Supply chain has driven itself to the top of corporate agendas and has brought transparency along with it. It is probably the defining issue of the whole supply chain debate, yet no one seems willing to admit the obvious truth: transparency has failed, and is a bad idea anyway.
Ten years ago, the commercial driver behind transparency was protecting corporate reputation. Key problems included sweatshop labour and tracing sustainable goods. They remain unsolved. New regulation around modern slavery and counterfeit goods is increasing the stakes, but there still isn’t a major business with a clear line of sight over their end-to-end supply chain. This is not due to lack of trying, or pressure.
Transparency hurts sustainability
Transparency is seen as something inherently good, and the media spotlight has remained on those promoting it. If only it had focussed on those being asked to deliver the impossible instead. Supply chains are opaque for solid commercial reasons: your supplier won’t tell you who their supplier is for fear you might (accidentally) damage that relationship. Those promoting transparency see this as an inconvenient truth to be worked around, but it’s about time we asked if transparency is a good thing at all. I’ve been working in sustainability and supply chain for over ten years and I think transparency is a bad idea and has failed.
When two business trade, the only thing that protects the profit margin of the smaller company is information asymmetry. It’s the information that they don’t share, such as who their suppliers are, that stops the larger company sucking all the profit out of them (intentionally or not). Supply chains are global, and this has important implications. Improving life in developing countries is dependent upon supply chains remaining opaque and keeping as much of the profit in the country of origin as possible. Even the environment is dependent upon businesses being able to protect themselves. The creativity of a free market is more important than ever as we try to find more effective ways to make the products we need in a world with more than 7 billion people.
Transparency is a weapon of war
The opacity of supply chains also prevents them becoming the targets of trade wars. Fortunately, the only weapons currently at the disposal of governments are trade tariffs and the crude targeting of individual businesses. Imagine the damage if a hostile government knew how your global supply chains operated and could disrupt your economy with laser precision? History shows that trade wars turn into real wars, especially when managed irresponsibly.
Accountability is what we really need
Do consumers and businesses really want transparency? As a consumer, I want to know that my food was produced in a safe way, and that the people who made my clothes worked in good working conditions. Businesses want to be able to coordinate production over their end-to-end supply chain, because they know it would reduce waste and increase speed to market, giving them a competitive advantage. Neither the consumer nor the business needs to know the name of the businesses doing the work. The problem is a lack of accountability, not transparency.
If supply chains were accountable you would be able to choose between two products based upon their price, quality, and impact. Businesses would be able to improve the efficiency of their supply chains by engaging in a dialogue with the independent businesses within them and sharing the profit fairly. If they were accountable, you wouldn’t need to rely on a government to rubber stamp everything. This does not require transparency to happen.
Transparency is a crude solution to the problem of knowing what’s happening in a supply chain. It’s not the right solution to the problem, as there are ways to get accountability without the problems (I’ll be tackling these issues in future blogs). It’s about time we started challenging transparency because it is dangerous. Transparency is a bad idea, it has failed, and we should be careful what we wish for.