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SAID BUSINESS SCHOOL
Elements in Delivering on Product Origin Promises
Making Promises about Product Origin is Indeed a Complex Job; The Story is rarely simple and at Times Simple items are Astonishingly Complex
Issue Date - 30/06/2011
 
Consumers, governments and organisations or all kinds are finding that questions of origin are climbing steadily up the agenda. For a multitude of reasons, people are asking the question: where did this stuff come from? Recent work at Said Business School has been focusing on this issue from several perspectives, and a new research agenda is emerging that reflects the most expansive view of operations management – one which takes questions of strategy, culture and society seriously. The overall lesson is that research must be driven by real questions that face business and society, and these challenges do not fit neatly into disciplinary boxes. So what are the strategic questions that emerge from worrying about product origins? One way of framing the discussion is to focus on three key transformations that organizations face: turning commodities into promises, making information out of data, and transforming procurement into supply chain management.

Commodities into Promises
A trip to your kitchen is a good place to start reflecting on the trans-formative effects of globalization. There are two things to observe. The first – obviously – is that our daily lives represent the confluence of stuff from every corner of the planet; you will rarely eat a meal that hasn’t been drawn in part from every continent. But, secondly, you will see that the way the threads of international supply are pulled together is not a simply mechanical exercise; the meaning of goods is in part constructed by narratives of their origin: ‘100% British Wheat’; ‘English Gammon’; ‘Sustainably Sourced Mussels’. Organic food, halal and kosher products all involve the selling of properties that are essentially unobservable and untestable by the consumer; the value of the goods is determined by a promise, a narrative, an association. In many segments, the role of provenance-based value appears to be increasing. There is a temptation to explain this as the result of some kind of ethical revolution amongst consumers, but to do so is wrong and also misses the key point. The number of shoppers who painstakingly examine every label for a detailed exegesis of origin is small, and even those who do are rarely consistent.

 
The larger issue is that in our purchasing we engage in a complex, reflexive engagement of claims, trust and reputation; for example claims about origin can be proxy claims for safety and integrity. The reputational system of modern commodity chains is about how we manage our identity, our guilt, and how we reconcile ourselves to taking things from strangers and feeding them to our children. What has changed is not that consumers have discovered virtue, but that this discourse has suddenly crystallized into an observable social phenomenon: the Asda breakfast cereal box now feels the need to proclaim that one of the world’s most powerful corporations (Walmart) not only sells the best products but ‘cares passionately about where they’re from’. As in the kitchen, so in the wardrobe – and in the toybox, and in every corner of our lives; we find that origins and provenance determine value, and in each case we find the same system of promises and reputational cues that give a buyer the sense of assurance that the product is valuable, safe or ethical. In a project supported by the Oxford University Centre for Corporate Reputation, we are working out some of the common dynamics of these mechanisms in contrasting settings. Cultural goods such as art and memorabilia acquire non-material virtue on the basis of which galleries the artist has been associated with. But some kind of parallel mechanism is at work in the more prosaic settings; when a retailer is sourcing a toaster from a Chinese factory, judgements about the ethics, product safety and environmental impact are made equally on the basis of a web of cues and signals, and essentially reputational judgements. And in safety-critical industries – pharmaceuticals, aerospace components – reading these cues correctly can be a matter of life and death.

Data into information
Making promises about product origin is a complex job; the story is rarely simple, and even simple items are astonishingly complex. Developments in technology, on the other hand, may be able to help. Systems of traceability and tracking are beginning to impact a range of industries; items can be tagged with radio-frequency identification devices (RFID), or even labelled with DNA-encoded ink. The internet provides an infrastructure of surveillance (some firms, including Asda in the UK, have experimented with web-cams in suppliers’ factories); advances in data-mining techniques mean that the enormous quantity of data that can be collected from automated systems can be explored and exploited. But data alone is not terribly useful: corporations face the challenge of converting this into useful information and this requires three elements that are in short supply. Firstly, there is the need for information systems that are flexible enough to cope with product data that is far richer than legacy approaches typically allow. In particular, ‘bills of materials’ – the databases which describe product structure – need to be rethought to enable increased granularity; what is important is not just what components go into your product, but what goes into the components. Secondly, there is a need for means of distinguishing between data of different levels of reliability; in a world where provenance really matters, simply recording whether a supplier has an acceptable official policy is not enough – data structures need to accommodate questions of actual practice and authentication of claims. Finally, there is the need for individuals in the organization who can interrogate and interpret data with sufficient context dependent knowledge; a new breed of procurement professional whose mandate goes beyond securing the lowest price.

          
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