Transparency in the supply chain

Transparenz in der Supply Chain

It is becoming increasingly important to make supply chains transparent

Failures or delays in supply chains pose a major risk to a company’s overall business and often have an enormously negative impact. Unfortunately, these problems have increased a lot recently, mainly due to the Corona crisis. It is clear that supply chain transparency is more important than ever. Only in this way is it possible for a company to react at an early stage and intercept any supply bottlenecks in good time before its own production comes to a standstill. Transparency also makes it easier for companies to manage their own inventories and keep customers up to date on the status of their orders at all times. This can significantly increase customer satisfaction.

A study by the auditing and consulting firm PwC shows that 84% of the so-called “digital champions”, companies that have already digitized a large part of their supply chain and optimized it with artificial intelligence, are able to deliver to their customers on time. In contrast, only 12% of the “digital novices”, whose digital supply chain is still in its infancy, succeed in doing so.

For its latest Hermes Barometer on the topic of “Transparency in the Supply Chain” (link), Hermes asked 200 companies in Germany whether their supply chains are already digitized. The result was that only 32% of the companies so far have a digital real-time supply chain to identify risk factors in the supply chain.

Obstacles on the way to a transparent supply chain

German companies cited “communication problems between the partners involved” as the biggest problem with digitization (58%), closely followed by “lack of networking with suppliers and trading partners” (53%). For more than half of the respondents, “lack of human resources” and “time and cost required to implement necessary technologies” are also obstacles on the road to transparency.

Benefits of a transparent supply chain

“More efficient operations” is seen by 80% of respondents as one of the key benefits of having supply chain transparency. “Increased supply quality” is close behind at 78%, and for 70%, “prompt mitigation of damage in the event of supply chain disruptions” is an important factor.

Use of technologies is of central importance

In order to be able to realize digitization, the pooling of information within the supply chain is essential. This has improved compared to 2017 among the German companies surveyed, but 37% still say they face major problems due to heterogeneous systems. However, three quarters of logistics decision-makers are convinced that digital technologies are the only way to create a resilient supply chain. The use of dashboards, platforms and cloud solutions has increased by up to 17% since 2017. However, innovative technologies such as blockchain or AI (artificial intelligence) are currently used by only 10% of the companies. Most commonly used at the moment are still proven methods such as electronic data exchange (65%), portals and platforms (55%) and ERP systems (47%).

Conclusion: The importance of transparency is undisputed, but implementation is often still lacking

The need to digitize supply chains to create transparent, traceable processes has been recognized. However, most companies have yet to implement this challenging task.

Sources:
Cf. Hermes Supply Chain Blog, SCM 2021: Transparenz, Risikomanagement, Nachhaltigkeit, accessed 20.05.2021
URL: https://www.hermes-supply-chain-blog.com/supply-chain-management-trends/

Cf. Hermes Barometer, Transparenz in der Supply Chain, accessed 20.05.2021
URL: https://www.hermes-supply-chain-blog.com/wp-content/uploads/2020/10/hermes-barometer-13.pdf

Cf. The Risk Management Network, Digitale Transparenz für die Supply Chain, accessed 20.05.2021
URL: https://www.risknet.de/themen/risknews/digitale-transparenz-fuer-die-supply-chain/

Cf. PwC, Connected and autonomous supply chain ecosystems 2025, accessed 20.05.2021
URL: https://www.pwc.com/gx/en/industrial-manufacturing/digital-supply-chain/supply-chain-2025.pdf