This article is part of a series on the intersection of supply chain and marketing. View all three stories here.
The days of procurement as a back-office function without much of a story to tell the public are numbered. More than ever, consumers want to know where and how their products are being made, and global brands are telling the trendy tales of sustainability and transparent sourcing.
In 2010, H&M launched its Conscious collection of items made with sustainable materials. This February, the retailer added "Innovation Stories," which showcase innovations, sustainability and design.
McDonald's is "able to tell the story about the farm in Bolivia and the farmer and his family, and the life story of that one head of lettuce," said Brendan Griffith, senior vice president at Reputation Partners Communications. (McDonald's has been a client.)
None of these stories — at McDonald's, H&M or other companies highlighting their vendors and processes —could be told without procurement working with marketing.
It's not a common partnership, said Griffith. It requires both departments to work together, because while marketing takes on the role of storytelling, marketing can't formulate the stories if procurement doesn't share them.
The companies that highlight the best parts of their supply chain "are getting rewarded for it," said Kevin Lyons, associate professor of professional practice at the Rutgers Business School-Newark and New Brunswick, "not only financially, but their customer base of loyalty to that particular brand has become stronger because of it."
These enterprises also form a buffer of goodwill in case one of their vendors turns out to be less than honest about their sourcing and their labor practices.
The supply chain is marketable
Highlighting an organization's sustainability and human-rights-friendly practices can help the enterprise overall by attracting conscious customers.
IBM and the National Retail Federation found that 57% of consumers are willing to change their purchasing habits to reduce environmental impacts. And 71% said traceability is important to them, and they'd pay a premium to brands who can provide it.
Interest in a company's supply chain isn't new, added Lyons. While the pandemic has pushed sourcing into the forefront of consumers' minds, he said it's been a growing consumer concern for the last decade.
That includes wanting to know about the values of vendors and the enterprise itself. "They want to know, not only do they have products and services that are sustainable, but that they have a culture within the company that mirrors that, as well," Lyons said.
77% of consumers consider sustainability important
Procurement can work with marketing to tell consumers about "your A-plus buyers and vendors, the ones that have phenomenal records, the ones you have a long standing history of working with, and the ones that uphold the values of your organization," Griffith said
That doesn't mean procurement has to do everything. The department can identify potential vendors or processes worth highlighting, and let marketing do the rest.
"The folks in public relations and marketing are, by nature, storytellers. The more information that you can supply to them, the better," said Griffith. That includes things like vendors with interesting founder stories, unique environmental initiatives or sustainability practices, or stand out diversity and inclusion policies.
Banking goodwill creates a defense against a bad vendor
Griffith also cited Patagonia as highlighting its vendors and making those stories part of the overall image as a socially responsible company. Patagonia is also honest about past mistakes.
In a 2015 piece on the company blog about how the clothes are made, Patagonia wrote about previous bad practices.
"During the early 2000s, we made the poor choice to expand our factory base in search of lower-cost labor. At one point we dealt with more than 100 factories, more than we could handle; we no longer knew many of the people with whom we were dealing or what conditions were like on the factory floor. The result: poor product quality, late delivery, expensive rework, long inspection times at our Reno warehouse, customer dissatisfaction, and loss of profit incurred by honoring customer returns."
Patagonia reduced the number of factories it worked with, going from 108 vendors in 2007 to just 45, which the brand said "allows us to responsibly manage working conditions and product quality far more consistently and effectively."
That kind of honesty hasn't hurt the company, but telling the story of how it righted its wrongs has helped cement Patagonia's socially conscious reputation, said Griffith.
If procurement talks to marketing, so that marketing, in turn, can highlight sound sourcing, a company can "build a bank of goodwill," said Griffith, in case a vendor is outed for poor practices or working with companies located in countries known for human rights violations.
If marketing has already created an accurate public image of a responsible supply chain, a rogue vendor is not going to make as big a reputational impact, experts said.
"The folks in public relations and marketing are, by nature, storytellers. The more information that you can supply to them, the better."
Senior Vice President at Reputation Partners Communications
The need to rid bad apples from the supplier base is only growing, especially as Customs and Border Protection cracks down on forced labor. The agency detains cotton and tomato imports with any link to the Xinjiang region of China. The burden of proof is on the procuring enterprise to ensure there's no forced labor — to the government and to watchful consumers.
In the case of a bad vendor being exposed, procurement must fix the problem but also work with marketing to tell the story about how they're fixing the problem, said Lyons.
"Own up to it, let folks know how you're going to go about dealing with it, and then report back to let them know you found the issue," he said.
That's much easier to do — and an easier story for marketing to tell — if the two departments' relationship was already solidified.
This story was first published in our weekly newsletter, Supply Chain Dive: Procurement. Sign up here.