The new world of supply chains – traceable and ethical come first

In 2019, consumers are increasingly concerned about the provenance of the items they buy and are aware of the human and environmental cost of their purchases. This presents a major opportunity for businesses that can bring transparency and accountability to their supply chain operations. The question is: how can they best do this?

Whichever way manufacturers and retailers choose to tackle this issue, it’s vital that they deliver meaningful solutions to customer concerns rather than trying to ‘spin’ their way out of the issue. Unilever is one of the companies that appears to understand this well, with the new CEO Alan Jope shaking up the recent Cannes Lions conference by castigating what he called “woke-washing” and calling on the industry to “unleash purpose”.

 

The tech to change the chain

So how can brands make meaningful improvements to their supply chains? Much has been made of the potential of blockchain technology: it can be used to track the miles that every component or ingredient has travelled, where they were sourced, how much carbon was used in their transportation, and how much packaging was used in the journey to the supermarket or retail store.

Exciting as blockchain is, we’re still at least a decade away from seeing the technology become widespread for tracking items across the supply chain. What’s more, it’s quite likely that blockchain will fail to live up to the hype. Even so, Gartner predicts that by 2025 a fifth of global providers will use blockchain for food safety and provenance.

In the short- to medium-term, we’re likely to see benefits coming from more traditional technologies. Take QR codes, for example. While in the past these didn’t quite take off in consumer applications, they’re becoming more commonplace to the woman on the street. This is thanks to startups like ScanTrust who are bringing QR into the mainstream.

Moreover, they are increasingly used in manufacturing and supply chain operations to track products across their journey. These codes can hold a surprising amount of data including serial numbers, part numbers, lots, and dates. This enables manufacturers to perform inventory management, keep track of items in transit and, potentially, to check the provenance of every component or ingredient.

There’s no reason why manufacturers or retailers cannot tweak QR codes so that ordinary consumers can scan them to find out how far the item has travelled, how much carbon was emitted in its transportation, or even to check that the factory where it was made has an ethical working policy – for example, by banning child labour. Such a bold move is bound to go down well with socially and environmentally conscious consumers.

 

Taking action, not just talking

But to really impress consumers, businesses need to be aware of one potential problem with this technology-led approach. If it isn’t combined with meaningful changes in manufacturing and the supply chain, it will only serve to expose a business’ shortcomings to consumers. While transparency should be welcomed, it will require retailers and manufacturers to sort out their relationships with suppliers and reduce inefficiencies and waste in their supply chain.

Informing customers about the provenance of their items and the environmental cost of the supply chain is one way to tackle this issue, but it’s just as important to change business models to reduce waste. We’re seeing this with retailers like IKEA, which has introduced its product take-back scheme enabling customers to hand back items for reuse when they buy a new product, ensuring that their kitchen cupboards and bedframes don’t end up in landfill.

Other retailers are exploring new business models that can reduce waste. The US firm Rent the Runway enables people to rent out the latest fashion rather than buying it. This ties in with a general move away from ownership and towards the ‘sharing economy’ – not just for convenience, but for societal good.

 

New opportunities

For businesses who think creatively about solving longstanding inefficiencies in their business models, the opportunity is ripe. These solutions will not only answer ethical questions about provenance and supply chain waste, but will also develop new business models that are highly attractive to a new generation of ethical consumers.

Whatever the future holds for supply chains, it’s obvious that consumer choices will increasingly dictate how businesses source their products and bring them to market. What’s particularly interesting is that governments around the world have so far held back from imposing legislation to reduce the environmental or human impact of supply chains. Instead, the pressure is coming from consumers and campaigners who are using social and traditional media to highlight the impact that our consumerist, throwaway lifestyle is having on the planet.

The lesson for corporations is clear: understanding the impact of every stage of the supply chain is good business. If they can fix issues within their supply chain, provide transparency and develop new, more sustainable business models, they will be well placed to foster even greater trust and loyalty from their consumers.

 

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