Manufacturers Accountable for Supply Chain Transparency, Consumer Trust

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Manufacturers Accountable for Supply Chain Transparency, Consumer Trust

02/29/2016

Being transparent about supply chain operations builds vital trust among consumers. But who is responsible for building this trust? According to a new report from The Center for Food Integrity, food manufacturers are expected to lead the charge in ensuring business ethics, environmental controls and food safety are implemented throughout the supply chain.

The report, “A Clear View of Transparency and How It Builds Consumer Trust,” says consumers hold food companies, by far—rather than grocers, farmers or restaurants—as most responsible for demonstrating trust-building transparency across almost all categories: impact of food on health (41 percent), food safety (37 percent), labor and human rights (40 percent), animal wellbeing (49 percent) and business ethics (42 percent). When it comes to environmental impact, consumers hold both food companies and farmers to the same accountability (38 percent for food companies, 37 percent for farmers). Additionally, consumers expect transparency with all six of these topics, despite their showing a higher level of concern about impact of food on health and food safety than they do for the other topics.

“Organizations get into trouble when they don’t have proper visibility into suppliers’ manufacturing processes,” said Brian Miller, vice president of services at e-sourcing service provider Intesource. “Ultimately, ensuring this transparency is a team effort, but with retailers being the last link in the supply chain and, therefore, closest to the end consumer, they have the most foresight into changing consumer preferences and market demands, and are in the best position to guide suppliers and manufacturers toward full transparency.”

It’s important for retailers to know, however, that some transparency activities are more important than others to consumers. For example, the report states that providing food safety audit results by a third-party verifier is a strong indicator of transparency than providing cooking instructions on a package. Additionally, storytelling and providing concrete examples of business practices are important: Actually showing and talking about what you do is key to being transparent, and merely making policies available to the public isn’t enough. The report points out that practices are a reflection of a company’s internal motivation—a demonstration of a company’s values in action.

As for whether or not the U.S. food system is on the right or wrong track, slightly fewer respondents than those in 2014 said it is headed in the right direction (40 percent, compared to 42 percent), the report explains. The dropoff was even greater among women and moms, with 5 percent less than a year ago saying the food system is headed in the right direction. However, percentages were steady among men, early adopters, millennials and foodies.

To better position themselves to be headed in the right direction, retailers must follow a few basic strategies: diversify their supplier base, have a rock-solid understanding of the supply market, and conduct regular supplier audits, Miller told Retail Leader.

“The more suppliers in your back pocket, the better chance you have of finding alternate supply sources that fit evolving consumer demands and preferences,” he explained. “Being proactive about review audits and having proper protocols around product and ingredient quality built into a contract will help put greater responsibility on the manufacturer or supplier to make sure their offering is sufficient.”

In the long run, developing trusted relationships with strategic suppliers and manufacturers is mutually beneficial, Miller stated.

“Suppliers, wanting to help out the retailer to keep their business and partnership, will proactively adhere to the transparency guidelines set,” he noted. “In turn, suppliers increase their own visibility into their supply base, create a more transparent supply chain, and reduce risk.”

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