The potential upheaval in supply chains caused by coronavirus could be an opportunity for some firms to improve their environmental and social standing.
Global sourcing has been a factor of many industries since the 90’s, and the deep tiering of outsourcing make the visibility within the supply chain difficult, if not impossible. The propensity of consumers – whether business or individual – to buy, especially commodity goods, on price alone has driven this shift. The risk is when the cheapest price can only be provided by a single supplier, and they are halfway around the world. It has been made evident during the coronavirus outbreak in China, but will play out globally as the virus extends its reach to suppliers in other countries.
But business stakeholders, both employees and consumers, and in some cases investors, in [mainly] small organisations have been going to market based on a model that is based not on pure short-term profit, but on environmental and social standing. They are behaving how they need to behave based on their understanding of their customers principles rather than on their own financials.
During the current outbreak larger organisations are struggling with how to behave, conflicted between wanting to improve bottom-line vs achieve the greater good. Their decisions will affect their brand identity into the future – will they be seen as truly altruistic, or jumping on a PR bandwagon? Will they deliver in the short-term or be able to maintain their stance, perhaps making fundamental changes to their business model? Others will hide, and not say much at all, or merely react to pressure.
In the unclear mists of the future how will this play out? How can a business achieve a purposeful stance on environmental and social perspectives? By knowing, and working with its supply chain. A visible supply chain, perhaps one that is shorter, and more regional can claim, and market themselves, based on this knowledge, visibility, and flexibility. One example might be being able to measure carbon reduction for a single ‘product’ throughout its life, rather than the footprint of a single organisation.
For this, some consumers would surely be willing to pay a higher price, one that allows the increased cost of regionalisation to be offset.