Have you ever wondered if your morning coffee was responsibly sourced? Or perhaps you’re an aspiring coffee-connoisseur like myself, and want to ensure the journey of your coffee beans – from farmer to market – is truly genuine and has good ethics behind it?
If you’ve ever found yourself contemplating these types of questions about your preferred products, well you’re not alone. Ethical sourcing is a considerate sourcing process that keeps both social and environmental impacts in mind, and its growing importance across key demographics is proving to be a market differentiator among consumers and companies.
In this blog, we take a look at the growing demand for ethical sourcing, the practical challenges facing companies across supply chains, and how blockchain is here to answer those challenges and provide the key toward a sustainable future.
The Growing Demand for Ethical Sourcing
Global Consumers and Generations
According to a recent 2019 study by Nielsen, the majority (73%) of global consumers say they would definitely or probably change their consumption habits to reduce their impact on the environment. As consumers become increasingly aware of what they put in and on their bodies, this demand suggests their interest in buying – and sometimes paying more for – products that adhere to responsible sourcing.
An earlier study depicts the importance of sustainability across today’s generations with Millennials (85%) and Gen Z (80%) leading the charge.
Leaving a Legacy
By focusing on conservation and sustainable sourcing to improve supply chains, companies ensure that those resources will be available in the future – a critical step for companies to continue their connection with consumers and the world around them.
Awareness around ethical sourcing ultimately contributes toward a company’s competitive advantage. Consider the business case for companies committing to ethical practices, it:
- Satisfies the growing expectations of your consumers.
- Elevates brand image, making companies more attractive to employees
- Keeps members of your organization out of the courtroom and in the board room.
Why Blockchain is Key to Ethical Sourcing
Practical Challenges Facing Companies
Ethical sourcing is not just a matter of checking a single box; rather, it represents the culmination of several coordinated efforts, suggesting that an organization is committed to ensuring the safety and fair treatment of the workers involved, and products are obtained in a responsible / sustainable way
This is all very laudable, but this presents a few challenges in practice:
- It is often not as straightforward to determine the provenance of materials or how they are sourced, especially where they’re procured deep within the supply chain – see how tainted gold may have ended up in your phone .
- When a breach of Ethical Sourcing has occurred, in many cases there’s no obvious sanction that can be applied.
- The inevitable response of contractors toward certain provisions (to seek to pass the risk down the supply chain) tends only to exacerbate the problem, rather than resolve it.
Leveraging Blockchain for Ethical Sourcing
To achieve the level of transparency, communication, and trust that manufacturers need to have with their suppliers, companies need a new way to structure and run their supply chains. Enter blockchain networks.
Blockchain networks, such as the Trust Your Supplier network, is one solution that provides credibility and compliance of all network members, and improves the real-time visibility across the entire supply chain.
Through a Blockchain network, companies can ensure their suppliers are maintaining the standards set forth in their contracts – allowing companies to address breaches and apply sanctions where appropriate.
And by nature, blockchain documents the provenance of parts, ingredients, and other elements that go into the manufacturing process, and as a result:
- Manufacturers have the ability to see a complete and immutable audit trail; encompassing each stage of the materials’ journey through the supply chain.
- Companies can share that immutable proof to show consumers (and regulators) that they’re meeting the demand for ethical and sustainable practices
Ethical sourcing is still a developing area, but it is here to stay. As conscious consumers join the call for greater social responsibility and environmental protection from manufacturers, blockchain helps companies answer that call. With a blockchain-powered supply chain, companies can not only promote good ethics, but good business.
About Carlos Rangel
Experienced Software Engineering professional with a demonstrated history of successful consulting and leading software solutions in the IT industry; furthermore as a technical specialist, he specializes in Web Application Architecture, Full Stack Development, and Blockchain Architecture & Development.
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