Supply Web

3 July 2020

It has been over four months since the COVID-19 crisis has gripped our world. This exposed the fragility, inequities and lack of redundancies in our material supply chains. As a response, the world is moving through exponentially rapid change and social turmoil amplified by digitization. Organizations are rethinking, responding and reinventing everything to respond to the needs of their customers and employees.

Prior to the Great Disruption, materials flowed in what we thought was an efficient system of supply chains. Goods and services criss-crossed the planet while logistics managers and procurement specialists managed the risks and disruptions through the digital flow of information. The operating systems were built to meet the needs of customers to provide the most amount of goods at the lowest cost options. Supply chains connected companies through win-lose negotiations. Compromises ruled.

We thought it was working pretty well. Until it broke. When COVID the future came fast. Faster than any business was prepared for. The low cost had come at a price. Multi-year roadmaps for digital transformation, sustainability and global expansion came to a head. Nearly overnight, companies froze in place; whatever they had in that moment was all they had to weather an unprecedented storm. Most, if not all, faltered. Companies either found themselves paralyzed by the sudden drop in demand, or a dried up supply. There were no alternative playbooks or clear pivots. The waste built into the chain, previously only sometimes visible, became an anchor.

Everything broke. That is what chains under stress do—they break. They are only as strong as their weakest links.

The companies who are surviving, even thriving during this time, have supply webs, not supply chains. A web is the best way to future proof your previously linear chain. The digital world is a network, a web. Companies who never wish to face this crisis again will retire the concept of a supply chain, and instead adopt a material model that is resilient, a supply web.

Why A Web? 

The world of arachnids is an inspiration. A spider creates her web by linking many threads together. The more threads linked, the stronger the web. Out of crickets and other bugs, at ambient temperatures, the crafty spider creates a silk, a complex composite material that is five times stronger, ounce to ounce, than steel, able, compared to Kevlar, to absorb five times the impact force without breaking. For the web to maintain its structural integrity under force, the material is also highly elastic, stretching up to 40% longer than rubber and bouncing back as good as new. The interconnected structure can withstand wind and the elements. Waste is unheard of. A web begins at the center – what is available locally and then moves beyond the center to acquire needed materials.

Future supply webs will rely on both the amount and strength of partners. This includes: farmers, suppliers, factories, manufacturers, shippers, packagers, retailers, fulfillment centers and more. A supply web allows a company to move in and out of situations dynamically, without sacrificing quality, efficiency or cost. A sustainable supply web does all that, and ensures protection and advancement of people and planet.

In a post-COVID world, no company alone can resurrect their industry. It will take many partners, even adversaries, to work together to find new meaning and market purpose. It will also require collaboration of supply partners, who are now only a fraction of what they once were. Previous competitors will need to band together to provide the capacity, quality and cost optimization needed to save their industries. All parties have to be equal, treated equally, all weathering the storm together. Future systems must be dynamic and have the ability to work across systems, partners and time zones, all in real time, meeting the expectations of the post-COVID consumer.

The Rise Of The Conscious Consumer

A recent Futerra study in the UK and US found “that nearly 80% [of consumers] are willing to make lifestyle changes to stop climate change as big as those they’ve made for coronavirus.” The COVID-19 pandemic has accelerated the need for operational excellence, as it has propelled the conscious consumer into the mainstream economy. There is no turning back for brands who have compartmentalized their ecosystem. No longer can marketing claims sit apart from production practices. Company accountability now encompasses the entire supply network – from the farms where raw materials originate to the consumer packaging used at point of sale.

Brands who are already working to address other complex consumer trends like personalization, omni-channel purchasing and technology enabled experiences—will now have to address their ‘purpose’ claims in an authentic and measurable way. Transparency will become the backbone of any brand story, and without a powerful supply web to support this, brands who fall short will be abandoned.

The Supply Web

A supply web is a network of partners, all intrinsically linked together. One can not survive without the other. The strength of each entity enriches the strength of the whole. For supply chains, this means building a democratic ecosystem centered on the viability of the group. It is initiated by a single entity and then expands out, locally at first, carefully building the foundation. As the core structure stabilizes, it expands. Each connector thoughtfully engages with the other, nimble enough to move and expand.

For companies, it is no different. As brands begin creating their products, they start a journey that will involve numerous other entities that are composed of people and natural resources. As each brand chooses their partners, they should first look locally, where they have the best ability to judge the quality of partner business practices. From there, product needs will dictate where the web expands. Throughout this process, it will be imperative to maintain the same principles and values to ensure all members of the web flow in unison, as the business itself will ebb and flow.

