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Knowing Every Link in Your Supply Chain

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Consumers are becoming more and more interested in the make-up of products they’re buying. The ability to trace products through the entire supply chain---whether from field to fork or source to consumer---is becoming a competitive weapon for some companies, especially if they can authenticate then promote goods produced with sustainable business practices.

A Financial Times article titled "Technology Let's Buyers Unravel Ethics Behind the Label" cites that ethical spending has increased significantly in the past 20 years. As an example in the United Kingdom, “The amount of spending and investment influenced by ethical considerations almost doubled between 1999 and 2008 to reach £36 billion.” The FT article mentions the growth of fair trade and certified organic products as part of this growth trend. And fellow Daily Fix author Ted Mininni says, these types of goods “are increasingly being added to retail assortments”—and in growing numbers!

However, one of the major challenges for both retailers and manufacturers alike is authenticating ethically sourced products. There's more to the process than taking the supplier’s word for it.

In the case of organic bananas, the FT article notes, “the food company Dole labels each of its organic bananas with a three-digit number that, when entered on its website, reveals details of the farm where that banana is grown.” Identifying where a banana is sourced, however,  is simple compared to such products as sweaters or t-shirts that pass through multiple suppliers and countries.

In “The Elephant and the Dragon,” author Robyn Meredith confirms that products often “zigzag” through the global supply chain from factory to factory. “A cheap toy may be assembled by parts from 12 different factories,” she says. And something as sophisticated as an automobile might contain five to seven thousand parts.

Fortunately for marketers, the challenge is not beyond the capabilities of today’s technologies. Some progressive companies are engaging in a purposeful effort to build effective policies (including auditing), technologies (supply chain analytics and infrastructure) and processes to track and monitor the extended supply chain.

Of course, implementing a data-driven supply chain infrastructure is only half the battle—supply chain managers, operations personnel and marketers must learn how to use it! Marketers, working alongside operations, will need training on the various tools and systems used to access data for reporting and query purposes. And marketers may also choose to make supply chain data available directly to consumers—similar to Dole’s web portal—thus enabling them to verify product origins for themselves!

Ethical sourcing, trade, manufacturing and retailing will continue to be a hot button for consumers. However, as seen from this article, jumping into this marketplace requires much more than just fancy signage and/or promotion. A real commitment to corporate responsibility and sustainable practices must be much more than lip service; it involves significant investment in people, processes, technology, and strategy. As seen from the complexity in supply chain traceability alone, it’s definitely not an effort a company should take lightly.

Questions:
• Does it matter to you how a product is made? Are you interested in the origins of the products and services you consume?
• The Financial Times article says that companies should make information about their supply chain public—or consumers will do it for them. Do you agree with this statement?


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Paul Barsch directs services marketing programs for Teradata, the world's largest data warehousing and analytics company. Previously, Paul was marketing director for HP Enterprise Services $1.3 billion healthcare industry and a senior marketing manager at global consultancy, BearingPoint. Paul is a senior contributor to MarketingProfs, a frequent columnist for MarketingProfs DailyFix, and has published over fifteen articles in marketing, management, technology and healthcare publications. Paul earned his Bachelors of Science in Business Administration from California Polytechnic State University, San Luis Obispo. He and his family reside in San Diego, CA.

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  • by Ted Mininni Wed Sep 29, 2010 via blog

    Hi Paul: thanks for the nice mention. In my work, packaging food and toy products among other categories, I'm quite aware of this issue. Consumers are demanding more information appear in labeling and packaging so they can make informed choices for their families. It's absolutely important for consumer product companies to be able to trace every single component in every product. It's incumbent on company purchasers to make sound choices and then be able to account for them. . .for their sakes as well as ours.

  • by Paul Barsch Wed Sep 29, 2010 via blog

    Thanks Ted. At the point of purchase, information on packaging is great regarding how the product was developed, country of origin etc. All well and good. I'm also advocating more transparency for companies with their own supply chain, so that consumers can gain visibility into where a product was produced, and the paths it traveled to reach it's final destination. Consumers with a focus on sustainable and ethical business practices are demanding this information. It's up to companies to provide it!

  • by Elaine Fogel Fri Oct 1, 2010 via blog

    Paul, this information certainly can't hurt for those who have an interest. On the other hand, it doesn't indicate which corporation is the overall parent of each product, no matter how extensive its supply chain. Is it possible that consumers can be purchasing ethically produced goods owned by big chemical corporations or others that are environmentally unsound? Just wondering.

  • by Paul Barsch Fri Oct 1, 2010 via blog

    Elaine, with complex supply chains crossing countries, multiple suppliers, shippers and even retailers, it's incredibly difficult to track products. This of course says nothing about the products themselves much less parent companies as you rightly point out! One of the key themes here is transparency. The more a company can be transparent about how its products are sourced--and make that information known to consumers--the better off they'll be for consumers that rely on this type of information for purchasing decisions. I really like what Dole has done in regards to making information about their products known via an easy look up web portal. Yes, tracking the origins of a banana is a far cry from something complex like an automobile, but I believe there is ample room for improvement for most companies when it comes to supply chain traceability.

  • by Savita Hanspal Sun Oct 3, 2010 via blog

    I agree that companies need to be transparent but what is equally important is the truth in the transparency. Who will verify? Time and again, scams have implicated even the best of companies... Moreover, transparency in one country and not in the other also has an implication. while we focus on all these trivialities, the main concern remains ethical business practices at all levels

  • by Paul Barsch Mon Oct 4, 2010 via blog

    Savita, thank you for commenting. You've made some compelling points on transparency. Indeed, auditing is an important part of the sourcing process for ethical and sustainable products. Wasn't it Ronald Reagan who said in regards to treaties on Soviet ICBM's - "trust but verify"? Seems like appropriate advice!

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