Joining the Dots in the supply chain

pp_1The first talk of the SustainRCA 2014/15 year, Joining the Dots, drew quite a crowd.  Held in collaboration with the People’s Parliament the event was held in a House of Commons committee room.  A fitting location as transparency, accountability and human rights are at the heart of the push to join the dots on the supply chain.  Baroness Lola Young introduced the speakers, and the evening, in the context of the Modern Slavery Bill.  The Bill, due for its second reading in the House of Lords on 17th November 2014, will compel large companies to annually disclose what they have done to ensure their supply chains are “slavery free”.  As well as regulatory pressure, customers increasingly expect businesses to delivery great products and services responsibly.  The demand for greater transparency is matched with growing interest in the narrative behind products, a desire for authenticity, the result of a centrifugal force driving remote, homogenous, global brands at one extreme, and a revival of artisan, heritage and craft at the other.

logo@2Celebrating materials, maker and method gives meaning to a product, in fact the object derives greater meaning from the sum of these stories, and here lies the rationale for Provenance, a new online retail proposition from RCA graduate Jess Baker.  Every product has a story in its supply chain, and “not all products are created equal”.  Baker felt that retail experiences where look and price are the only metrics available are missing something and she suggested customers would pay up to 70% more if they knew that the benefits were going to the local community.  Observation made, Baker, with a PhD in computer science, is optimistic that technology can help us be better citizens, redressing the informational asymmetry that currently defines the retail experience.  Provenance tells the story of the people, places, processes and materials behind products.  Oh joy to discover I live a stone’s throw away from where Prestat, chocolate purveyor to H.M. The Queen is making dark salted caramel truffles!  The Provenance  API offers makers a host of smart perks, such as the ability to serve stories on other sites, but essentially it is the products’ stories that provide the marketing clout.
The second speaker, Leah Borromeo took us to the other end of the spectrum with the trailer for her documentary, “The Cotton Film: Dirty White Gold”.  The film shines a light on the cotton industry in India, where around 300,000 cotton farmers have committed suicide to escape debt.  The political, social, cultural and economic context is such that 28.5% of the Indian population (343.5mn) are destitute and the estimated net worth of the top ten was $102.1 bn, around 5.5% of GDP in 2013.  The plight of cotton farmers is part of a web of relationships and pressures more complex than can be tackled in this film, but it poses some tough questions.
Cotton is just one commodity at the base of complex, dynamic, global supply chains increasingly under scrutiny.  Tim Wilson, Historic Futures, works with a range of multinational firms to map the value-chains (a term Wilson prefers to supply chain) from where raw materials are sourced to the retail distribution of products in a format that can be rapidly updated.  80% of social and environmental impact is in the value chain, and typically organisations have limited tools to measure this accurately.  We know deforestation, climate change and biodiversity loss are increasingly cause for concern, and that the rates of change of going up.  Yet lack of accurate, complete information undermines an organisation’s ability to make informed and reliable sourcing decisions.  Without the ability to convey their best practice to management or buyers, participants in the value chain can not differentiate themselves from less responsible competitors, and justify what may be a higher cost or investment.
We should not underestimate the complexity of these relationships.  For example, working with Marks & Spencer, Historic Futures, mapped 12.5 million items over 15 months, from more than 700 third party suppliers, and more than 6,500 retail points of sale.  It can be done with accuracy and precision.  Historic Future’s String 3 is working on a platform that is verifiable but does not reveal the suppliers, so enabling companies to share information, and preserve their competitive advantage.
Demand for this data is growing.  Earlier this year, PricewaterhouseCoopers bought Geo-Traceability, a company that uses GPS mapping, Geographic Information System (GIS) technology and mobile phone and bar coding systems to track products from origin to shop floor.   GeoTraceability has collected data from 113,000 small holder farmers in developing countries and is developing new approaches to trace conflict minerals, and monitor of key biodiversity indicators. Ian Powell, Chairman and Senior Partner, said: “Resource scarcity and supply chain management are significant issues for our clients. The acquisition of GeoTraceability is another example of how we are investing in innovative technologies and services that enable our clients to make better business decisions, establish trust and reduce their risk.”  For the smallholders the platform provides information to help improve their production, farming practices and build a more sustainable livelihood.
6114_pcThe final speaker, Bruno Pieters, designer and founder of Honest by, is striving to be the first company in the world to offer customers price transparency.  Pieters is an entrepreneur, fashion designer and art director well-known for his sharp tailoring developed while working with designers such as Martin Margiela, Thimister and Christian Lacroix.  Pieters returned from a sabbatical in India, with a deep-seated concern for the environment, and wider impact of fashion industry.  His vision brings radical transparency to the entire supply chain.  Click on an item that catches your eye and, in addition, to conventional information about the garment’s size and care, scroll down for details of the material, manufacture, carbon footprint, and price calculation: with 0.5 euros of thread, and the retail mark-up.  What a fascinating exercise!
Many of these ESG (environmental, social and governance) impacts materialise in the medium or longer term, beyond the horizons of quarterly returns or short-term profitability.  Momentum supporting a culture of long-termism, transparency and accountability in business, and the finance industry, is developing on several fronts.  Following the Kay Review of UK Equity Markets and Long–Term Decision Making, the recent establishment of the Investor Forum, is the latest in a series of initiatives that will drive demand for integrated analysis incorporating ESG factors into standard financial valuations.  These developments reflect a wider discussion about the role of business, and banks, as corporate citizens, such as the Blueprint for Better Business, Aviva’s Roadmap for sustainable capital markets and the Banking Standards Review.  In a survey of 30,000 consumers across twenty countries in five continents carried out by the UN Global Compact-Accenture Study on Sustainability, in collaboration with Havas Media, found “72% of people globally say business is failing to take care of the planet and society as a whole”.
Joining the dots on the supply chain is only the first part of a linear model of manufacture and consumption, characterised by “take, make, consume and throw away”.  Measuring and valuing resources reveals the real business benefits opportunities of using them more efficiently, and effectively.  The Disruptive Innovation Festival, was a virtual festival ideas from leading thinkers, entrepreneurs and businesses sharing knowledge about the circular economy, an economic model that is restorative by design.  Environmental scientists have long urged us to recognised that we live in a closed system or biosphere.  Mapping impacts is the beginning of better decisions, to borrow the words of Maya Angelou, “I did then what I knew how to do. Now that I know better, I do better.”
P.S. Andrew Hill will interview Honest By Founder & CEO Bruno Pieters at 12pm GMT on Day 2 of the FT Innovate 2014 conference in London, ” The Digital Big Bang, how digital technologies and practices are transforming the way companies innovate and do business.”
Related links:
 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/253457/bis-12-1188-equity-markets-support-growth-response-to-kay-review.pdf
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