A Look at Supply Chain Transparency and Traceability of Responsible Buyers

Date: November 7, 2014

A Look at Supply Chain Transparency and Traceability of Responsible Buyers

Will it be a new trend for more responsible buyers
to adopt a traceable supply chain?

Is there a growing trend for responsible buyers to reveal a more traceable supply chain?

How many consumers know exactly where the products they buy come from? In today’s interlinked supply-chain environment, it is almost impossible even for the retailer or anyone who is selling a product to know precisely where their goods are manufactured, not to mention the idea that consumers will be given information on which factories actually made their products. In years to come will it still be the case that consumers are kept in the dark and know little about the supply chain behind each product? Or will consumers stand up for their right to a transparent, traceable supply chain by rewarding those companies who exercise more social corporate responsibility in supplier disclosure?

Apple and Foxconn

Following the outcry from Foxconn workers on how they were mistreated in China and the large-scale media coverage of the issue a few years back, Apple, which is highly dependent on the supply of products from Foxconn, has since improved its supply-chain transparency and disclosed its suppliers on their website. Some activists had called for a boycott of Apple products as they were manufactured in an unethical environment and buying those products implies an indirect approval of the exploitation of worker rights. Yet in the United States the number of iPhone users and its market share have continued to rise. The tie-in between technology and supply-chain visibility may not be that strong, and as the industry is dominated by a few technology conglomerates, this may leave consumers with no choice but to hope that their supplier is a highly responsible corporation.

Patagonia and a new relationship with consumers

 Full disclosure of the production facilities
and their relationship with the brand for a
Women’s Special Edition
Re-Tool Snap-T® Fleece Pullover

On the other hand, there are more encouraging stories in consumer markets where there is more diverse competition. One of America’s biggest outdoor brands, Patagonia, is one of the pioneers in introducing traceable products and supply chain to its customers.  Every product on the Patagonia website comes with full disclosure of the production facilities and their relationship with the brand. Patagonia has also introduced the “traceable down” concept for their down products and guarantees that animals on the supplier farms are ethically raised and treated, with no live plucking of feathers or other mistreatment. The sources and the manufacturing process are explained in detail in their marketing materials and website.  For consumers who want to have a better idea and grip on where their products are coming from, Patagonia is definitely a brand they would love to have in the vanguard of supply-chain disclosure and transparency to consumers. This is likely to increase brand loyalty and create a new relationship with customers in that they will choose only this brand, as the traceable nature of all its product has become the unique selling proposition and criterion in purchasing decisions.

Toms and Fair Trade Coffee

Toms, which has grown into a multi-million dollar brand, started with the idea of “one for one” whereby when a consumer buys a pair of shoes, somewhere in the world someone in need of shoes  will be given a pair of shoes to wear. As a result Toms has become much sought after by celebrities, fashion lovers and ordinary consumers. Recently, the company also launched Toms coffee in addition to their shoe business. The association of philanthropy with the product is still strong as the purchase of one bag of coffee automatically triggers delivery of clean water to people in need. Whether they are good at the coffee business is not the key point in its success, as the brand tells us boldly that they were no expert in the shoe business to start with. With the “one for one” core value and fair trade coffee, Toms, and the ideology behind it, is destined to ride on its success as a socially responsible brand. 

The Key to a Traceable Supply Chain Is In Consumers’ Hands

Besides clothing brands, we are also seeing occasionally some food packaging being given QR codes to enable tracking of the production environment or tracing the supply-chain route and which are sold at much higher prices. The question as to whether there will be more supply-chain visibility lies in consumers’ hands. When a brand or seller starts to change its usual way of sourcing or procurement to trace its supply chain and adopts suppliers that are socially compliant, the cost of manufacturing and buying is likely to increase, which will then be reflected in the price of the products.  Whether generation X or Y or Z is willing to pay a premium for their right to know will determine if we are offered the right to know in years to come.  This, of course, is based on the view that the world is a free market and there is no government or monitoring-body intervention or mandatory requirement for disclosure of suppliers. 

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