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Key Capabilities for Success: Transparency and Traceability
SAP Perspectives
By Mark Osborn, SAP - 12/18/2017
Shoppers today are better informed, more digitally connected and increasingly invested in where their money is going — rather than simply what it's buying.
According to Nielson's annual Global Corporate Sustainability Report, 66% of consumers are willing to spend more on a product if it comes from a transparent or sustainable brand. Growing concerns around health, wellness, and ethically sound production is helping to influence a radical shift in the consumer products industry through the proliferation of transparent, sustainably conscious companies and initiatives.
To build trust and be successful in this new age, consumer goods companies are actively demonstrating transparency from end to end and supplier to supplier. With consumers asking more questions about the food they eat and the clothes they wear, companies are focusing on strategies that provide insight and details into product and ingredient origination and sourcing.
Food Traceability
From allergies like lactose intolerance or gluten-free, to ethical standards like pesticide-free, organic, free trade, cruelty-free and free-range, and even to lifestyle choices such as veganism, consumers are beginning to ask more questions about the ingredients used in the processing and production of food.
According to a Nielson study, 75% of consumers say they're concerned about the long-term health impact of artificial ingredients and are demanding more transparency.
These behaviors are driving companies to pursue initiatives that deliver an open supply chain through transparent marketing, including adding background information on labels, advertising and websites. Examples include naming the specific farms or listing all ingredients on the product label and blogging about each step in the production process.
Beyond just print, brands are starting to leverage the SmartLabel initiative to provide consumers with a wide range of information. While nutritional facts, ingredients, and allergens may be included on print, SmartLabels can provide information on third-party certifications, social compliance programs, advisories, safe handling, and much more.
Coca-Cola Co. is one of the brands using on-pack QR codes to provide ingredient definitions, GMO disclosures, and contact information. With a quick scan on a smartphone, consumers can make informed decisions about Coke products using up-to-date, real-time information that's managed directly by the company from its own enterprise or product information management solution.
With this level of transparency, food companies are delivering an enhanced consumer experience while delivering transparency and building trust.
Another example is Sonnentracht GmbH, a manufacturer of organic honey and other all-natural sweeteners, which is using is analyzing batches of product and managing inventory in real-time, giving the company background into all aspects of production — from pesticides to genetically modified organisms. With the help of technology, Sonnentracht can make timely decisions and keep pace with consumer requirements, securing the company the "certified organic" rating that many consumers now seek.
As consumers increasingly look to businesses that operate sustainably, Barry Callebaut, a manufacturer of high-quality chocolate and cocoa products, has embraced the concept. By providing an innovative cloud-based mobile solution to its cocoa suppliers, the company helps small farmers monitor prices to determine the best time to go to market and manage their cocoa sales through electronic fund transfers. This also lets Callebaut trace its ingredients all the way back through the supply chain to the source, offering consumers transparency and trust.
Apparel Transparency
Consumers are starting to demand similar accountability for their clothing items. According to McKinsey & Co.'s "State of Fashion 2017" survey, sustainability is becoming an important driver of consumer purchase decisions. To address the trend, apparel company Everlane details all production costs — including materials, labor, duties and their markup — on their website. The company also includes information about the factories where the products are made, with pictures and videos of the employees and factories. Everlane's consumers have background on exactly what is involved in each piece of clothing they purchase, allowing them to feel better about the ethics and background involved in their clothing purchases.
Consumers increasingly are demanding details about the clothing they buy and the food they consume, making transparency and traceability a clear business imperative. By letting consumers easily obtain the information they want, companies can foster stronger, more authentic relationships. And helping to ensure and sustain consumer trust by adopting new technologies will also translate to better business results through improvements in brand equity, social sentiment and, ultimately, increased product demand.
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Mark Osborn
Mark is Vice President, Digital Strategy & Business Planning for SAP. Read More
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