Investing in a Sustainable Supply Chain Now Could Save Brands’ Future
The shopping habits of millennials and Gen Z have changed the way brands sell their products; experiences, e-commerce pop-ups and personalization are dominating retail. But these consumers also value sustainability and ethical business practices, which many brands have been slower to address at the risk of lowering margins.
“We’re so hyperconnected that people can find out information almost immediately, and Gen Z has never lived in a world without this connectivity,” said Kim Matsoukas, senior manager of sustainability and social responsibility at Vans. “They’re able to be more aware of some of the issues that we’re facing as a society, whether they’re social or environmental, and they care deeply about those issues.”
An increasing number of brands are incorporating sustainability initiatives into their business strategies, but the back end can sometimes be overlooked in favor of more marketable programs. However, as supply chain transparency becomes an expectation, many companies may find themselves left behind by their savvier competitors.
“There are very real, immediate commercial benefits,” said a spokesperson for Provenance, a digital platform that utilizes blockchain to help brands authenticate their supply chain. “These include charging a premium, retaining and increasing market share, defending brand reputation and mitigating risk, and driving customer loyalty.”
A comprehensive assessment of a supply chain involves looking at multiple tiers, from the manufacturing partners down to the farmers who grow the materials. Sourcemap, a supply chain tracking software that works with VF Corp. on its transparency, estimates that a typical retailer will have thousands of suppliers involved in their product journey. That number greatly increases the risk that a supplier might not be meeting a brand’s sustainable standards.
VF brands Vans and Timberland are both advocates for a strong supply chain strategy, having publicly shared the supply chain map for the Vans checkerboard slip-on and Timberland Earthkeeper; they intend to publish more this year. By sharing them with consumers, the brands are able to authenticate their claims of sustainability and ethical responsibility. This is increasingly valuable following the exposure of multiple sweatshops in recent years for both customers and employees, who are frequently asking about company practices during interviews and the intake process.
“For us, commerce and justice are inextricably linked; this notion drives our business forward,” said Colleen Vien, sustainability director at Timberland. “These SourceMaps allow for a deeper level of engagement and dialogue with stakeholders and consumers, bringing the data to life in a visually compelling and easy-to-digest way.”
For brands looking to address their own supply chains, Matsoukas recommends beginning by assessing which materials you most commonly use, as this will inform which sections of the chain to prioritize. A cotton-based product line will mean looking at water sources, while synthetic fibers will direct you to recycled content and chemicals management. Another tactic is to begin by working with your closest product partners to set sustainable standards which can then filter through the larger network.
“We rely on the participation from our Tier 1 factories to make these initiatives successful, so it is important to establish that strong partnership with your direct suppliers,” said Shanel Orton, manager of responsible materials and traceability at VF. “Engaging with suppliers in Tiers 2, 3, and 4 can be difficult because we have no direct business relationship and very little leverage. However, through continued engagement and demand from other brands across the industry, we expect these upstream suppliers to recognize the value in such efforts and be more willing to participate.”
Currently, extensively mapped supply chains are limited to a few sustainability leaders, but larger brands could find themselves particularly vulnerable, as their supply chains are often more complex and therefore harder to overhaul. Meanwhile, the new crop of digitally native brands, which commonly have more contained supply chains, are already positioning themselves as socially and environmentally conscious; Everlane, Allbirds and Rothy’s all emphasize this as part of their brand identities.
“Challenger brands are encroaching on the market share of the bigger players by competing on authenticity, openness and demonstrating positive social or environmental impact,” warned the Provenance spokesperson. “Consumers are ready for this shift and are already voting with their wallets.”
