We live in an era in which many organizations operate highly complex and globalized supply chains. While these supply chains are now required to be lean, agile, and sustainable, they are also the focus of growing attention from a variety of external stakeholders seeking information that includes and frequently exceeds what the company is legally obliged to disclose. (See “About the Research.”) However, many companies have limited visibility of their supply chain information, have a poor understanding of their capabilities for capturing and reporting this information, and have not overtly considered their supply chain information disclosure strategy.
In this article, we discuss the pressures on companies to disclose supply chain information, the drivers and impediments to supply chain disclosure, and the types of supply chain information typically made available to the public. Finally, we identify the broad disclosure strategies companies can use to release supply chain information and offer managers guidance on designing the optimal disclosure strategy for their company.
Pressures to Disclose Supply Chain Information
To understand how best to strategically manage public supply chain information disclosure, it is important that managers appreciate the diverse forces and actors driving and enabling this trend. Aside from internal governance and risk concerns, external pressure has come from government regulations, best practices of peers, and changing expectations from salient stakeholder groups such as nongovernmental organizations.
Recent examples of new regulatory pressure in the United States include the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and the California Transparency in Supply Chains Act of 2010; in Europe, examples include the Restriction of Hazardous Substances Directive and the Registration, Evaluation, Authorisation, and Restriction of Chemicals regulation. At the same time, leading companies in many industries are shifting the boundaries of supply chain information disclosure. We have seen this in the apparel and electronics industries, with companies such as Nike Inc. leading the field in supply chain information disclosure and other companies following their lead. Once a brand leader begins to open its supply chain to public scrutiny, it is difficult for others in the industry to resist without a good commercial reason.
1. “Ask Nestlé to Give Rainforests a Break,” www.greenpeace.org.
2. G. Nimbalker, C. Cremen, and H. Wrinkle, “The Truth Behind the Barcode: The Australian Fashion Report,” Baptist World Aid Australia, Aug. 19, 2013.
3. D. Linich, “The Path to Supply Chain Transparency,” Deloitte University Press, July 2014.
4. For a full report on decisions taken by Nike, see D.J. Doorey, “The Transparent Supply Chain: From Resistance to Implementation at Nike and Levi-Strauss,” Journal of Business Ethics 103, no. 4 (November 2011): 587-603; Nike Inc., “Global Manufacturing,” http://manufacturingmap.nikeinc.com; and Nike Inc., “Workers and Factories,” in “Corporate Responsibility Report FY07-09,” www.nikebiz.com.
5. See Doorey, “The Transparent Supply Chain.”
6. WD-40 Co., “What Does WD-40 Multi-Use Product Contain?” www.wd40.com; and R.M. Halligan and D.A. Haas, “The Secret of Trade Secret Success,” Forbes, Feb. 19, 2010.
7. K. Hodal, C. Kelly, and F. Lawrence, “Revealed: Asian Slave Labour Producing Prawns for Supermarkets in US, UK,” June 10, 2014, www.theguardian.com.
8. “Apple Supplier Responsibility Progress Report,” 2009-2014, www.apple.com/supplier-responsibility.
9. Apple Inc., “Supplier Responsibility: 2009 Progress Report,” February 2009.
10. Apple Inc., “Environmental Responsibility Report: 2015 Progress Report, Covering FY2014,” May 2015.
11. R. Bilton, “Apple ‘Failing to Protect Chinese Factory Workers,’” BBC News, December 18, 2014, www.bbc.com.