Kang Hsu, Sahil Malkani, Patrick Shanahan, and Christopher S. Tang
Over the last decade, as the number of product recalls hit record highs and concerns over environmental and social responsibilities rise, consumers are demanding more production information ranging from product ingredients to supplier identities. For decades, many western firms guarded the identities of their supply-chain partners as a way to maintain their competitive advantage. However, as governments, consumers, and NGOs exert pressure on increasing supply chain transparency, the old adage of safeguarding supply chain partners has taken a turn. In an ironic twist, making supplier identities public is taking form of a source of competitive advantage, particularly targeting consumers who demand information so that they can make informed purchasing decisions.
In 2005, Nike became the first company in the apparel industry to disclose the names and addresses of its contract factories worldwide on its corporate website (http://manufacturingmap.nikeinc.com/). Since then, many well-known companies such as, HP, Intel, Apple, etc., have released the names and addresses of their suppliers to the public. In the same vein, Patagonia launched its “Footprint Chronicles” (a “cool” version of a Corporate Socially Responsible report) in 2007 with the intention of educating its customers on the various environmental impacts of a sample of 17 Patagonia products, while also allowing the customers to solicit feedback. (Figure below).
In 2012, Patagonia decided that it was time to considerably expand the scope of its “Footprint Chronicles”. The content was shifted to focus on product origin details, including supplier identity and supplier operations. The revamped Footprint Chronicles now traces the social and environmental impacts of products from factory-to-store and readily shares this information with -everyone. It also provides information about whether a supplier is ISO14000/14001 certified or not; whether the supplier is certified in the processes for handling organic cotton. Taking a step further in showing commitment to being socially responsible, Patagonia even provides information about the ratio of men to women working in the factory. These measures are a testament to Patagonia’s commitment to fair labor initiatives.
With more transparency over supplier’s social and environmental responsible operations, companies and suppliers can gain public trust. As more consumers purchase products that are socially and environmentally responsible, the payoff for making supply chain transparent can be huge!
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