The potential upheaval in supply chains caused by coronavirus could be an opportunity for some firms to improve their environmental and social standing by looking at their organisational purpose.
Global sourcing has been a factor of many industries since the 90’s, and the deep tiering of outsourcing makes 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. But when that price can only be provided by a single supplier, and they are halfway around the world, that’s a risk. The coronavirus outbreak in China has made this plainly evident, 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. This behaviour is driven by their understanding of their customers principles rather than their own financials.
During the current outbreak larger organisations are struggling with how to behave. There is conflict within organisations; do they improve bottom-line or focus on achieving the greater good. This will inevitably affect brand identities. However, the question of whether people see them as truly altruistic, or jumping on a PR bandwagon is as yet unanswered. Some will hide, and not say much at all, or merely react to pressure. Others may be able to deliver in the short-term, and a subset may even be able to maintain their stance. Perhaps making fundamental changes to their organisational purpose?
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 be an asset you a business. That business can claim, and market themselves, or their product on this fact. One example might be the ability to measure carbon reduction for a ‘product’ throughout its lifecycle. Rather than on the carbon footprint of the entire organisation.
Some consumers will be willing to pay a higher price for this. One that allows the increased cost of regionalisation to be offset.