Supply Chains Are only as Strong as Their Weakest Links

Have you ever wondered who assembled your new iPhone or where the vegetables were grown to make the salad you just had for lunch? The apples you buy from the grocery store have an “organic” sticker but how can you be sure? Knowing where materials originate from and the working conditions of those manufacturing the products we buy is the first step to transparency within supply chains.

Sustainable Brands Conference

During the Sustainable Brands ’16 conference, one major commonality among many of the panelists was that companies are putting forth a greater effort to provide transparency. This means putting their money where their mouth is and opening up about the environmental and human rights violations occurring within their supply chain. Many long-overdue regulations are being implemented to monitor the different farms and factories involved in the production process. As Jonathan Atwood of Unilever warned, "The places to hide are getting smaller."

From apparel to electronics, companies in all industries are urged to go out and talk to the farmers, manufacturers, factory workers, etc. and really get to know their supply chain with the intent that conversation can instigate action.

While it is ideal to meet face to face with every supplier in your supply chain, a site visit is not an immediate act of transparency. Panelist and CEO of ChicoBag, Andy Keller, explained how he made a point to visit each supplier and implemented a tracking device to ensure that only recyclable materials were being used in the company’s products. Because ChicoBag launched with only a handful of suppliers, it was feasible for Keller to visit each one and could more easily identify and implement corrective action for those suppliers not meeting the required standards. However, traveling to meet with each company can be a very time-consuming and costly task for companies with thousands of suppliers.

In the session “Evolving Tools and Technologies in the Quest to Increasing Supply Chain Transparency,” we heard from panelists who have created tools designed to help companies like ChicoBag verify their product’s materials and confirm their sourcing’s origins.

Source Intelligence has utilized software as a service market to create an online platform that facilitates the collection of supplier data, KPI metrics and quality analysis of data provided. Suppliers are surveyed on regulations such as conflict minerals, human trafficking, restricted substances, and anti-corruption. Tracing of their supply chain is trailed all the way down to the very origin of their products.

Transparency and Supplier Engagement

This information can then be shared both upstream and downstream as needed, to fulfill requirements and connect companies to their supply chain. Source Intelligence CEO, Jess Kraus stated, "To unlock the door to transparency you must empower your vendors to engage with each other.” Connecting vendors and suppliers are exactly what the platform allows you to do. 

Many companies are hesitant to voluntarily disclose information regarding the issues found within their supply chains. Whether it be carbon emissions, human trafficking or sourcing from regions that finance armed militias, companies fear that their brand name will be permanently tainted if it is publicly disclosed.

However, we are seeing that companies are better off coming forth with these issues – NGO backlash can be lethal for a global enterprise. Legal authorities and even consumers are not expecting these issues to dissolve overnight but rather they are looking for companies to develop and implement a measurable action plan to clean up their supply chain by going green and preserving human rights.

Much like the sustainability reports many companies are preparing, Kashi is putting transparency into action by partnering with QAI to develop a “Certified Transitional” initiative label, which consists of a procedure that helps to recognize and reward farmers during the three-year transition period while they are in the processes of obtaining an organic certification.

Transparency can be a scary word for companies, but it is evident that this is only the beginning. It is imperative for companies to start engaging with their suppliers more closely to identify the different issues that need to be addressed and implement changes as needed.