Companies experience that consumers are becoming increasingly conscious and curious about what is behind the products they chose to buy.
Research shows that consumers are changing their purchasing behaviors. Their choices are less and less determined by brand loyalty and increasingly influenced by the specific performance and features of individual products. They look to companies for proof that the value chain, behind every product, is sustainable. The demands to deliver cascades from the consumer down throughout the supply chain, putting pressure on every player.
In parallel, supply chains are changing. Digital technologies and business models are disrupting supply chains’ linear structure. Emerging is a more brokered, networked system of peers, where previous sub-suppliers suddenly interact directly with a consumer, for example. Digital transformation is further enabling and amplifying this supply chain transformation.
A recent survey by DNV GL-Business Assurance revealed that half of the respondents considered their company a beginner when it comes to sustainable supply chain management. While 81% indicate that they have taken at least one action to address supply chain sustainability, only 7% respond that they are covering their entire supply chain. Since a total of 86% indicated they feel increasing pressure to demonstrate a sustainable supply chain, it seems clear that companies realize the need to move. The UN Sustainable Development Goals (SDGs), first launched in 2015, provide a solid framework and reference against which companies need to comply, and from which to mold strategies and measure performance.
In the survey, companies leading the way stand out, managing their supply chains with a strategic approach and penetrating all tiers with a holistic, structured approach and actions. Their active management of supply chain sustainability is driven by customer demands and regulations. Through this approach, they create business improvement opportunities, gain market shares and other market related benefits. For these companies, the benefits clearly outweigh the cost of investing.
Mutti is one company example, where a clear decision was made to integrate supply chain management as part of the business strategy to differentiate the brand and win market shares. When the idea was first launched, experts did not believe it to be possible to base a market strategy on value-driven choices for a low-value, commodity product such as the tomato. But staying firm, a clear strategy was developed with 3 main ingredients: premium quality, lower environmental footprint and social responsibility. Starting at the farm, the family-owned company is now a winner with consumers, being the market leader in their product category.
The leaders in the survey mentioned above, indicate there is still a lot for them to do. They are committed to continue to improve supply chain sustainability and increase investments because they recognize the relevance for the future success of their organizations.
Digital transformation, led by technologies such as blockchain, sensors, IoT, and platforms, are a game changer. They enable companies to manage their supply chains more effectively and efficiently, reducing costs and frictions. At the same time, they empower companies’ abilities to illuminate their supply chain, increase transparency and consumer communication.
Our digital assurance concept called My Story® combines domain industry and assurance knowledge with digital technologies. My Story solutions let companies manage the physical supply chain of a product, its components and their origin. These are given a digital fingerprint and verified by a 3rd party, in this case DNV GL. Companies can consequently manage and improve their value chain more efficiently while enabling transparency and communicating the story behind each product to consumers, from origin, quality and safety to sustainability aspects such as social, environmental and ethical integrity.
Traditionally, proof of sustainability performance has been directed toward stakeholders such as governments, companies with whom you wish to do business, investors and the like, communicated through reports or information on corporate websites. Digital assurance addresses the trust gap with consumers, providing information on sustainability and the supply chains behind them on each product. Consumers can instantly access verified facts securely stored on a blockchain platform, enabling effective, trusted consumer communication and engagement.
This post was written and contributed by:
Supply Chain Manager
DNV GL - Business Assurance