rights and implementation of due diligence as the global standard for companies on human rights, companies are using social audits to comply with due diligence standards.  

A social audit is a formal review of a company’s activities, process, and code of conduct around social responsibility and the company’s societal impact. A social audit is an assessment of how well the company is achieving its goals or benchmarks for social responsibility.  

Even though social audits are accepted as the foundation of socially responsible supply chain management, they are ineffective when used alone to discover human rights abuses, and these audits in their current form are failing workers. Rana Plaza was audited shortly before the tragedy which, along with others, has illustrated the shortcomings of social auditing. 

This means companies must adopt technological solutions to supply chain management and social responsibility. Logility’s corporate responsibility solution combines audit and self-assessment data in a way that is highly effective at identifying suppliers who are not engaged in ethical social practices. 

Supply Chain Transparency Requires the Right Technology 

Audits are often ineffective as they are currently used. Supply chains are opaque. Violations of workers’ rights are at an all-time high.  

In 2020, the poorest working conditions were identified in Bangladesh, Brazil, Colombia, Egypt, Honduras, India, Kazakhstan, the Philippines, Turkey, and Zimbabwe. 

Yet you may need to buy from these countries. How can you ensure you are not purchasing from a supplier that had a positive audit but actually practices worker abuse? How can you align your business with consumer and regulatory demands for transparency?  

What’s required is an intuitive supply chain powered by the newest innovations in cognitive planning. The solution should leverage artificial intelligence (AI), machine learning (ML), and automation to ensure peak operational performance by continuously sensing, analyzing, and updating any supply chain activity.  

Logility’s corporate responsibility solution allows your business to create robust, collaborative supply networks that boost your corporate reputation. You are empowered with relevant and timely social and environmental data to drive ethical sourcing decisions, enable transparent reporting, and support better risk management across your supply chain to provide: 

  1. Comprehensive visibility into social compliance data across all suppliers throughout the entire network. 
  1. The capability to monitor, review and submit corrective action plans for all aspects of social compliance. 
  1. Environmental status to ensure compliance with a good corporate responsibility practice. 
  1. The ability to review total emissions by each supplier as well as perform root cause analysis to understand the reasons for variances that could require action through a notice or corrective action plan. 

The Logility platform also offers a traceability solution that allows brand owners and retailers to document the chain of custody from component origin to importer of record, storing and managing all supporting transactional documents for complete visibility. This provides a digital thread for your company to generate a certificate that comprehensively summarizes the chain of custody. 
With the right digital solutions in place, your company can make honest and verifiable human rights claims and easily comply with new legislation and regulations, satisfying both today’s consumer and your company’s obligation to humanity. 

Want transparency? Look no further than Logility 

Today’s consumer values brands that push past boundaries to ensure they are operating a completely ethical and sustainable supply chain. That puts corporate social responsibility at the forefront of any business endeavor. 

Logility empowers companies to reach their social and environmental goals. To deliver a digital, sustainable supply chain, reach out to our specialists today. 

Mark Balte

Written by

Mark Balte

Senior Vice President, Product Innovation

Short bio

As senior vice president of product innovation, Mark is responsible for all product development and technology strategies for the Logility® Digital Supply Chain Platform. His leadership and creativity are crucial to driving innovation in Logility’s cloud strategy, product architecture, advanced analytics, and mobility. Mark has more than 30 years of experience in development, implementation and support of supply chain software solutions. Mark holds a Bachelor of Science degree in Mathematics from The University of the South (Sewanee) and a Master of Science degree in Operations Research from the Georgia Institute of Technology. He is a frequent guest lecturer for the supply chain management graduate program at the Georgia Institute of Technology. Supply Chain Brief