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Transparency A Growing Issue

March 14, 2011

The New York Times carries an interesting article on the subject of transparency. It highlights the extent to which data availability is putting new levels of control into the hands of buyers and consumers, in particular through the growth of computer applications. Examples include the ability to monitor the arrival of buses or trains, the chance to check product performance and – of course – the potential to monitor prices.

The article makes the point that not everyone welcomes this transparency. Airlines in particular appear to hate the idea that anyone might be able to understand or compare their charging practices. But they must surely be standing in the way of progress.

However, are they alone in this skepticism? On one level, business has jumped at the opportunities created by today’s technologies. They monitor markets, they create demand-based pricing models, they welcome web-based selling and procurement programs. Yet they have been reluctant to grasp the opportunities that could flow from more extensive and rapid exchanges of information between buyers and sellers – for example, shared performance management systems, proactive visibility of risk, on-demand financial information.

Over the last 20 years, there has been massive investment in Enterprise Resource Planning (ERP) systems which were focused on internal efficiencies. In some ways, these made relationships between businesses harder to manage. I believe the next 20 years will be dominated by systems that facilitate the management of business interconnections – first among them an increased level of transparency and the enabling of new levels of customization.

Many companies will doubtless be hesitant about these changes, yet they are fundamental to the growth of trust and to the strength of corporate reputation. This is especially significant in the supplier selection process, during negotiation and in post-award contract and relationship management.

In a global market, these attributes of trust and reputation will be critical to success – so it is time to start thinking about transparency, in particular as part of the contracting process.

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