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Transparency in reporting can no longer be an option, but a must

Transparency is defined by what data a company is going to be transparent about, to whom, and how often, or when.

Transparency in reporting is growing to be a key selling point for many businesses giving them an edge over others

A commonly cited positive outcome of transparency in business is that traceability can lead to a product’s provenance especially as integrity is known to be the focal and most appealing selling point for most consumers. How safe and secure one feels about affiliating themselves with a product or brand is a significant influential factor in consumer confidence when making purchases. Consumers like to be aware of how the product has been manufactured, from where have the ingredients been sources, all touch points along the supply chain before it reached the store as well as environmental footprint.

With ample availability of substitute goods, consumers are ready to switch from their usual product to another if it provides more in-depth information. Being transparent of the business activities may build consumer trust and boost loyalty at a time when competition among companies is fierce. Hence, if a business is to develop a key competitive advantage through long term customer loyalty and brand reputation, it is becoming crucial to provide in-depth information of products and how it has been manufactured.

An expert in the UK tea export industry indicates that “When it comes to taste, knowing where the tea comes from and who made it tells you a lot about its flavor,” Hence, it serves as a sage approach to develop transparency within and outside business premises to create a sense of confidence in the consumer’s mindset.

Being transparent does not mean the business has to alter its actual way of operations. Rather it enables a consumer to make a well-informed purchase decision.

Most businesses are afraid to let their customers be aware of their inside activities. The fear arises from the notion that, as customers grow more familiar with what the firm does and how it operates, they will scamper away. Businesses should shrug away this myth that allowing the customer to see through the real picture of where they stand could ultimately shrivel the chances of attracting prospective buyers.

Instead of worsening the situation, trends suggest that sharing such details could help build consumer loyalty.

For example, the process of transparency in reporting seems to become more and more untenable for certain business sectors such as mining, petroleum and oil exploration as their environmental footprint is far too high to be uncovered.

It is not that consumers are presently unaware of the lasting damage caused by such firms, in fact hearing it directly from the company enables them to trust the company better. It is inevitable that unethical activities are likely to be unveiled by authorities sooner or later, in which case, it is too late for a firm to reverse the reputation damage that has fallen upon them.

Hence, companies should take steps to be the key informant of its activities to consumers. It can provide details on alternate production/operating methods that are currently available that considered more environmentally friendly, yet why they are not able to adopt them, the economics of a change in operating methods such as cost implications on the firm and eventually on consumers as costs get passed down in the form of increased prices. The firm could also share details of research/innovations it is investing on to resolve such issues in the long run. Instead of making the company vulnerable to its flaws, transparency is known to create an arena for customers to understand and appreciate such efforts taken by the company to innovate along the production life cycle.

Transparency requirements are extending beyond a single entity or basic supply chain– stakeholders are keen to know about the entire supply chain that is involved in the making of a product.

In addition to producers and consumers who form integral parts of the supply chain, there is a growing need to involve all supply chain partners such as traders, retailers, investors & logistic companies to enable more efficient traceability and transparency. Increasing transparency is an effective way of demonstrating sustainability efforts and openness to stakeholders.

The rapid advances in processes to collect, monitor, disclose, and disseminate information among supply chain partners has enabled such extended transparency reporting. This has also created unique opportunities for companies to increase their supply chain efficiencies, meet regulatory requirements and connect with stakeholders across all levels.

With the advancement in technology and advent of social media, people now have the power to expose illegal, unsafe, or irresponsible practices or simply inefficient processes through a host of publicity mechanisms.

Hence, the business case for engaging in initiatives that enable transparency is required now, more than ever, to ensure visibility and sustainability of business models and being responsible towards all stakeholders.

Rather than viewing transparency as a challenge or burden, businesses can leverage the opportunity to identify potential operational improvements, promote good corporate citizenship, reinforce the strength of their brands, and potentially minimize the impact of future events!