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Transparent Supply Chains Are An Underrated Advantage


12-Feb-16 09:39
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Transparent supply chains are a key factor in mitigating reputational risk. This much may be clear to many, but a significant majority of companies struggle to open up their supply chains, with increasingly well-publicised consequences. The key to success is anticipating future trends and risks and tailoring your supply chain accordingly.

There are many companies, be they from the beauty, fashion, or food industries, which have made efforts to tackle one element or another and there are lessons to be learned in what they’ve tried to achieve.

 

UK cosmetics manufacturer Lush is an example of a company that has looked to get ahead of the curve here. In its early days Lush scrupulously detailed every stage of its supply chain and published that on its site and in-store (the brand famously uses no additional marketing). This was done long before public interest in supply chains and sustainability spiked.

In an industry that in the past has been hit by scandals surrounding animal testing, harsh chemical ingredients, health scares and employee exploitation, Lush produces cruelty free or vegan products and claims only to use natural ingredients. On each product, there is an image and full name of the employee that made it, demonstrating its consistency in transparency and reassuring customers. In order to make that claim, careful attention to sourcing, onboarding and auditing are essential.

Customer enthusiasm for Lush’s approach to CSR is clear as the brand has expanded hugely; 700 stores in 46 countries in just 20 years. By 2014, Lush was worth more than £250m.

 

Indeed, a recent Forbes survey suggested consumers overwhelmingly favour CSR initiatives and Lush constantly tops surveys and is featured positively in the media, with consumers noting its ethics as one of the main reasons why they were willing to reach into their pockets and buy Lush products.

Coca-Cola and PepsiCo, meanwhile, capitalised on the trend years in advance by making their processes more environmentally friendly and promoting these efforts to win consumer’s approval. Packaging has become a key battleground.

In 2009, PepsiCo introduced new packaging in the form of an ’Eco-Fina’ bottle for Aquafina water. This bottle used half as much plastic as previous models, saving 75 million pounds of plastic annually. The company continued these efforts in 2011, introducing a new bottle made entirely of plant-based materials. This initiative has pushed other brands into producing their own plant-based bottles.

For example, in 2015 Coca-Cola unveiled a PET bottle made from plants, stating these bottles would save more than 315,000 metric tons of carbon dioxide emissions annually.

Fashion deserves a thought too: In 2011, retailer H&M announced plans to improve labour practices and to monitor its suppliers and suppliers’ suppliers better. The company made agreements with the International Labour Organization to improve negotiations and working environments for employees, and increase dedicated teams to monitor supplier’s compliance – particularly significant when compared to criticism levelled at its competitors in the retail space.

Meanwhile, H&M launched an animal welfare roadmap in an attempt to use 100% certified wool by 2018. While there are negative aspects of a fast-fashion supply chain, the company’s efforts are notable considering its scale. Ultimately, they have created what has been recognised as a ’cleaner’ supply chain.

 

As the food industry has come under scrutiny for its treatment of suppliers, some brands have chosen to be more open about product provenance. Big brands such as Wal-mart, Tesco, and Kroger have plans to implement technologies to provide specific provenance data to the marketplace, showing their willingness to adapt to the public’s concerns.

 

It is increasingly likely that consumers will not only want full details of their product’s origins but demand them. Anticipating future reputational risks or consumers trends are an excellent way to help decide how to modify your supplier choices, and how to market and promote your brand to enhance your image.

This article is a piece of independent writing by a member of Procurement Leaders’ content team.


Lily Fish by Lily Fish

 
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