Consumers demand supply chain transparency: Where did it come from?
As we approach the one-year anniversary of Hurricane Sandy’s devastating path of destruction across the Eastern Seaboard, I recall the extensive aftermath of the storm as millions of people struggled to rebuild and gain access to basic resources such as gas and electricity.
The year prior to Sandy, the global economy was shaken by the earthquake and subsequent tsunami in Japan. Damage and workforce displacement left critical suppliers and subcontractors for automakers, technology firms, and countless other industries short on parts or completely out of supply. The generally reliable and stable supply chains that we often take for granted were brought to their knees, and the economy was in a state of duress. What can we do to anticipate and plan for catastrophes like this in the future?
A Social Network for Supply Chains
Massachusetts Institute of Technology researchers have developed a tool that will help companies visualize and assess the vulnerability of their supply chains in the face of a catastrophe. The tool is called Sourcemap, and they call the platform “the social network for supply chains”—offering the ability to see the complete supply chain for a product or company and fully understand where things come from. And, in the event of natural disasters or political unrest, quickly assess the potential impacts on the entire supply chain.
Let’s not wait for the next hurricane to think about the supply chains we depend on. The question of “where do things come from?” that Sourcemap addresses is relevant and should play a more prominent role in our daily lives. The last time you bought a latte or a pair of yoga pants, did you ask where the ingredients or materials came from? If your answer is no, you are in good company, as most people don’t take the time to investigate.
Let’s start with the latte. Where did the ingredients originate, and where did they stop along the way before you began sipping your drink at your local Starbucks? Sourcemap offers a visual depiction of the journey of Starbucks’ espresso beans from coffee plantation to packaging plant. Most likely, you won’t be surprised by what you see there, since Starbucks has demonstrated a commitment to hyper-transparency for their customers, including their supply chain and related sustainability programs such as recycling.
Savvy businesses see sustainability and supply chain transparency as strategic business initiatives, critical in building customer trust and loyalty. Even McDonald’s is getting in the sustainability game. Whereas once upon a time you would have had to dig deep into the fine print on their website to find out where their ingredients came from, now they are bringing this information to the forefront—and that means directly on the product. That’s why their pumpkin latte marketing features the little green frog seal of approval from the Rainforest Alliance. That’s also why McDonald’s fish sandwiches, for the first time, feature a blue ecolabel from the Marine Stewardship Council certifying that the pollock inside comes from better-managed fisheries.
Not all brands have access to this level of visibility into their supply chain, and it shows. That brings us to a popular retailer of yoga attire: Lululemon. Recall the see-through pants crisis of this past spring? Not a disaster of the magnitude of a hurricane, but still memorable. The primary cause of Lululemon’s Luon problems?
A weak link in the supply chain, of course.
As Rachel Spasser of Ariba, an SAP Company, stated so eloquently in her blog: “Having great product ideas is not enough. Having the type of relationships that ensure stellar execution on great product ideas is critical. And, having the right level of collaboration with and insights into your supply chain is a key input to that stellar execution.”
Whether you are a consumer, investor, or other stakeholder, analysis of a business’ supply chain and the potential disruptions are as critical as R&D or sales strategies. A company’s supply chain is its lifeblood, a critical contributor to profitability and shareholder value.