How to build resilience in retail with blockchain
August 31, 2020
There are only so many cardboard forts my four-year-old can build, which is why our after-dinner ritual now includes breaking down boxes on top of doing dishes. Having upped our grocery delivery over the past few months, my wife and I are part of the 87 percent of people who changed their purchasing behavior due to COVID-19. This has overwhelmed our global supply chains as well as our recycling bins.
Even pre-pandemic, behaviors and expectations were changing faster than supply chains could handle. Nine out of 10 CEOs see sustainability as important to success and 66 percent of consumers would pay more for sustainable brands. Investors and shareholders increasingly equate negative environmental impact with risk and volatility—making transparency a fiduciary responsibility that demands insight into raw materials at the source. Strong investment performance in the Environment Sustainability and Governance (ESG) space furthers the case for rethinking supply chains to better prepare for anticipated events, like climate change, and those unforeseen, like natural disasters and pandemics.
COVID-19 has been a dress rehearsal for the oncoming issues of climate change, water stress and geopolitical risk with a few foregone conclusions: The wheels have fallen off the proverbial bus.
Why? Today’s supply chains are built for efficiency and predictability, not resilience. Automation and robotics were the last great innovations in the field, but they do little for environmental concerns, supplier relationships or disruption responsiveness. It’s time to reinvent how we source, produce, finance and deliver goods to outmaneuver uncertainty and meet new economic imperatives.
Today’s never-normal world demands a more nimble and sustainable supply chain network, with greater transparency. Future-proofing practices, like regenerative farming, also require a much more collaborative model to tackle issues from the outset.
ESG Advisor Frank Zambrelli is my counterpart in the Accenture Retail group. He and I often talk about how regenerative agriculture is disrupting sustainable retail at the source.
Overgrazing leaves soil bare, resulting in desertification and carbon emissions: Farmed and grazed soils around the world have lost 50 to 70 percent of the carbon they once contained. But when cattle graze just enough, as on a regenerative farm, plants grow faster. This restores soil health, allowing it to remain a beneficial “carbon sink” in which plants take in CO2 and push extra carbon through their roots into the ground, keeping it out of the atmosphere.
Thus, regenerative agriculture reverses climate change, reduces risk and brings consistency to supply by maintaining conditions. This is critical to reduce volatility—a margin killer in any business, but especially with a high-volume, high-priced asset like leather.
But how do we go about monitoring and promoting practices like regenerative agriculture? How can we achieve such granular control and agility throughout the network?
To turn supply chains into agile supply networks, organizations must be able to share, agree and act on trusted data in real time, across silos. Blockchain and multiparty system technologies allow partners to see the same data at the same time on a single distributed ledger. This eliminates tedious and risky back-and-forth reconciliation while enabling new processes and forms of collaboration.
In Frank’s world of retail, this model is particularly valuable to manufacturers using the leather downstream. Transparency is crucial for delivering excellence to consumers and for dexterity in times of disruption. It also makes it easier to identify regenerative sources and practices, leading to greater inclusivity and incentives for small producers who are underserved and overburdened by prevailing supply chain models.
Multiparty system data sharing can improve supplier accountability, billing accuracy and brand loyalty in a growing ethical economy, while also helping to improve inventory management, waste reduction, sell-through and margin.
Continuing with cattle: The beef industry went offline in the wake of COVID-19, with small holder farms filling in for larger meat processors to keep supply coming. Here, multiparty systems could readily connect regenerative agriculture farms to the nation’s meat supply, with enormous potential for scale.
With newfound insight into the creation of goods—and the ability to make those processes more sustainable and inclusive through regenerative agriculture—retail is on the edge of something big. Multiparty systems allow you to reimagine responsibility and relationships around an entire set of connected business processes, from risk assessment to invoice settlement.
Seize this chance to pivot to the future with supply chain networks that are designed to be more profitable, resilient and responsible. Prepare your business for the next unforeseen event and the aggressive climate change hurdles that are poised to disrupt business as usual in the decades to come.
Like a cardboard box in the hands of my daughter, supply chains will be remade into something new, ushering in a wave of new markets, new innovations and a new era of sustainability.
Visit Accenture.com/blockchain for more on how to make your business more resilient with blockchain and multiparty systems.
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