Where do the products we buy come from and how do we know that their production doesn’t leave a wake of environmental damage or exploited workers? Even brands we think we trust are often linked to suppliers with questionable or downright abusive practices, as exemplified in the November factory fire in Bangladesh, where 112 workers were killed at a factory that supplied Walmart, Sears and even the U.S. Marine Corps, though all claim they had no idea that apparel produced there was destined for their stores.
Global supply chains are complex and opaque, with many layers of suppliers, distant and inconsistent regulatory environments, and intermittent and sometimes unreliable audits and reporting.
But this is an area ripe for social innovation, which we at CSI define as “a novel solution to a social problem that is more effective, efficient, sustainable, or just than existing solutions and for which the value created accrues primarily to society as a whole rather than private individuals.”
Consumer demand to know where products come from and feel good about their sourcing is on the rise. And fortunately, our desire for information is aligning with innovations in technology that provide more visibility into the journey products take to get to our homes than ever before. The challenge is how to source, sort, and package this information in a way that is useful and can compel positive change.
At a conference on socially and environmentally responsible supply chains hosted by Stanford’s Global Supply Chain Management Forum and CSI last fall, GSB Professor Hau Lee and his team of collaborators presented their research Maturity in Supply Chain Management. The framework and findings of their report are helpful, and I encourage you to read more here if you want more details.
In its research, Lee’s team found that over 80% of chief supply chain officers at the 750 firms polled had social and environmental monitoring systems in place for their internal operations. But less than a third had such systems to monitor the practices of their immediate and extended supplier network. This is pretty dismal. Without taking ownership for the integrity of goods that come through their suppliers, we don’t know much at all about the true social or environmental footprints of the products we buy.
But there is evidence that we can do better. Three organizations at the conference particularly impressed me with the hopeful examples they provide, each with a different approach toward increasing transparency in the global supply chain. All three of these innovators are sourcing, aggregating, and disseminating information in unprecedented ways that can have broad impact at different parts of a product’s journey to our homes.
Humans at the Source: Dr. Kohl Gill, CEO of Labor Voices, presented his work to build “real-time” supply chain visibility. Labor Voices captures stories from factory floors via mobile technology, then analyzes the information and delivers it to brand-conscious companies and third party inspectors. Data on recruitment, employment, child care and health care is provided to employees, and information on worker satisfaction, migration patterns, and employee retention is provided to companies. Gill says Labor Voices’ intelligence is helping supply chain executives at major brands to detect emerging risks and choose the best suppliers, and also helping suppliers attract and keep the best workers. This is interesting – they’ve transformed the notion of whistle-blower from an individual, risky act into collective data gathering with the potential to build a more transparent system offering gains to all stakeholders.
Environmental Footprint: In 2006, Ma Jun founded the Chinese nonprofit Institute of Public and Environmental Affairs (IPE), after witnessing many environmental and public health tragedies while working as a news reporter. IPE’s searchable, online database of water, air, and hazardous-waste pollution records in China now contains more than 100,000 accounts of factories violating China's environmental laws, and users of the website (including major brands like Unilever, Coca-Cola, Walmart and GE) can see if suppliers have a violation on record. Access to these records has galvanized some Chinese communities to pressure local officials into more consistent enforcement of Chinese environmental protection laws. The database is also a tool for major brands to support their suppliers in making changes, and for consumers to learn about the supply chains of their favorite stores. IPE’s work to amplify the accessibility of information as a lever for environmental protection and restoration at the hub of the world’s manufacturing has tremendous potential.
Point of Sale: GoodGuide’s co-founder Dara O'Rourke presented a tool to help consumers find “safe, healthy, green, and ethical” products based on scientific ratings, so that their purchases can better reflect their preferences and values. The platform also crowd-sources peer reviews, leveraging this massive trend toward greater transparency in the marketplace. With mobile technology, consumers can access all of this information at point of sale. If buyers who care use such a tool to shape their purchasing patterns, this information can shape the marketplace, and push retailers and manufacturers toward higher standards in social and environmental responsibility.
To close I’ll point back to the research of Professor Lee and his team. Their study’s list of best practices for building more responsible supply chains emphasizes the importance of a collaborative approach to information sharing that relies on transparency as an essential lever. Many innovators, including those I mentioned above, are approaching this daunting problem from all angles. Now it’s on us to align our buying practices with our values, and help these diverse approaches coalesce into a strong force for social innovation.