How to improve traceability and transparency throughout your supply chain
This article will answer the following questions:
- What is a supply chain?
- What is traceability and transparency?
- Why is it important to achieve traceability and transparency through mapping my supply chain?
- How can I map my supply chain and speak to my suppliers about this?
- What is the minimum level of traceability and transparency Wolf & Badger requires?
What is a supply chain?
A supply chain is a network of individuals, organisations, resources, activities, and technology involved in the creation of a product. A supply chain encompasses everything from sourcing raw materials to the manufacturing through to delivery to the end user. Depending on what you are producing, the materials you use and the scale at which you are producing, the length and complexity of your supply chain will vary.
Supply chains are broken down into numeric tiers:
Tier 4: Raw materials suppliers
Raw materials suppliers produce the materials and substances used in the primary production of a product. For example, cotton farmers, gold-miners, raw beauty ingredients.
Tier 3 & 2: Raw material Processing & Sub-Component Suppliers
Tier 3 and Tier 2 of supply chains are sub-suppliers to a brand, providing the processed raw materials (e.g. fabric, tanned leather, processed ingredients, metal and jewellery components). These materials are then purchased by the manufacturer (your direct tier 1 supplier).
Tier 1: Manufacturing Suppliers (direct suppliers)
Tier 1 suppliers are those who produce the final product for a brand, otherwise known as manufacturing suppliers, final assembly suppliers or more commonly direct suppliers.
Tier 0: The Brand (creative, operations, logistics, retail)
The brand is the key decision maker of the supply chain, and ideally, brands would be able to ensure that all stakeholders who work directly or indirectly for the brand are acting in the interest of the brand – whether it be in terms of price, quality, ethical or sustainability requirements.
What is traceability & transparency?
Traceability equals that you have oversight of your supply chain and are able to ‘trace’ all the parties involved. For example, this means you know where and by whom all components of your product are produced and how they move from one stage to the next.
Transparency equals that you are able to communicate all this information through your supply chain, publicly to customers and other stakeholders. It is important to note that this means communicating all information honestly, without withholding information or cherry picking key elements.
Why are these terms important?
Transparency and traceability are often linked to the word visibility.
Understanding and mapping a supply chain (traceability) is not quick or easy, however speaking about how and where you produce publicly (transparency) has numerous benefits:
- It can help you identify and prevent risks - these could relate to human rights such as paying fair wages, environmental impacts or health and safety.
- It can help you ensure you conform with relevant laws and regulations.
- It can help you understand how your production requirements, policies and codes of conduct are being met and ensure product quality.
- It can help you enhance consumer perception in your brand as trustworthy.
- It can help customers make more informed decisions as they have more reliable information on the sustainability claims you make.
How to get started in achieving traceability and transparency
Below are some suggestions for steps you can take to gain and communicate greater supply chain visibility.
Just getting started?
The beginning of your traceability journey will start with developing communication and building relationships with your supply chain partners to create a supply chain map. Once these relationships have been established it makes it easier for information to flow up and down the supply chain. From this you can look to implement improvements, mitigate risks and build out your overall ESG strategy in partnership with your suppliers.
How to map your supply chain
|Step 1: Speak to your Tier 1 Suppliers||Step 2: Beyond your Tier 1 Suppliers||Step 3: Build Map||Step 4: Layer data, identify risks & build resilience|
Invite your Tier 1 (direct suppliers) to participate in the mapping process.
Send out a supplier assessment covering essential criteria e.g:
Ask for a Code of Conduct, audits and any 3rd Party certifications your supplier may have to verify the ethics and sustainability practices of their operations
Once a good line of communication is established with your Tier 1 suppliers, look beyond to your Tier 2 and Tier 3 suppliers.
Ask your tier 1 supplier to send the same basic assessment to their tier 2 suppliers. In turn, ask them what information they can provide on their suppliers.
As you learn new information in the discovery phase, populate your map.
There are numerous ways this could be built out, such as inputting information into a database, using Excel to manually create linkages between suppliers, or using something more visual like a Miro board. There are also companies that provide specialised supply chain mapping software.
Now you have a map you can update and amend when necessary.
You can better identify risks - e.g. a factory that has been fined for environmental non-compliance, such as polluting a local river.
Look for third-party information on potential risks too.
Adding more data and learning about your risks means you can build resilience against future shocks
I’ve already done these suggestions, how can I take my work further?
- Explore traceability and transparency data sharing platforms. For example, the business membership organisation, Sedex, has an ethical data exchange platform that is one of the largest collaborative platforms in the world. It allows buyers, suppliers and auditors to store, share and report on supply chain information quickly and easily.
- Consider production processes which are certified by third-parties. Some of these offer a type of verification called chain of custody which allows items to be traced through supply chains. There are a number of different certifications verified by third parties which afford a high degree of traceability, from materials to chemicals.
Just getting started?
- If you haven’t shared any information publicly about your production processes, think about what information you have, what information you would like to disclose, and how. We recommend disclosing where you produce and the year a supplier began producing for you. Additionally, look to include material composition and ideally the country where the materials come from.
- Recent research has found that consumers are willing to pay up to 10% more for products from companies that provide greater supply chain transparency. Talking about where the items you sell come from creates greater trust between you and your consumers.
I’ve already done these suggestions, how can I take my work further?
- Join the Apparel and Footwear Transparency Pledge. This pledge was developed by multiple human rights and labour rights organisations. It calls on fashion brands committed to transparency to publish their supplier details on their websites and any other communication platforms.
- The full name of all authorised production units and processing facilities
- The site addresses
- The parent company of the business site
- Types of products made
- Worker numbers at each site
- A step up from publishing your supplier details on your website is to upload them onto the Open Apparel Registry Website (OAR). The OAR is a free open source, interactive map of garment facilities across the world, and it shows which organisations and companies are affiliated with each facility. This is a game-changer in increasing transparency in the fashion industry and there are currently more than 70,000 production facilities listed worldwide.
- Once you start collating supplier information, a next step could be to publish more in-depth information on your supply chains. This could include information on the percentage of migrant workers in a factory’s workforce, the presence of unions, or the types of energy sources a factory uses.
- The ultimate end goal for supply chain visibility is to trace and disclose information on all stages of production. This of course is not an easy task and involves a long-term sustainability strategy that prioritises both traceability and transparency.
What is the minimum level of traceability and transparency Wolf & Badger requires?
This section covers how Wolf & Badger are promoting traceability and transparency on our platform and through our guarantees programme.
Achieving happy worker
Happy worker is the guarantee which encapsulates the topics discussed in this article. It is also our only mandatory guarantee - all brands must submit evidence for this guarantee.
For happy worker we require all our brands to be able to disclose at least their tier 1 suppliers as a minimum. This covers basic levels of traceability.
We then require that all of your products accurately communicate where your products are made (e.g. the location of your principal tier 1 manufacturer at an individual product level). This covers basic levels of transparency.
What do I need to provide?
You can find more information on the specific requirements for happy worker in our guide here.
Happy worker covers your tier 1 suppliers at a minimum, however we strongly encourage you to map your entire supply chain. If you have done this then we encourage you to publish this information on your product description, promoting transparency so that your customers know where your material / ingredients come from and where they’re manufactured. The goal here is to provide as much information as possible to customers.