Moving Towards More Transparent and Sustainable Supply Chains?

Green chain
While the prevalence of "green" and "sustainability" has been rather constant, or shown slow, steady growth from 1995 to 2005, numerous consumer research sources show that consumer attitudes and preferences for sustainable and green elements in their shopping experiences and lifestyles has grown dramatically in the last few years (download Greentailing in Tough Times: How are Consumers Reacting and Retailers Responding?.  A few general observations that I have found particularly interesting:

  • The definitions and standards of "green" and "sustainability" are still under debate and refinement.  It's clear that there are many shades of green which can be analyzed in many areas of a product's lifecycle.  For example, how does one measure the "greenness" of a completely recyclable product that is manufactured in a fashion that has a large, negative impact on the environment?  Conversely, what of the circumstance in which a non-recyclable product with harmful materials is manufactured in a very low-impact environment?  Include the footprint that is created when factors such as packaging, shipping, disposal vs. reuse vs. recycling, energy consumption of the product itself, retail environment requirements, and many more–and it's easy to see that there are numerous areas in which a product may or may not be green and/or sustainable.
  • Green generally refers to elements of eco-friendliness.  Ethically sourced and Fair Trade generally refer to the social impacts of the conditions in which the goods are made.  Both might be said to fall under the general umbrella of sustainability.
  • Because the topics of green and sustainability have gained so much momentum in the last few years, many companies who jumped into marketing green without much follow through, were quickly labeled as "greenwashers".  Thus, 3rd party certification and authenticity through honesty and transparency seem to be gaining greater currency with consumers who demand that companies' claims of sustainability are real.  
  • Consumers are generally not willing to pay a price premium higher than
    10% or so for green products.  To continue towards mainstream growth,
    green cannot cost more…green.

Where do supply chains fit into all of this?  The general concept of the supply chain consists of how products are produced and moved from producer to end user.  From the consumer's perspective, this process is essentially invisible.  This may be a reason in which this area has received less focus than others, such as energy consumption of the product, packaging, recyclability. 

However, global supply chains have been a major force for economic expansion and development, as well as widening environmental and social impacts.  When companies in the United States extend supply chains to lower cost, developing countries, prices in stores drop and a whole segment of the U.S. population that would not have been able to afford a certain standard of living are able to accumulate material wealth. In China, the manufacturing base expands to support the demand, and people leave the countryside to earn wages higher than those made in the countryside.  When consumers in the United States slow down their consumption of products, areas in China developed to support previous consumption levels are again dramatically impacted.  In the area of Dongguan, a large manufacturing region in Southern China, it is estimated that up to 1/2 of the population, or approximately 6 million people, have left in the last year.  Imagine half the population of Los Angeles leaving the city in a year's time.  The positives and negatives of all of this is extremely complex and could be approached from myriad perspectives.  But one thing is clear, supply chains are having a substantial impact on the world.

Some companies like Patagonia, Timberland, and a few others are publishing the carbon dioxide footprint of their product lifecycles.  Patagonia is taking some impressive steps forward with their Footprint Chronicles and the publishing of their factory list.  Patagonia is not only making their supply chain more transparent, they are doing so in a refreshingly authentic fashion by sharing both the positive and negative impacts that their products and processes have.   Will other retailers and manufacturers follow suit?  Will consumers demand more information and transparency with respect to supply chains?

Much more to come on this topic, such as Walmart and transparency, manufacturers in China, the social compliance auditing system, and more.