Circularity is a key component of the supply web. It is by nature meant to stay intact, producing no waste. The same goes for brands who are creating goods of the future. There is no room for excess materials or toxic chemicals, polluting natural systems or human bodies.

ReInventing Everything

ReInventing Everything is how we prepare for an uncertain future. Moving from supply chains to supply webs is a key element to creating a diverse, equitable, resilient and frankly much better company.  This is the moment in time where the once impossible is now possible. We can help.

Thank you.

Fashion’s Downfall

2 July 2020

“Above all we understood we went way too far. Our reckless actions have burned the house we live in,” says Gucci creative director, Alessandro Michele.

Angeli Mehta explores the troubling reality facing the fashion industry in her recent article in Ethical Corporation: “‘Pandemic forces fashion industry to take stock.”

The dire conditions facing manufacturing communities, due to abrupt cancellations of apparel orders from global brands, is accelerating the already critical crisis.

Highlights from the report include:

  • The average market capitalization of apparel, fashion and luxury brands dropped almost 40% in the year to the end of March.
  • McKinsey expects “a large number” of global fashion companies will go bankrupt in the next 12 to 18 months.
  • In 2016, WRAP estimated the fashion industry global supply chain waste was 800,000 tonnes, even before any clothing reached the consumer. In the UK alone that year 300,000 tonnes of clothing went to landfill.
  • The industry accounts for 10% of global carbon emissions.
  • McKinsey’s survey of North American and western European sourcing executives reveals not all brands are taking steps to support their supplier base. And only 19% are providing pre-payment for orders, even though 64% of respondents said this action would have a significant impact.
  • The pandemic has increased consumer interest in sustainability: a survey of consumers carried out in Europe and the US in March suggested 20% of them want to support local business, and in Europe 16% said they’d be buying more socially and ecologically sustainable clothing in future.
  • Consumers have also taken note of efforts by brands to look after their employees, contributing items like PPE, or donating to their communities.
  • The Textile Recycling Association fears that unsold stock will take the place of secondhand clothing in many markets in eastern Europe.

Read more here: https://bit.ly/2AwaaVw

A Business Case for Sustainability

27 June 2020

Pierre-Francois Thaler, Co-founder and Co-CEO of EcoVadis, perfectly articulates  the new business imperative – sustainable supply chains – in his piece in Future of Sourcing, “The Growing Business Criticality of a Sustainable Supply Chain.”

Key insights include:

  • 88% of studies found companies adhering to social or environmental standards showed better operational performance, with 80% showing a positive impact on stock performance.
  • Sustainably minded shoppers will spend $150 billion on sustainable products by next year. That’s $14-22 billion more compared to prior years, pointing to new sales opportunities for businesses that prioritize sustainability in product devleopment.
  • Sustainable supply chain practices reduce costs by 9-16% and create a 15-30% increase in brand value. 73% of CEOs report sustainable business builds trust and reputation.
  • Ignoring ESG exposes investments to huge risks and erodes returns. This behavior has wiped out $534bn of valuation in the last five years.

Read more here: https://bit.ly/2NT6xM8

White Paper: Food Systems

15 June 2020

NextGenChef’s white paper, The State and Future of the Food System post-COVID-19, explores today’s most pressing questions.

COVID-19 has exposed the weak points in the U.S. food supply chain, raising fears of food shortage among consumers. The disruptions have drawn widespread attention to the problems that entrench the food industry, simultaneously urging the country to reflect on sustainable alternatives.

As consumers alter shopping behavior, suppliers run low on supply, and logistics buckle under pressure, brands who will emerge as winners will be the ones who lead with environmentally and socially responsible operations.

In this NextGenChef whitepaper, the team speaks with eight industry experts across the country, including senior supply chain consultants and CEOs who represent more than 180 organizations to uncover how COVID-19 has changed the food supply chain.

GoodOps’ CEO, Divya Demato, touches upon the importance of DTC food models and how the path to resiliency lies in supplier recovery.

Read on for exclusive industry insights here https://go.aws/2CdRJVU

Webinar: FASHINNOVATION Worldwide Talks

5 June 2020

FASHINNOVATION’s Worldwide Talks 2020 panel on Supply Chain and Circular Economy explores the role of equal justice, standardizing sustainability metrics, power of being an early adopter of ESG and future trends like plant-based materials.

Panelists:

Watch the full panel here: https://lnkd.in/djH-xNv