Devastating sourcing and supply chain disasters, including the Bangladesh factory collapse in April 2013, have increased the push for retailers and other businesses to implement sustainable and responsible practices across the global supply chain. Tamara Saucier, VP industry – retail solutions, GT Nexus, discussed the topic, and proactive measures retailers can take, with Chain Store Age.
What can retailers be doing to ensure ethical and sustainable supply chain practices?
The challenge is in knowing where your goods are being made and who’s making them. This is a struggle due to the complexity of multi-tiered supply chains, but there are steps retailers can take to improve the visibility and traceability of the movement of goods throughout the production life cycle, from origin through delivery. Visibility means different things to different companies, but for the sake of ensuring ethical and responsible production of goods, visibility means knowing who every party is in the supply chain starting with raw materials, and tracing the steps in the production cycle to ensure compliance. Doing this from thousands of miles away is difficult.
Where should they start?
The first step is to connect all of the trading partners on an automated, electronic network that enforces workflows and procedures and ensures that the right parties are creating the goods with the right materials, labor and working conditions. It can be a challenge to mandate suppliers to log in to a system and report their steps or milestones in production. But we’ve found that by tying payments to the system, there’s a completely different perspective from the suppliers. By connecting all trading partners in a cloud environment that automates the orders, invoices, documents and payments, retailers have a fighting chance of obtaining visibility into the supply chain to ensure ethically and sustainably produced goods.
Are consumers’ purchasing habits being influenced by how ethical or sustainable a retailer is?
Yes, today’s consumers are tuned in to where goods are made like never before. They want the best possible deal, but they also want to feel good about where the product is coming from and how it has been made. More consumers are demanding responsibly produced goods, and companies that fail to demonstrate ethical production are seeing their brands and stock prices impacted.
What should retailers keep in mind when they are trying to create a more sustainable and ethical supply chain?
It’s important for retailers to remember that suppliers and trading partners are part of the brand and that they can’t be separated. Retailers should have a vested interest in the health and success of their suppliers — sometimes squeezing the last dime out of suppliers is a short-sighted approach. Instead, retailers should find new ways to partner with suppliers to ensure their brand is healthy. For example, leading retailers are offering early payment programs to suppliers to assist in delivering access to capital. A truly collaborative approach is a win-win situation for all parties.
Are there any retailers that come to mind that are doing a good job of making their supply chains lighter?
Companies like Patagonia and Levi Strauss & Co. have well-publicized efforts to do no harm to the environment. Levi has programs that drastically reduce water amounts used in production of its clothes, and Patagonia has marketing campaigns that tell customers NOT to buy their products unless they really need them.
Patagonia also has tools that allow consumers to track the carbon footprints of their products. It’s one thing for a company to talk about sustainability, but consumers really embrace a brand when they are able to put their money where their mouth is.
What tools or technology can facilitate retailers’ efforts in producing and sourcing goods more responsibly?
Tools that deliver visibility and accountability within the production of goods are making an impact. A retailer is in a good position to enforce responsible production policies if they are able to see where goods and inventory are in the supply chain, know each party that touched the goods in the process, and track and manage the delivery of goods to minimize shipping miles and carbon footprints.