Corporate behavior is under a microscope in our always-connected, hyper-social world. Organizations that participate in shady or unethical behaviors quickly become front page news—and not in a positive way. Consumers across industries are increasingly demanding that sustainability and corporate social responsibility (CSR) be top priorities for organizations’ supply chains. Organizations in the food and drug industries have embraced supply chain transparency practices in recent years, and now it’s retail’s turn.
The sheer size and complexity of global retail supply chains provide a unique challenge to achieving the level of transparency and visibility needed to meet the rising consumer demand. As millennials continue to dominate purchasing power as a generation (with Gen Z close behind), these more socially-conscious generations are pushing the CSR/sustainability agenda, and holding businesses accountable. They genuinely care where and how products are made and how it will impact their own status, their health and the planet.
The keys to solving this transparency issue—and meeting consumer standards for social responsibility and product traceability—lie in collaboration across the retail supply chain, powered by technology.
Collaboration Across the Supply Chain
Very few retailers currently have total visibility across their supplier base, and that lack of transparency can lead to problems. Retailers are sourcing products from hundreds of suppliers, who are also sourcing materials from hundreds of suppliers, and so on around the globe. Ignorance is no longer an excuse: If a second- or third-tier supplier is, for example, violating local labor laws or compromising a habitat due to materials harvesting techniques, the retail brand associated with that supplier will likely be blamed for the activity, even if the brand didn’t know it was happening. Solving the problem takes a sophisticated level of collaboration between a retailer and its supplier base and manufacturers in a way that doesn’t dampen productivity, but aids in co-creation and idea sharing.
Powered by Technology
Retail-specific platforms that speed collaboration and streamline processes can create or improve greater visibility throughout the retail supply chain. Product lifecycle management and global trade management tools capture all pertinent information across product discovery, development and delivery, keeping retailers as well as their suppliers and vendors on the same page. By digitizing the entire system, these technologies provide a check-and-balance mechanism to ensure that any potential sustainability issues can be raised and mitigated quickly.
Communicating Transparency in 2018 and Beyond
The challenge of achieving sufficient levels of transparency aside, consumers also want to be informed—not just with some fluff PR piece on a corporate CSR program, but with granular evidence that proves the company is committed to ethical practices. In the same way the “buy local” movement has changed labeling and communication for food, comparable change is coming to the retail world. Think of it this way: Similar to how you might know the farm location, food source and treatment details of an animal used for meat production, consumers will want to know the details of cotton harvesting for a t-shirt. Where it was grown, and with what chemicals? How were the employees who harvested it treated? How are the factory safety standards where it was sewn? Retailers will need to be able to track this level of detail through its supply chain and have the processes in place to communicate it to customers, at scale.
The effort to implement this level of transparency across the supply chain may be difficult, but there are significant upsides for retailers who choose a sustainable path. In addition to making the world a better place, consumers are willing to spend more if their products can be traced back to an original—and ethical—source. Companies can price products that are viewed as socially responsible higher than others, and consumers are rewarding retailers that take steps to ensure the protection of workers and the environment. Organizations who take a stand and improve their operations to meet consumer demands for transparency—and who can market accordingly—will reap the rewards from the growing consumer base that continues to care deeply about where the products they use every day come from.