One of the biggest problems fast food supply chain managers and procurement directors have historically faced has been a lack of transparency within the supply chain. In a consumer environment in which we are seeing more demand by the day for increased transparency, the lack of knowledge about what is going on upstream is a real dilemma.
No one wants to be in the position of being caught in the middle of a social media-fired bad PR frenzy because of a supplier’s missteps or misdeeds. Companies, like Chipotle, have so far been able to stay ahead of them; other companies — Adidas, Nike and Apple for example — have found themselves in some cases behind the curve.
So how can procurement directors and supply chain managers keep better tabs on their suppliers and logistics vendors? For that matter, how can they find cheaper, more efficient and more ethical vendors? Technology offers us many capabilities that can be leveraged to do just that.
From greater visibility to better vendors, technology plays a critical role in ensuring sustainability in the fast food supply chain. Crowdsourcing software, data analysis tools and tracking technologies offer managers better top-to-bottom visibility over a fast food company’s entire supply chain.
How an online labor survey saved a crop.
One agricultural supplier in Argentina — where much of the harvest is dependent on the labor of migratory, undocumented workers — found itself facing a crisis. And it was a crisis that would have been unknown to that supplier had it not employed crowdsourced labor surveying software to actively monitor the mood of its labor force.
Argentine tax laws required payroll withholdings to be based on household size, which resulted in large disparities between workers’ paychecks. As word about the differences got around among the community of laborers, many thought they were being cheated of their due wages. Unrest began to foment and almost 20 percent of the labor force planned to walk off the job, jeopardizing the operation just before harvest time.
The supplier, however, learned about the tension through online labor surveying. It was able to quickly step in, educate its workforce on the letter of the law and save its yearly crop. In this case, the company was able to increase top-down transparency for its own labor force, because transparency had been promoted from the bottom up.
Technology, then, isn’t a mirror; it’s a window. It can bring two-way transparency within a company’s supply chain, as well as provide consumers and shareholders with information they need to make well-informed financial decisions.
“The idea is that companies will be able to better identify the sources of raw materials, vet individual suppliers and increase accountability for social and environmental impacts embedded in their supply chains,” wrote GreenBiz contributor Lauren Hepler.
“Recognizing this, savvy entrepreneurs are looking to build out new tools to analyze specific risks within a supply chain, such as security, safety or other industry-focused diagnostics,” she observed.
The pressure to reform isn’t just coming from the consumer side.
Ethical supply chain reforms and sustainability incentives are also coming from shareholders — especially as Millennials begin to build their nest eggs. Many younger adults are deeply interested in ethical investment; they don’t want their retirement portfolio to support companies that conduct business in ways that are diametrically opposed to their personal viewpoints.
Pressure is coming from competitors. Many grocers, fast food companies and fast-and-fresh chains — Panera, Whole Foods, Chipotle and Wendy’s, to name a few — have recognized the marketability of achieving a completely sustainable, ethical supply chain and are investing heavily in building their sustainable infrastructures.
And pressure is coming from government and industry regulators, who are trying to safeguard the environment and promote good stewardship of finite resources in an increasingly crowded world.
How should you respond? What technology investments could you make to increase sustainability within your supply chain and to make your fast food company more ethical in the eyes of stakeholders and consumers?