A new generation of shoppers is emphasising buying ethically sourced goods.
According to research, nine in 10 Australian consumers are more likely to purchase ethical and sustainable products. The latest Australian Ethical Consumption Report states that Aussies under the age of 26 had the highest ‘ethical consumption index’ score of any age cohort.
Moreover, 46 per cent of Australian shoppers under 30 would be willing to pay more for ethical and sustainable products.
For retailers, living up to these expectations can be difficult due to the global nature of supply chains, not to mention the very nature of a company’s relationship with its suppliers.
Retailers want to ensure their suppliers comply with standards and contractual commitments around environmental, social, and governance (ESG) practices. Suppliers similarly want to prove that they comply but do not want to expose the details of their subcontracts within the supply chain.
Thankfully, new technologies exist today to resolve these traditional roadblocks to transparency in the supply chain.
Advanced contract lifecycle management (CLM) software leveraging capabilities like blockchain helps companies track and enforce sustainable practices in their supply chain and can be a differentiator for companies trying to appeal to the ethically- or sustainability-minded customer.
CLM and More Ethical Supply Chains
Contracts can be a critical element in enforcing ethical practices across operations. They contain crucial business information that defines what a company buys and terms.
By digitising and structuring contract information, then connecting it to operational systems across the supply chain with suppliers, distributors, wholesalers, and customers, as well as third-party systems like Dun & Bradstreet—retailers can actively monitor compliance after a contract is executed.
At Icertis, we call this ability to ensure that the intent of every contract is fully realised ‘contract intelligence’. The power of contract intelligence is further enhanced with advanced technologies like AI and blockchain.
Powered by blockchain technology, businesses can leverage smart contracts to ensure global sourcing and contracting practices adhere to strict working conditions, human rights, environmental protection, safety, business ethics, and compliance without compromising contract confidentiality.
Retail businesses and their suppliers can place their compliance terms on the blockchain, ensuring that the required terms are present in all contracts constituting the supply chain. This provides tracking commitments across suppliers, enabling a new level of commercial collaboration, visibility, and accountability.
In addition, the Icertis Blockchain Framework allows participants the option to leverage Icertis’ AI capabilities to automatically verify the contractual obligations around agreed terms, such as sustainability.
The technology can also be used to enforce compliance requirements like data privacy (including the GDPR), information security, the International Traffic in Arms Regulations (ITAR), the Foreign Corrupt Practices Act (FCPA), and other regulations.
This transparency is critical for retail companies. Their brands are on the line with every item they source in an age when the consumers value ethics and sustainability.
For retailers, supply chain transparency means creating visibility for customers to understand not just what products are available for purchase through which channels (in-store, pickup, delivery), but where products were sourced from, how they were produced, and their impact on sustainability.
With supply chain transparency, customers can be confident that merchandise is ethically sourced and conforms to their beliefs on sustainability, animal treatment, or carbon neutrality, for example.
As Microsoft states in a 2021 retail report: “Customers expect greater inventory transparency and accessibility, regardless of how and where they choose to shop.
They seek personalised service and experience delivered by knowledgeable associates, and they’re increasingly willing to share data to receive it. Purpose-led practices, particularly around sustainability, continue to impact purchasing decisions and long-term loyalty.”
If supply chain diversity is all about building the right portfolio of suppliers, supply chain transparency is all about understanding in real-time how that supply chain is performing—all the way up through multi-tier supply chains and down to the point of purchase.
How Contract Intelligence Can Help
The next generation of shoppers arrives at the market with extremely high expectations around sustainability and ethical sourcing. They are willing to vote for products and vendors that live up to their values with their dollars.
Retailers and their partners must rethink their approach to business and explore new technologies that provide them with the supply chain transparency they need to meet these new demands.
Contract intelligence empowers retailers and all their partners in the supply chain, from manufacturers to farmers, to drive transparency across their supply chain and differentiate themselves in the market.