What's Your Strategy for Supply Chain Disclosure?

While global supply chains are expected to be lean, agile, and sustainable, they have also become 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. In this article, the authors discuss the pressures on companies to disclose supply chain information, the drivers and impediments to such disclosure, and the types of supply chain information typically made available to the public. The article identifies the broad disclosure strategies companies can use to release supply chain information and offers managers guidance on designing the optimal disclosure strategy for their company. In addition to exploring the topic with examples from companies including Nike Inc., WD-40, and Patagonia Inc., the authors take a detailed look at how Apple's approach to supply chain disclosure has evolved since 2009. In considering how to manage supply chain information disclosure, the authors argue that managers must 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, changing expectations from salient stakeholder groups, and, of course, external events (such as the 2013 Rana Plaza garment factory collapse in Bangladesh). The authors note that improving transparency can be expensive. The lack of standardized reporting systems, the absence of a common technology platform, ill-defined standards, and a lack of supplier education can also pose serious hindrances to companies wishing to improve their supply chain transparency. The authors identify four common types of supply chain information that tends to be publicly disclosed: supply chain membership, provenance of materials, environmental information, and information on social impacts such as working conditions. Based on their research, they developed a transparency matrix to frame four typical supply chain disclosure strategies: transparent, secret, distracting, and withheld. The authors say managers must understand the demands and respond in creative and meaningful ways without undermining the competitive advantage of their company. The tools and advice presented in the article can help managers navigate this complex and evolving area.