Dave Hughes was most recently the EVP Supply Chain, South East Asia and Australasia at Unilever and is currently an advisor to the GoodChain Foundation. In this article, he discusses the challenge of ever growing supply chains and talks about the GoodChain approach to that challenge.
If I were pressed to make one observation about how supply chains have changed over the years, I would say that they have become astonishingly complex. In the past ten years in particular, this complexity has only accelerated as supply chains grow larger and more sophisticated. Companies source ingredients, packaging, and labour from a wider range of countries around the world, sometimes to create just a single product. Synchronising the various segments to ensure the golden rule of supply chains — right product, right place, right time — requires global teams and state of the art technology.
Along with growth, another recent and dominant supply chain trend is consumer demand for transparency. Ten years ago, when people heard “sustainability” they would have associated the word with organic groceries and not much else. Fast forward to today: consumers have better information and know that responsible sourcing touches every stage of the supply chain, including both environmental and social responsibility. There is a call now for more transparency on how products are made, the integrity of labour practices, the country of origin, the environmental sustainability of products, and everything in between. During my tenure at Unilever, we placed consumer demands at the highest level of importance; nothing was more important than ensuring consumer trust. This is a common rallying cry for many organizations that depend on their customer’s trust, and yet across all industries, there is much room for improvement. Where to begin on improving that trust lies in the bigger picture.
In the realm of environmental sustainability, companies and consumers are taking a more holistic, life-cycle view when measuring impact across the value chain. Certainly in no small part due to consumer demands, industry leaders are challenging each other to review and rethink the supply chain. We’re looking at the sustainability of agricultural raw materials, greenhouse gas emissions in the manufacturing and transportation of our products, the amount of waste sent for disposal from factories, water consumption in both the creation and usage of products, and the environmental impact of product packaging. Unilever has always led the way in developing sustainable solutions, such as sustainable sourcing of agricultural raw materials and ensuring zero non-hazardous waste goes to landfill from factories.
Consumers are also more enthusiastically asking about social responsibility, and about human rights practices and the well-being of employees that facilitate the production of goods. Are workers making a living wage in the local economy? Can they provide for their families? Are controls in place to ensure no underage labour exists in the supply chain? Are regular health and safety checks conducted in manufacturing plants?
Issues of social responsibility and environmental sustainability often intersect; tea is a commodity that exemplifies this crossover. Sustainable agriculture methods are crucial to ensuring the future viability of tea farms by increasing crop yields, mitigating the effects of climate change, and providing stable wages for millions of farmers around the world. More tea brands are claiming to work within the tea supply chain to ensure farmers can engage in sustainable agriculture practices while generating enough income. There are also critical efforts to preserve natural resources — water is the most significant of these, essential not only for growing crops, but also to meet the basic health and hygiene needs of farming communities.
As the intricate web of geographies, component parts, labour, and transportation grows, keeping tabs on sustainability metrics is the biggest challenge for multinational companies with procurement teams scattered across the globe. Some agricultural commodities benefit from producing a greener product using responsible farming methods promoted by trusted third parties like Rainforest Alliance. This helps to ensure sustainable and socially responsible production. But these external organizations are limited to vetting a handful of high-profile products, such as chocolate and coffee. Going forward, a key priority for today’s businesses will be developing the ability to trace all materials from the original source through to the final product.
This is where the work of the GoodChain Foundation aims to make a big impact. Practically speaking, GoodChain is a scalable, affordable, and agile approach to exposing and dealing with weaknesses in the supply chain. Generally speaking, GoodChain works as a way to hold companies accountable for their social and environmental practices while also allowing them to use transparency and other rewards to incentivise consumers to support social good. Using blockchain and unique identifiers like RFID, NFC, or copy-proof QR codes, buyers can trace the origins of a product registered in the GoodChain ecosystem by simply interacting with a unique product identifier. Each scan by a consumer serves to verify the item while adding further information to the product journey record. GoodChain then rewards consumers for their important role in interacting with products by awarding IMPACT points. These points can be kept for product rewards and donated to worthy causes. Causes then receive GoodChain Tokens that they can convert to cash to support their work; the brilliance here is that donations can be easily tracked and reported on by all parties through the same GoodChain platform technology, ensuring that no aspect of the donational process is obscured.
I’m pleased to now be advising the GoodChain Foundation, applying my decades of experience in global supply chain management to spread the GoodChain mission to as many industries as possible. GoodChain is one of the most cutting-edge developments I’ve encountered in social and environmental responsibility, and I am very excited as we use this platform to unite brands, consumers, and worthy causes to promote social good in this unparalleled product transparency initiative.
You can find out more about The GoodChain Foundation at https://thegoodchain.io
September 6, 2018