Most organisations are aware who their direct suppliers are, but often very little is known beyond that. The 2013 Rana Plaza garment factory disaster in Bangladesh intensified the pressure on global brands and retailers to know and reveal the history of the items they sell. This isn’t just a trend: it is a fundamental shift, with many now trying to find out where and how their products were made, and where the raw materials came from.
Technology now makes it possible to collect the information required to create robust product histories. Of course, for this to work, suppliers need to engage, but many have practical concerns. Sharing commercially sensitive information is one. Others include the amount of time it takes to deal with customer requests, and the issue of poor internet connections making it difficult to use contemporary solutions.
A supplier in India told us that “in reality, most suppliers are not based in the centre of town, so internet connections are often not reliable. Some suppliers have to hire people just to go to the nearest town to input data.”
Historic Futures is piloting a solution, String3, which addresses these practical concerns. This secure online service collects data directly from the organisations at every stage of the supply chain. The retailer logs in and asks their questions to their immediate supplier, for instance: where is the cotton in this t-shirt from? The supplier states whether they made it or bought it, and if they bought it, they in turn ask the same question of their supplier. The process repeats until the organisations who really knows the answer to the questions provides the answer in String3, which could be a supplier many levels down the supply chain.
By only asking for the information the retailer requires, instead of information on every product supplied, there is no need for complex data uploads or attachments, which addresses the issues of time and unreliable connections. It also doesn’t cost anything for suppliers to answer questions, or continue the question down the chain so the price of the technology will not be a barrier to supplier participation.
The retailer is kept informed of the progress of their questions, and gets the answers as soon as they are provided, e.g. The cotton came from Australia. However they do not see the details of the organisations involved, so suppliers can use String 3 without worrying about having to share their sources or share confidential data. However the retailer can be confident in the answer because the end supplier has confirmed that they did supply the cotton, and if their question isn’t answered then they know that this might be a supply chain they need to investigate in more detail.
Being able to reassure suppliers that their practical concerns have been addressed is a major step forward in the drive to know where products come from. The final stage in this journey is actually motivating suppliers to participate, and our research suggests a number of successful key motivators.
Some suppliers respond to client pressure. If a customer insists that value chain data is a condition of any contract, this may prove enough of an incentive. Smaller customers however, with limited purchasing power, and even larger ones that are unable to maintain pressure beyond the first tier of the supply chain, may need to try other means of persuasion. This could be the guarantee that that they will remain a long-standing customer, or the promise of new business.
In an age when customers are demanding to know more and more, and globalised supply chains are vulnerable to events a long way from home, it is crucial to know where your products really come from. The development of String 3 has the potential to be a major breakthrough.
Tim Wilson is Founder and Director, Historic Futures.
Image credit: istock