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Executive Briefings: 12 September, 2017

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From brand buzz to brand bust - a supply chain mistake?

Risk

A few months ago I sat in a room with senior procurement executives from major European companies discussing the future value of the procurement function. One procurement chief, hailing from a manufacturer of mobile devices, raised the point that procurement is well positioned to help to create new opportunities, both internally with other business units such as R&D, marketing and sales, and externally, with suppliers. The example he referred to was a brand with which all of us are familiar: "Quality is good but not sellable. It’s all about emotion. Look at Apple. Because of the emotion, you sell a lot more, and this creates a premium."

 

No doubt a brand sells on the emotion it creates for consumers. Apple is sleek and edgy, it has cool advertising and launches the most innovative products at a speed consumers can barely keep up with. It’s no surprise that in a city like London, one is surrounded by Apple devices of all sorts.

 

And despite all the buzz Apple has managed to create, the company just hit the headlines again. A new report by a group of Chinese NGOs found environmental problems at 27 electronics suppliers in China that supply Apple. Allegations include severe pollution of a lake in the central city of Wuhan, complaints about noxious gases in Taiyuan and incomplete record keeping of hazardous waste at a plant in Beijing.

 

This is not the first time that Apple has been criticised for environmental violations and its secretive supply chain management in Chinese factories, where it assembles most of its products. We all remember the Foxconn suicides in 2010. In fact, Apple was rated as more secretive about its supply chain in China than most of its rivals.

 

I’m curious to see how long Apple will be able to uphold its brand equity in the consumer eye. Surely Apple is an example of how procurement communities play an increasing role in how their companies are viewed as a brand. However, it does not exempt them from their basic duties, which include ensuring the highest quality of social responsibility throughout the supply chain. Because if they don’t, there is a risk their brand might start to crumble.

Maggie Slowik
Posted by Maggie Slowik