As consumers increasingly put their money behind companies they perceive as sustainable, every industry is being pushed towards transparency. Nielsen recently reported that 66 percent of global consumers are willing to pay more for products from companies they perceive as sustainable, companies just need to show they can meet these expectations. Unfortunately, in the race to be the first and the cheapest, many retailers often sacrifice sustainability and transparency along the way.
It’s in a retailer’s best interest – not to mention the future of our planet’s – to focus on increased collaboration and transparency in order to pursue more sustainable supply chain practices. Participating in the race to the bottom is bad for business, it results in cheap, poorly made products, which will ultimately open a company up to economic, financial and reputational risk that can affect the bottom line. When there’s a lack of transparency, it’s easier to cut corners, whether intentionally or not. Retailers can minimize this potential risk by using digital technologies to improve relationships with suppliers, consumers and other partners in the community.
We’ve already seen the impact of these sacrifices in factory collapses, unethical work conditions and environmental crises. Some retailers have learned the hard way how reputational and operational consequences greatly outweigh the small cost reduction initially intended in the race to the bottom. Instead of putting a band aid on the problem, retailers need to address transparency throughout their supply chain and work with the community to implement ethical and sustainable practices as part of a long-term solution.
The current political and trade climate doesn’t help – under pressure to secure deals with Brexit and NAFTA negotiations looming, retailers face a difficult choice between purchasing cheaper products from other countries and promoting high-quality, ethical and sustainable practices. Instead of panicking about the potential effects of eminent trade deals, retailers need to focus on collaboration and innovation to incorporate sustainability and transparency throughout the product development process, in turn better mitigating risk in the long-run.
Luckily, digital technology has evolved to help companies better track supplier and other partner activity, improve collaboration and forecast potential risk. The movement towards a more transparent supply chain has grown in recent years, placing the responsibility directly on retailers’ shoulders to ensure they are managing their supply chains responsible. It may seem daunting to invest in sustainability and transparency while competitors continue the race to the bottom, but retailers who go above and beyond to incorporate transparency throughout their supply chain will find it ultimately improves their bottom line and creates more business value.
Read our latest white paper see how what-if, any-market costing helps mitigate risk in the retail supply chain.