How often do you think about the entire process behind getting your food, clothes, electronic devices and other products into your household? How many hands were involved in producing your smart phone? Who picked that apple you eat every day in order to keep the doctor away? My latest trip to the black forest region in Germany really got me thinking about the supply chain and all the processes involved with getting products to the end-user. My desire for a weekend away brought me to a tiny village called Appenweier. The village is surrounded by a mix of forest and vineyards (see photo above). As I walked through the vineyard I started thinking about everything that is involved with turning grapes into a bottle of wine, ready to be served to the consumer. There is the agricultural side of growing the grapes. Then the grapes must be harvested and pressed. Large vats are used to stabilize and store the grape juice to begin the fermenting process before it is transferred into oak barrels. Any time after one to eight months the wine can be bottled. The bottles then need to be boxed, and since not everyone will be driving to their favorite winery for a wine pick-up, the wine needs to be shipped to wholesalers and retailers in order to get the product onto the dinner tables of the consumers.
But let’s be honest, not everybody thinks this way, at least not when it comes to every day products. However, recently, consumers are increasingly demanding that large companies create a more transparent supply chain. These demands were escalated by the recent horse meat scandal that has enthralled central Europe over the past several weeks. The fact that horse meat was discovered, for example, in frozen beef lasagna meals took many consumers aback, especially since the inclusion of horse meat was nowhere to be found on the ingredients list. This example makes it easy to understand why consumers and governments are demanding more transparency across supply chains. Somebody has got some explaining to do as to how horse meat ended up in several beef products. What about the other side though? What about the businesses? Will they too benefit from a more transparent supply chain? What steps can be taken so that both the consumer and businesses can benefit from pulling back the curtains of the supply chain?
We have all seen what happens when the curtains are pulled back on a big business supply chain, for example the Foxconn suicide incidents. Foxconn, located in China, is a major manufacturer serving large companies such as Apple, Dell, HP and Sony. Between 2009 and 2010 a total of 18 employees attempted suicide resulting in 14 deaths. These events called the working conditions of this notable Apple supplier into question. Apple also began being criticized for its use of sweatshop labor as well as environmental destruction and unethical business practices. This is, of course, not an isolated event as other big businesses have recently come under close scrutiny for their supply chain practices. Fashion retailers, for example, were heavily criticized after a factory fire in Bangladesh killed over 100 factory workers. Safety standards were called into question and several fashion retailers were accused of turning a blind eye to the issue.
As the issue of supply chain transparency gains ground, both companies and consumers are hoping to find some common ground as the right balance is sought after. One example is the clothing retailer H&M. The company has dedicated itself to informing its customers and other stakeholders about its efforts to create a transparent supply chain as they stress the importance of knowing not only their direct suppliers but also those that supply their suppliers. H&M is not alone as many other companies are transferring from a state of resistance toward embracing the idea of a transparent supply chain. Companies that embrace the idea of allowing the consumers a peek inside the supply chain may in fact curtail future incidents similar to Apple’s Foxtronn and the fire at the clothing factory in Bangladesh.
Where do you stand on this issue? You are welcome to leave your opinion in the comment field below.