How can companies leverage data for supply chain sustainability?

By Vivek Ramachandran, Chief Executive Officer, Serai

Sustainability is not just a buzzword!

Brands have come under increasing pressure – from consumers, regulators and investors – to prove the origin of their products and attest to the credentials of their supply chain partners.

Public commitments are becoming more common. Apparel companies, H&M and Zara have made public pledges to have a majority of their clothes made sustainably. Nestlé became the first fast moving consumer goods (FMCG) company to disclose their list of suppliers in 2019.

New regulations are also becoming more specific and demanding. Germany, as an example, recently implemented the Supply Chain Due Diligence Act (‘Lieferkettengesetz’) which requires companies with over 3000 employees to ‘prove’ that their supply chains are sustainable. In June this year, the UK Government proposed amendments aimed at strengthening the transparency provisions of their Modern Slavery Act.

Whether or not these public commitments and regulatory demands can be met remains to be seen.

Building genuine supply chain transparency will require a paradigm change. It will require businesses to think and act very differently in terms of how they collect and share information.

Transparency – easier said than done

However, building supply chain transparency can be a herculean task.

Most industries are extremely opaque, with complex supply chains. Information is not always available nor it is convenient to access. There are usually participants who benefit from the lack of transparency.

The fashion industry is a case in point. A single garment may comprise a variety of materials and fabrics. A large global brand can have up to a few thousand partners in their supply chain. However, most companies do not  know their suppliers beyond tier 2, not to mention the origin of their raw materials. Whatever supply chain data they may have, is often stored in disparate excel sheets or even in hard copy documents.

Building genuine supply chain transparency will require a paradigm change. It will require businesses to think and act very differently in terms of how they collect and share information.

Data consolidation – is technology the solution?

Thankfully technology can help. Platform-based solutions software can help companies to digitize and turn their supply chain data into actionable information. Brands and manufacturers can share and make sense of vast amounts of data including origins of raw materials, garment production, and shipment and order details. They can map this data to a product level, for all suppliers throughout the value chain.

Through integrations with third party data providers and internal systems, and with the help of innovative solutions providers, companies can monitor changes in their supply chain over time such as alerts on potential disruptions, identify corporate and financial risks, to ensure business continuity. On the other hand, companies can easily spot top performers in their supply chains based on factors including shipment delays, product quality and cost efficiencies.

Having all this data in one place is powerful. In addition to demonstrating ESG commitments, they will be able to get valuable insights into areas such as consumption of water, energy and greenhouse gas emission, or man-hours spent throughout the various stages in the supply chain.

What the future holds

What will set companies apart is not just having the data, but knowing how to use, analyze and share it.

As writer William Gibson said, “The future is here, it is just not evenly distributed”. The technology to genuinely build supply chain transparency exists today. Businesses need to start adopting this technology to stay ahead of the curve in a crowded industry.