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5 Ways to use Responsible Sourcing to Boost your Bottom Line
Over the last several decades our idea of what business value is has evolved. That has been led by the evolution of the concept of intangible assets. Not simply cash, but also what else does the business have that creates value for its stakeholders. Some companies have other things that are valuable other than cash and that includes the Brand itself.
You can look at the cash figure if it goes up or down. And you can look at perception of the brand and see if it goes up or down which going down means also the cash in that profit line are going down. Because those two are related therefore, protecting the brand is important in preserving the value.
Traditionally Bottom Line means- the bottom of your financial statement or net profit.
Warren Buffet said: “It takes 20 years to build a reputation and five minutes to ruin it.”
Your reputation is at the heart of your brand therefore protecting it is so vital for protecting your bottom line. Ensuring that brand loyalty is something you can continue to draw upon instead of ruining it through irresponsible sourcing practices. Your brand name means something, that is why a consumer picks your product over a competitors product.
There is a new approach and that is towards a Triple bottom line.
This is a recognition that corporations no longer are valued by the last line on the financial statement but rather the totality of their impact on the people, planet and profit.
In order to for this to occur there’s need to be a systemic approach. This could mean taking a proactive approach to prevent issues from happening in the first place. Rather than a reactive approach if or when something happens.
No matter where you are on the supply chain, designers, buyers or manufacturers are impacted as your license to operate depends on your ability to be sustainable.
Here’s 5 ways to put this into plan action:
- Make sure your company serves a social purpose by taking a holistic approach and looking at sustainability and responsible sourcing as business decisions.
- Make sure the additional cost is bringing value to your brand. Having sustainability practices in place may cost more. Make sure your costs are not putting you out of business. The triple bottom line has to be based on the profit model in addition to the impact on both people and the planet.
- Make sure there is commitment from the top (CEO, Owner, GM). To ensure a systematic approach takes root is to make sure there is commitment from the top. Make sure they understand this matters and driving it down to the rest of the organization.
- Prove these practices and commitments with documentation. Make sure policies and procedures you are putting in place are properly documented, written and communicated. Using 3rd party organizations like WRAP, Higg Index can help with this process.
- Continuously educating the people who this applies to. Training is key to carry out the message to staff and others involved so they understand why these things matter to them by getting everyone involved and understanding its importance.
In a highly connected world where information is instantaneous, NOT meeting the customer’s expectations could have an immediate, and disastrous effect. Creating trust and transparency along the entire chain can no longer be buzzwords.
What defines the bottom line is now evolving. It includes a social purpose. The triple bottom line is what more investors are looking at companies to judge value. It’s important wherever you are in the supply chain, you act in a responsible fashion because that will impact your bottom line.
Product, quality, price, delivery are still important but you need to layer on top of that responsible sourcing system is necessary to protect your bottom line. Therefore becoming a more profitable company in the long run and not just for short term earnings report.
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