Supply chains must take the lead in origin stories
Originally published on Supply Chain Dive
“Batman Begins,” “The Godfather Part II,” “Casino Royale” – what do these movies have in common? Apart from being box office hits, they each tell an origin story. They take us back to a time when James Bond didn’t care about the details of his drink, Vito Corleone was a fugitive from Sicily and Bruce Wayne afraid of bats. Audiences love these stories because they feel more connected to the characters. They experience how the protagonists became who they are today.
Products, too, have origin stories. These stories describe materials and production methods, the nation or region of harvesting or production, the people who made the products. And as more consumers aim to back up their personal values by making more sustainable buying decisions, they want to know how their purchase became what it is today. They want to align what they believe with what they buy.
The trend toward sustainability marketed products is undeniable: A newly published Gartner study shows that 37% of U.S. consumers make protecting the planet the center of their purchasing decisions. An October 2018 study from Nielsen showed sales of sustainable products in the chocolate, coffee and bath product categories grew twice as fast as the weighted average growth of the three categories combined. In 2019, Unilever reported its sustainability-marketed brands grow at faster rates than its other products.
With sales growth a clear benefit for CPG companies, it’s no surprise that marketing and product managers are eager to leverage sustainability-based origin stories, but is supply chain ready to fulfill that demand?
It takes a family to create an origin story
A good origin story is the output of a healthy enterprise partnership. Although marketing will most likely come up with the idea of putting together a sustainability-based origin story as the basis of product positioning, the supply chain organization must take the lead in planning and executing this initiative. After all, it’s the supply chain leaders that oversee the decisions and transactions within sourcing, production, delivery and (sometimes) packaging processes that yield the information that constitutes the origin story.
Supply chain is the enabler of traceability of materials, components and finished goods throughout production. Supply chain’s process decisions can also affect the ability of the company to achieve third-party certifications for initiatives such as fair trade or responsible harvesting.
The legal department must also be involved in the origin story creation process. Especially in the U.S., supply chain information shared in corporate social responsibility and sustainability reports has been used as the basis of class action lawsuits by both investors and consumers. If a consumer or an advocate organization finds that a sustainability-based origin story is untrue, they could sue the company for false advertising.
Good stories come from good governance
When we boil it down to the essentials, a product’s sustainability-based origin story is information about the people, materials and processes involved in creating a product. The information can enhance the brand value if the consumers find that the product has attributes that align with their values and they trust that the information about the product is true. Both key factors — the information and its trustworthiness — can be ensured by a good governance process that should be initiated and led by the supply chain function.
By Pam Fitzpatrick, Senior Director Analyst, Gartner Supply Chain Practice – Nov. 8, 2019