As shoppers get increasingly interested in where their products come from, a growing number of companies are starting to tell the stories behind the journey to the retail shelf.
Shoppers can now use product codes to trace Silk Soymilk back to the soybean farm, Organic Valley milk back to the dairy farm, and John West canned tuna back to the fishing vessel. The soon-to-be-released "Trace My Coke" application will also disclose details about the product's environmental impacts, including its carbon footprint.
Beyond food and beverage products, examples of supply chain transparency are also showing up in consumer products like clothing (e.g., Patagonia, Icebreaker, etc.), and jewelry (e.g, Walmart).
Whether or not a company is ready to embrace supply chain transparency, there are a number of good reasons to get to know suppliers, and to promote more sustainable practices throughout the supply chain. When companies operate in the dark in regards to their supply chains, they take on significant legal, operational, and reputational risks.
Legal risks stem from a recent increase in laws that hold companies accountable for their suppliers' environmental and social practices. For example, in 2008, the Lacey Act was amended, making companies who manufacture, source or specify paper and wood products liable to fines and criminal sanctions if their products are found to contain illegally sourced fiber.
In 2010, the Dodd-Frank Act was passed, requiring companies regulated by SEC to publicly disclose whether their products contain conflict minerals from the Democratic Republic of Congo and nearby countries. The Food Safety Modernization Act, passed earlier this year, requires importers of food into the U.S. to implement a foreign supplier verification program.
And starting in 2012, the California Transparency in Supply Chains Act will require companies to investigate whether suppliers have policies to prevent human trafficking and slavery, and to disclose this information on their websites.
The reputational risks of not knowing the supply chain are also well understood, particularly to companies whose brands have been target of "brandjacking" campaigns by NGO's. These campaigns have tended to focus on commodities long implicated in the global sustainability crisis like fish, wood, paper and palm oil. However NGOs are continually identifying new high priority environmental and social issues associated with global manufacturing that could become the target of future campaigns.