Win customers’ hearts with a transparent supply chain

This article by Saif Rivers first appeared in IBM’s blockchain blog: Blockchain Pulse

Only a few years ago, consumers could trust the quality and integrity, ultimately the provenance, of their milk. That’s because each morning it was hand-delivered from a local farm by a familiar and trustworthy face: the milkman.

Such a service might seem unnecessary today, but a clear link between the creation of a product to its final placement in a customer’s hands helps consumers make purchases that align with their values and beliefs. Thanks to the promise of several technologies, including blockchain, consumers can now expect to see the entire histories of the products they buy, and hence make more informed decisions.

A transparent supply chain assures consumers they’re supporting brands that align with their personal ethics. It also allows retailers, manufacturers and others to confidently demonstrate that they’re treating workers properly, sourcing in ethical ways and caring for the environment.

Consider Starbucks. The coffee house chain follows the guidelines of Coffee and Farmer Equity (C.A.F.E.) — a set of industry standards that are verified by third parties — when evaluating its supply chains to ensure that coffee growers work under fair conditions and the product itself was created under environmentally sound farming practices. Starbucks customers know that when they’re drinking the brand’s Reserve coffee, it has been verified by C.A.F.E. standards.

Provenance matters to consumers: According to Cone Communications, 87 percent will buy a product because a company advocated for an issue they cared about, while 76 percent will refuse to purchase a company’s products or services if it supported an issue contrary to their beliefs. This is powerful information with a direct impact on a customer’s wallet.

Transparency highlights good ethics and practices

Companies that want to emulate the fair and environmentally sound business practices of Starbucks and other brands need look no further than blockchain technology. Blockchain offers complete visibility of the data behind the many stages of product creation. Manufacturers, farmers, wholesalers, suppliers, delivery services and stores each input information that details and verifies their roles in the process — creating a log that provides irrefutable evidence of a product’s provenance.

With a transparent, end-to-end trail of farming certifications, factory records, product identifiers and other data, retailers and service providers can “open their books” with a clear conscience. They can tell customers with conviction that they “get it.” They share consumers’ beliefs that food, clothing and other materials should be natural and that products should be created under fair labor practices and with minimal damage to the environment.

Not adhering to fair labor standards and failing to demonstrate good stewardship of natural resources hurts businesses. Tech manufacturers have come under fire for having parts made in countries where workers log long hours for low pay. Retailers have faced backlash for selling merchandise that violated human rights policies. Restaurants have received criticism for serving food that was grown in unsavory conditions.

A transparent supply chain proves that a brand operates above board. It also gives retailers, service providers and other businesses an opportunity to tell a new story. They can market themselves with an authenticity that will strengthen their bonds with customers.

Imagine an airline that uses its in-flight video system to highlight how the manufacturer of its passenger seats uses carbon-neutral materials and provides its workers with good benefits. That video could prompt passengers to further examine the airline’s supply chain record of the very plane on which they’re traveling — an act that would secure their comfort when they recognize the aircraft was built with care and precision.

Connecting with brands and product creators

With this kind of openness, brands not only win the hearts and minds of customers, but they also share the stage with the many unknown people who make their products and grow their food. Now able to identify the usually anonymous sources of goods, customers will connect with these individuals’ stories and want to support their efforts.

It’s one thing to tip your neighborhood coffee shop barista. It’s a whole other thing to use technology to also tip the coffee growers themselves. But thanks to the visibility of blockchain, consumers can conduct micro-transactions with coffee growers in South America and Africa, thanking them for helping make delicious cups of joe.

Getting to know your milkman is no longer the stuff of a bygone era. A transparent supply chain gives retailers and service providers a legitimate opportunity to stand behind what they sell — and in turn, it gives consumers the confidence that they’re spending their money wisely.



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