As Daymon’s Chief Sourcing Officer Vipon Kumar shared last month in the first installment of this two-part series, the adversarial sourcing models developed in the late 20th century are quickly becoming incompatible with our new global economic and retail realities. This month, Kumar shares where he believes the industry is headed—and how retailers and suppliers will have to respond to remain competitive.
“To effectively prepare global businesses to deliver on the social and environmental challenges we are facing, the 21st century sourcing journey will need to move from ‘what’s in it for me’ to ‘what is in it for us, our consumers, our society and the planet,’” says Kumar. He explains that just as retail engagement tactics are changing in response to the demands of consumers and their changing needs, so too will sourcing practices need to evolve to:
- Serve the demands of Millennials and iGen/Gen Z
- Serve the growing aging population (aged 65+)
- Support the rapid urbanization of Asia
- Promote sustainability and regeneration of the planet
- Promote social accountability and the upliftment of society.
“To achieve this, the transactional sourcing model widely in use today will need to evolve to a co-sourcing model,” says Kumar. As co-sourcing partners, both the buyer and the supplier will act as champions of the consumer, anchoring each end of the value chain.
“Buyers and suppliers will work together at every step, from procuring raw materials all the way to collaboratively developing products that delight their consumers,” Kumar explains. “Through this collaboration, the buyer and supplier will create a virtuous cycle of feedback to adjust, tweak and alter raw materials, costs, manufacturing and supply chain to deliver the best possible products made of the best materials, all the while following the safest manufacturing processes and socially conscious labor practices.”
Though not yet commonplace, some industry-leading companies have begun to evolve their sourcing models to begin to achieve these goals and to tap into the collective intellect of producers and suppliers. Kumar points to Coca-Cola’s PlantBottle, a fully recyclable plastic bottle made from the by-products of cane sugar production. The bottle was developed in partnership with Coca-Cola’s suppliers, who were already processing sugar cane and saw a potential use for the residual materials that resulted from that process.
“This bottle technology came from the intellect of the suppliers and producers—the people actually at the sugar cane outposts. Tapping into this collective intellect is where the sourcing journey needs to continue,” says Kumar.
Coca-Cola’s sustainable packaging lead Sarah Dearman seemed to echo this in a recent interview with Packaging Digest. “The Coca-Cola Co.’s goal is to reduce the carbon footprint of our packaging. We know that we can’t do it alone. The way we can maximize progress is by working together. Our suppliers play a critical role by working together to advance innovation to help enable all parties to meet their goals,” she was quoted as saying.
This technology has not been limited just to bottles—Coca-Cola also partnered with Ford Motor Company to create the fabric for Ford’s electric hybrid vehicle, the Fusion Energi, out of fabric made using PlantBottle material. This cross utilization helps spawn the broader concept of co-sourcing in completely unrelated industries to lower the carbon burden on our planet.
“For years, companies have been so focused on what they want to sell, not what they could sell. But when you are open to the possibilities, you can elevate what you have to offer consumers, and at the same time help uplift the suppliers and producers. It will take some industries longer than others to make these changes. But eventually we will all be on the spectrum,” predicts Kumar.
Previously published in Retail News Insider, A Daymon Worldwide publication.