As consumer expectations around sustainability grow, every single aspect of a business’s supply chain is a potential weak link. The following guest post gives a sneak peak into the latest episode of Eden Talks, the new podcast from Edenhouse, where the company’s Chief Technology Officer Andy Bell discusses why it’s vital that businesses can manage their supply chain effectively and efficiently.
Sustainability is becoming ever more important in the choices we make every day. From reducing our carbon footprint to buying from local suppliers, as consumers, we’re increasingly doing our bit. That, in turn, raises our expectations of what the brands we buy from should be doing too.
Speaking on the second episode of Eden Talks, the new podcast from Edenhouse, the company’s Chief Technology Officer Andy Bell said that there’d been a marked shift in expectations over recent years.
“We've seen new legislation in many areas to support this being introduced, and all of this exerts pressure on businesses to really demonstrate their green credentials,” he told Edenhouse colleague, Solution Architect Jennifer Hilliard.
“Customers are looking to ensure that what they're buying is sustainably and ethically-sourced and traceable, that suppliers or producers aren't exploiting cheap labour, that human rights aren’t being violated and that the carbon footprint is minimised right throughout the supply chain from raw material supply, production, storage and distribution.”
The changing dynamics of supply chain management
The shifting focus of the supply chain is an interesting challenge for businesses to deal with, given everything else going on in the world.
Previously, conversations in businesses up and down the country focused on optimising efficiencies and keeping costs low. Manufacturing, for example, was sent offshore; if goods could be manufactured at a lower cost overseas then that’s what happened – and often a blind eye was turned to how workers were treated, or how well they were paid.
“We tend to see things going in cycles,” said Bell. “So, while over the past couple of decades we've seen heavy globalisation of supply chains, in more recent times things have shifted as businesses recognise the imperative to reduce their carbon footprint.
“We've seen a trend back to a desire for more locally, responsibly-sourced goods and most recently, in the current pandemic era, we're seeing customers actively seeking to support small independent businesses and helping to support local jobs and economies.”
In fact, a Neilsen survey finding that 81 per cent of global respondents felt strongly that companies should help improve the environment., 73 per cent saying they would definitely or probably change their consumption habits to reduce their impact on the environment, and a further 46 per cent saying they would be willing to forgo a brand name to buy environmentally-friendly products.
Supply chain sustainability – understanding every component
The pressure’s on for businesses to ensure they’re doing all of the right things – both in the way they operate and act on a day-to-day basis, but also that their suppliers are doing things in the right way, too.
“Businesses need to ensure that they can evidence their compliance with all of these things that customers are now looking for,” said Bell. “This is fundamentally all about trust. Trust at a transactional level between businesses in the upstream supply chain, to provide that traceability so no rogue or inferior quality or uncertified components are able to get in.
“Component traceability has always been hugely important in industries such as aerospace, for example. In the event of an aircraft accident, investigators need to be able to identify whether there are any component quality issues out of several thousand components in a plane.
“What we're now seeing is that level of rigour and scrutiny being applied much more widely across all sorts of other industries, products and services, particularly in things like food, consumer products and clothing.”
A global pandemic may seem like an inopportune moment for businesses to have to review their whole supply chain to ensure every facet is operating in the most ethical way possible. However, this desire for more responsibility from those who are providing consumers with goods has been coming for some time and needs to be addressed.
Pandemic speeds up the rate of change
In many areas – particularly the technology industry – COVID-19 has simply sped up the process of change; and with the spotlight thrust upon those local businesses who are struggling to survive, it’s easy to understand why.
But, of course, things still have to make business sense.
“It’s still a natural requirement for businesses to ensure that their supply chains remain efficient and cost-effective,” said Bell.
“To do this effectively, customers and businesses need to be able to look at and optimise their supply chains holistically.
“So, for example, outsourcing manufacturing to a lower-cost country where products can be produced more cheaply is often offset by higher transportation fuel costs to transport the goods to where they need to be.
“It's all about seeing the big picture of all of that and making holistic, coherent decisions.”
Tune in to the second episode of the Eden Talks podcast to hear more on how businesses can build a sustainable global supply chain, the challenges of managing a supply chain during COVID-19 and what brands are risking if they get caught up in a supply chain scandal.