Consumers and the supply chain
Companies around the world are evaluating their supply chains to safeguard their bottom lines and their reputations as socially responsible corporations.
Tue, Mar 27, 2012 at 11:40 AM
Did you pledge not to buy any more Apple products when you heard a supplier used by the computer giant allegedly mistreated workers in China? Do you cringe every time you hear of a contaminated factory and recalls of the products you often buy?
If you answered “yes” to either scenario, you already understand the intimate relationship between consumers and the supply chain. The supply chain is what links all the parties involved — directly or indirectly — in fulfilling your needs. In most cases, this translates to the total effort of bringing goods to market.
Whether it affects their health, tugs at their heart-strings or conflicts with their ethical values, consumers have demonstrated a willingness to use their dollars to vote their conscience. These buyers not only want to know about the ingredients in their products, but also about how the product arrived on the store’s shelves.
As a result, companies around the world are evaluating their supply chains to safeguard their bottom lines and their reputations as socially responsible corporations.
Reporting environmental impact
Nearly 80 percent of large manufacturers surveyed about a year ago said they were required by their customers to report on their environmental impact and that of their entire supply chain. The study of 200 executives was conducted by IFS, a public company providing supply chain management software to businesses.
Consumers increasingly are interested in the environmental and social impact of products and services they pay for, says Matthias Stausberg, spokesman for the UN Global Compact, the United Nations initiative to promote responsible business practices.
There’s often a gap, though, between what consumers will say and what they will do, he says. “Everyone will tell you they would buy more ethical products But at the end of the day, many will default to price and convenience.”
But new evidence shows consumers aren’t just giving lip service to their convictions.
New Harvard study
Some consumers are aligning their values with their spending, even if it has to cost a little more.
A Harvard study released last year found that even “price-sensitive eBay shoppers” are willing to pay a premium — 45 percent for Polo shirts and 23 percent for gourmet coffee — for products labeled as produced in workplaces with fair labor standards. The shoppers were not aware they were participating in a research project and the more ethical products were lined up with unlabeled, but cheaper items.
The study used certification of fair labor standards developed by Social Accountability International (SAI). While more businesses are adopting similar standards to ensure humane workplaces, most consumers don’t have a clear indication at the point of sale about how an item was produced down the supply chain, says Alice Tepper Marlin, SAI president. “If companies can demonstrate good supply chain management practices, it will give consumers more confidence.”
Helping consumers feel comfortable with their purchases also was the goal of Tepper Marlin’s book, “Shopping for a Better World.” It evaluated well-known brands on working conditions and other social and environmental issues.
”Some supply chains are more relevant to consumers than others,” says Donald Ratliff, executive director of The Supply Chain and Logistics Institute at Georgia Tech. Food should definitely be a consumer concern, along with pharmaceuticals, he says. The supply of those products affect consumers in a more serious way — their health — than say electronics or clothing, where the only issues tend to be price and condition, Ratliff explains.
“We import 60 percent of all produce and 80 percent or more of seafood,” he adds.
What consumers should be concerned about is where it came from, how it was handled, the temperature that was maintained and whether it came into contact with anything that could contaminate it, Ratliff says.
“If it’s perishable, and all food is to some degree — some more than others — it has to be kept cold,” he says. “There are a lot of places where there’s the potential for something to go wrong.”
Dangers of transport
The biggest risk involves moving or transferring the product, from storage facility to truck, for instance, he says. With international transport, a product may be flown into an airport and be at risk by sitting on a hot tarmac for too long, he adds.
Wine is one of those products. “Wine connoisseurs are not going to be happy if their wine is the wrong temperature too long,” especially if they paid a lot for it, Ratliff says.
They may not even know until they retrieve it from the wine cellar years later, he adds.
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