The Armchair Supply Chain Expert
Haley Garner, Research Director at eft rekindles his musings on supply chain through a look at the connected consumer, and the implications this might have on the supply chains they frequent from the perspective of transparency, ethics and generally...
Supply chain risk has often headlined a number of our events, reports, surveys and even a webinar or two. In very broad terms, the primary areas we’ve seen covered include 1) security risk 2) natural disaster risk 3) supply/demand risk (economic). However, the age of the connected individual, how does the concept of supply chain risk need to evolve to incorporate modern variables?
For the world’s 7 billion people, there are 6.8 billion cell phones. I’m using this incredible statistic to underline the truism ‘everyone’s got a phone, people are connected’. Last week I was looking at some of the advantages this has had for supply chain – more than ever, customers have access to online marketplaces, allowing them to realise their needs, wants, desires on a whim. But mobile might not be entirely positive in an industry that is highly sensitive to economic trade-winds, global disruption, and consumer trends: it has provided the consumer with a platform – the ability to voice like, dislike, concern etc. of the companies they interact with. Will this have the ability to place enough onus on companies to ensure their supply chains are risk free – environmentally, geopolitically, socially and ethically from the consumer’s perspective?
In a recent report on supply chain risk, CIPS noted that 11% of UK Businesses thought it was likely that some form of modern slavery exists in their supply chain. A further 72% of British supply chain professionals have claimed to have little visibility beyond the second tier of their supply chains. Given the nature of ‘viral’, it’s becoming increasingly in the interest of companies to have total supply chain visibility not only for business operations reasons but for controlling their image. Effectively, a more powerful consumer means the nature of supply chain risk needs to be taken even more seriously by supply chain executives.
A cursory survey of current issues provides 4 good examples of how the modern consumer is putting more pressure on supply chain managers.
1) Current geopolitical actions have created a push and pull effect on market access for some companies via such forces as sanctions, conflict and boycotts. It is perhaps in this last area in which we’re seeing increasing consumer presence and effect on demand as a consequence of supply chain decision-making. I won’t go into the examples, just hyperlink them, as we’re not looking to launch into a geopolitical discussion, but just point out consumers’ awareness of a company’s supply chain are at a much higher level.
2) The ethical implications of a company’s supply chain have gained more and more attention in the wake of controversies surrounding footwear, clothing and electronics manufacturing. One area though we’ve started to see supply chain executives respond is in the realm of conflict minerals and their usage in electronic devices. At eft’s recent Chief Supply Chain Officer Forum in Chicago, Trevor Schick, SVP Enterprise Group Global Supply Chain at HP outlined the company’s responsibility as a global citizen and the work they’ve done to eliminate such minerals from their supply chain. In outlining the importance of eliminating conflict minerals from the supply chain, Schick noted ‘Our Conflict Minerals Report is a required disclosure to the SEC and was filed May 28th. It will be scrutinized by NGOs, investors, customers, consumers, and the government. Customers are asking for DRC Conflict-Free products.’ Clearly the business case is there.
3) Environmental concerns are gaining more and more scrutiny from consumers. Whether it is the EU’s recent cap on vacuum machine power or the pressures from investors, the business case for environmental concerns is becoming more clear-cut, and the more consumers are connected to a platform to broadcast their opinions on these issues, the more companies are going to take a second look at their supply chains.
4) The power of crowd-sourced social critique on supply chain has come to our attention in eft’s corner of London. A local super market has gained its own Tumblr highlighting the woeful state of the stocking of the store’s shelves. You can imagine that once viral, the multi-billion pound supermarket took notice. I’m sure many of us have encountered similar memes. On perhaps a bigger scale, the recent food security issues McDonalds has been facing in China and the role social media is playing in the country to shape consumer food choices.
So what does this all mean? Well, at the outset I said that the connected individual hasn’t ‘just been a positive’ for supply chains, in that giving the consumer a platform has had its consequences. But it is perhaps this platform, and the power of consumers to securitize the supply chains of the companies they patronize that is one of the big positives of mobile. The consumer ultimately knows when a supply chain is working or not, and as such a supply chain executive can no longer be ignorant of twitter, tumblr, or facebook – the armchair supply chain manager’s in the office.