Clear gains: Embracing transparent supply chains in Bangladesh

By embracing transparent supply chains, companies not only keep stakeholders well-informed but also adhere to regulations. Photo: TBS

Supply chain transparency involves disclosing and sharing information within the business ecosystem, ensuring both consumers and enterprises gain insights into the origins and processes of goods' production. This practice validates the source and movement of materials, components, and final products. 

By embracing transparent supply chains, companies not only keep stakeholders well-informed but also adhere to regulations safeguarding the environment, labour rights, and human rights. 

The journey towards achieving supply chain transparency revolves around enhancing visibility, traceability, and openness. This involves systematically collecting and disseminating information across the supply chain and effectively communicating it to authorised internal and external stakeholders. Embracing such transparency is integral to fostering trust and sustainability in the dynamic landscape of supply chain management.

Businesses stand to gain numerous advantages from embracing supply chain transparency. As governments worldwide implement regulations addressing human rights and environmental concerns, transparency becomes a strategic tool for companies to ensure regulatory compliance. It serves as a proactive measure to mitigate supply chain disruptions by identifying bottlenecks and inefficiencies and offering insights into potential vulnerabilities. 

The adoption of transparency not only aligns with consumer preferences but also yields reputational benefits, fostering trust and brand loyalty. Particularly in the context of Bangladesh, where regulatory scrutiny on labour practices and environmental impact is heightened, supply chain transparency becomes a crucial asset. 

By enhancing visibility and traceability, businesses in Bangladesh can navigate regulatory landscapes effectively, ensuring adherence to evolving standards while building a sustainable and trusted brand image.

The primary impediment to achieving transparency and driving positive transformation in the fashion industry in Bangladesh is the issue of cost. Despite manufacturers' earnest efforts to bring about positive changes, the burden of costs tends to be disproportionately placed on them. 

The pivotal factor hindering the creation of an enabling environment for transparency across the supply chain is the absence of transparent pricing and purchasing practices by apparel retailers and brands. In the context of the global supply chain, the responsibility for transparency cannot solely rest on manufacturers and suppliers. 

To ensure transparency throughout the entire apparel supply chain in Bangladesh, the key lies in fostering a trusted and predictable relationship among all stakeholders involved in the industry. This approach is crucial for navigating the challenges specific to the Bangladesh garment industry and promoting sustainable practices.

In the context of Bangladesh, supply chain transparency is a critical consideration that extends across various scales of enterprises. Smaller businesses and internal departments within larger corporations within the country often place a significant emphasis on internal transparency. This involves fostering open communication and visibility within their organisational structures, ensuring that information flows efficiently among different departments or teams.

For smaller enterprises in Bangladesh, internal transparency is vital for streamlining operations, minimising miscommunication, and enhancing overall efficiency. This can involve transparent communication about inventory levels, production processes, and other internal workings. By maintaining a clear and open flow of information, these businesses aim to optimise their internal processes and make informed decisions.

On the other hand, larger corporate entities in Bangladesh, particularly those with extensive supply chains, tend to dedicate more resources to achieving comprehensive supply chain transparency. This entails a broader and more in-depth approach to information dissemination, extending beyond internal operations to include external stakeholders such as suppliers, distributors, and even consumers.

To ensure transparency in the FMCG (fast-moving consumer goods) sector in Bangladesh, a multifaceted approach is imperative. Firstly, implementing robust traceability systems, possibly leveraging technology like blockchain, can enable the tracking of products from raw materials to the final consumer. This ensures that the origin, production processes, and distribution channels are well-documented and accessible. 

Secondly, adherence to international standards and certifications related to quality, ethical sourcing, and sustainability can enhance credibility and transparency. Collaborative initiatives involving industry stakeholders, governmental bodies, and non-governmental organisations can establish best practices and frameworks for transparency. 

Lastly, fostering open communication and engagement with consumers through clear labelling, information dissemination, and feedback mechanisms can build trust and further contribute to transparency in the FMCG sector in Bangladesh.

In 2022, the Canadian government pledged to boost supply chain transparency and reinforce mandatory product labelling. Inspired by this initiative, Bangladesh has the opportunity to collaborate with manufacturers, the private sector, and other stakeholders to implement similar measures. Responding to the growing consumer demand for clear information on product labels, such initiatives can empower Bangladeshi consumers to make informed choices.

Technology is pivotal in establishing a transparent supply chain, offering tools to monitor products comprehensively, from raw materials to the final product. The integration of Industry 4.0 practices, incorporating new tools and analytics into manufacturing, is a key driver of transparency. Companies are exploring methods, such as blockchain, a secure digital ledger, to enhance transparency. This technology aids in preventing fraud and guarantees the ethical sourcing and production of products.

Organisations are proactively embracing sustainability by embedding it within their supply chain structures and utilising sophisticated end-to-end planning tools. The pivotal element of accountability hinges on establishing traceability throughout the supply chain. Without this crucial component, companies find themselves compelled to initiate foundational efforts to effectively meet the evolving demands of future consumers and align with the broader expectations of stakeholders. This underscores the evident imperative for enhanced collaboration between supply chain professionals, sustainability experts, and technology firms. A close working relationship at the operational level is vital to unlocking the full potential of digital solutions in augmenting supply chain traceability and transparency.

Achieving transparency is a challenging journey. It is crucial to amalgamate the appropriate skill set to lay the foundation for supply chains characterised by transparency, resilience, sustainability, and growth.

Mohammad Ashraful Islam Khan is the president of The Supply Chain Street and was previously head of Supply Chain Advisory Services at KPMG Bangladesh. You can reach out to him at khan.ashraful@gmail.com.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.