Transparency and engagement

Brands are increasingly taking responsibility for highly complex and globalised supply chains, especially now that customers and stakeholders are empowered by the internet and social media to access and share information on corporate performance with a global audience.

For those that can demonstrate strong ethical and sustainability performance from cradle to grave, there is a growing opportunity to differentiate, build customer engagement and enhance loyalty.

New technologies are emerging that enable better traceability through the supply chain from raw materials to factory gate, allowing companies to more accurately trace material flows, disclose impacts, identify potential risk ‘hot-spots’, and inform customers about the provenance of their goods.

Business value levers

Source: Accenture, 2013

Size of the prize

The market for sustainably sourced, ethical and transparent goods and services has grown 14% year-on-year since 2000. [i]

  • Fairtrade products and sustainably sourced clothing achieved over 30% annual growth over the last decade. [ii]

  • Short-term sales uplift of at least 1% is possible through certification of supply against recognised environmental or ethical standard. [iii]

  • Track and trace technology can enable inventory reduction and real-time forecasting of supplies, helping reduce cost of goods sold by up to 10%. [iv]

Diagram source [v]

Sustainability benefits

Visibility programmes, combined with setting higher supplier standards, can pre-empt, monitor, and ultimately reduce supply chain failures, enhancing health and wellbeing of the extended workforce and communities. Examples of social outcomes can include improved health and safety (through identification of potential workplace risks), fairer living wages and stamping out child and forced labour (through better auditing against minimum supplier standards), enhanced training, and generally improved working conditions.

Visibility and improved supply chain management can also lead to multiple environmental benefits, such as reducing transport emissions through smarter logistics management and favouring lower-impact production techniques.

Technology will drive ever greater transparency throughout supply chains, empowering customers and asking for greater levels of engagement between sustainable business models and consumers.

- Marc Bolland,
Chief Executive, Marks & Spencer

Example questions to ask to help your business consider this innovation area

Opportunity What are our customers’ expectations with regard to the origins of our products?
How can we engage customers on product origins to build trust and loyalty?
How material are environmental and social risks in the supply chain, and how can we best monitor these issues (e.g. labour standards, product origins)?
Competitors How are our competitors innovating to build transparency and engage their customers?  
Business case What are the costs and benefits to our business from enhancing traceability (e.g. sales impact, inventory impact, avoided recall costs, etc.)? What investments in technology and processes are required?
Source: Accenture 2013

References

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