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Being able to prove ethical practices is becoming a differentiator for businesses PHOTO: Petya Boyadzhieva

Consumers, led by millennials and Generation Z, are making purchase decisions based on factors beyond product quality and cost. For many, a manufacturer's or retailer's perceived ethical business practices can drive the decision to buy or not to buy.

We’ve seen consumers question companies like Uber and Trader Joe’s about their business practices. These consumers are demanding more transparency into how these companies conduct their business, source their products or treat their employees. Forrester analyst Anjali Lai wrote in Forbes that, “customers are becoming more aware of — and sensitive to — social issues overall.” 

Consumers are increasingly challenging the business practices of organizations and forcing them to take an ethical or political stance.

The Data That Supports the 'Value Index'

Today's consumer is asking companies to divulge their political alignments and share how they conduct their business or risk losing wallet share. Purchase decisions take into account various factors including ethical sourcing, fair trade practices, environmental impact, hiring practices and work culture. Consumers want to know who companies partner with and if they uphold their partners to the same ethical standards as their own brand.

So what can a business do to support these consumer demands?

Consumer goods manufacturing, as well as retailers, can help buyers by making this information more readily available. Soon, such a “values index” could become as common as nutrition labeling. 

We already see various approval seals like Fair Trade USA, PETA Approved, Repair the World and Green America that indicate some form of value observance. Getting these certifications and producing proof of compliance will be critical. 

Modern data management technologies can help manufacturers and retailers capture all internal, external, third-party, social and public data and aggregate it to be part of product or supplier masters. 

They will need to uncover and visualize relationships among products, suppliers, certificates of approvals and consumers who value these. Understanding relationships will help them make sure what products comply to which standard, how much the consumer values those standards, and, in the case of an audit, quickly create compliance reports. 

Moreover, once they understand the relations and customer preferences, they can share this information and make it easier for the value-based consumer to make decisions.

Appealing to Consumer Values

Retailers will also use aggregated data with advanced analytics to determine the value index of the products, value-sensitivity of the consumer and then recommend the right product to the right customer. Watching the impact of carrying a product on consumer sentiment and acceptance will give new insights into potential future directions. 

You can find an aisle of certified organic products in most stores today. With better data and relevant insights, retailers can provide an even wider range of products to upsell and cross sell products that appeals to consumer values.

A New Competitive Advantage

Value-based ethical business is a new competitive advantage. 

Companies are making every effort to appeal to the social needs of customers and share the “farm to fork” product story and offer the evidence to back it up. Legacy supply chain, ERP and procurement tools weren't designed to manage and serve such “values” information. 

As organizations offer increasing options of socially conscious products, new data management platforms and strategies will help them collect the data across the supply chain, manage the data, ensure data governance and share this information with consumers.