How to build a profitable, sustainable supply chain with product customization.

Brands today are taking bold action to build a more sustainable supply chain. Leaders are eager to make a positive impact on the world, satisfy consumer demands, and stay competitive.

Product customization is a key part of this equation.

A more sustainable supply chain can directly improve profitability, and customization can be a driver.

Sustainability goals such as reducing pollution, protecting biodiversity, and maintaining positive community relations are top of mind in today’s corporate climate. 

At the same time, staying competitive, maximizing profits, and increasing market share are always top priorities. 

Sustainability often ties in with profitability indirectly, making it seem more like a cost than an investment. 

Advancing socially and environmentally progressive manufacturing practices are the necessary costs of doing business ethically. 

These investments pay dividends in many important ways. They help care for our planet and advance outcomes for people. But these humanistic dividends are often difficult to quantify.

Many brands are discovering ways that sustainability can lead directly to profitability. 

Brands typically see sustainability leading to quantifiable dividends (profits) in two ways: when it drives the initial purchase decision or as it contributes to brand loyalty.

Brands like The Sak are committed to spotlighting the humanity, artistry, and personal touch behind their products, part of a broader story that involves protecting the rights of workers throughout their supply network.

1. “Sustainable” can be a label that drives the initial purchase decision.

For example, nearly half of consumers are willing to pay more for sustainable products. And over 50 percent of up-and-coming Generation Z shoppers (at the time of writing, teenagers to mid-20s) will do so.

That’s an example of when sustainability is top-of-mind for a consumer, a benefit that directly influences a purchase. Being known as a “sustainable products” brand can attract new customers and drive higher margins as consumers are willing to pay more.

2. “Sustainability” can also be a story that drives ongoing consumer loyalty.

Sustainability isn’t always top-of-mind leading up to a purchase, but it rather acts as a value add. Knowing that a product was developed in a sustainable way helps consumers feel good about their purchase and stay loyal to the brand.

This is the value of a compelling sustainable supply chain story. Not only is advancing sustainability the right thing to do, but it also affects brand perception in powerful, profitable ways.

Product customization is part of the broader sustainable supply chain story.

So where does product customization fit into this conversation? 

It’s part of a broader strategy to create a virtuous circle: 

• Delighting consumers with exactly what they want (with customization), while
• Building a more sustainable supply chain (which supports customization), and
• Tying the story of how customization works to your sustainability story, which, in turn
• Keeps them eager to come back to help perpetuate the cycle.

What does a sustainable supply chain look like?

According to the Organization for Economic Cooperation and Development (OECD), there are three dimensions to the sustainable supply chain model, i.e. sustainable manufacturing: Economy, Society, and Environment.

Addressing these three key areas is key to unlocking the profitability of green economics:

“Many businesses have already started to take important steps towards green growth – ensuring their development is economically and environmentally sustainable. Their pioneering experiences largely show that environmental improvements go hand in hand with profit-making and improved competitiveness.”

When a leading brand cultivates a more sustainable supply chain, the results are far-reaching. The stories can be powerful.

Product customization can be part of that story. It’s one highly profitable engine for creating domestic jobs, improving working conditions, and reducing waste. Not alone. But rather, it’s part of a green culture that successful brands are actively and eagerly building.

Economy.

The ‘80s and ‘90s saw nearly every major U.S. footwear brand moving operations overseas. One brand remained committed to maintaining domestic operations: New Balance.

To their competitors, it didn’t seem to make sense. According to CEO Rob DeMartini, labor costs in the U.S. are around 10 times higher than in Asian countries. 

Supply networks supporting the footwear industry had moved overseas as well. So maintaining operations here meant putting work into cultivating U.S. partners.

Why go to all this trouble and expense? Because New Balance had a vision that was as consumer-centric as it was economically sustainable.

Their close-to-home strategy facilitated the innovation, quality control, and efficiency necessary to implement a highly consumer-driven product customization program.

The strategy contributes to economic sustainability as it provides quality, onshore jobs. Their ability to market products “Made in the USA.” is an added benefit that builds consumer loyalty.

Because made-to-order production often relies on localized supply chains, product customization can incentivize onshore operations that create jobs and promote economic sustainability.

Society.

Overemphasizing low-cost labor overseas has led to serious problems ranging from product quality concerns to human rights abuses.

As shareholders pressure brands to increase profits, overseas manufacturers feel the pressure to push the boundaries of what cheap labor can accomplish.

Writing for the Harvard Business Review in 2020, supply chain management experts reported that one of these leading overseas supplier factories was violating the 60-hour workweek limit. As a representative explained:

“We didn’t want to tell our customer that we can’t produce its products on time, because otherwise it’s going to try to find someone else that can. But our customer didn’t give us enough notice to hire enough skilled people to do the job.”

This story exemplifies how easily global economics can become disconnected from the humanity involved in production.

But brands like The Sak are committed to spotlighting the humanity, artistry, and personal touch behind their products, part of a broader story that involves protecting the rights of workers throughout their supply network.

 

The story they’re telling about “Consciously Crafted objects that invite touch” is as authentic as they come. As a certified B Corporation, The Sak’s overseas operations meet high standards for both social and environmental performance. 

Their product customization program is a natural extension of this artisan-centric brand. 

Customization is part of a movement toward higher quality, bespoke fashion that’s more personally meaningful to the consumer. Knowing that well-paid, ethically-treated artisans are on the other side of the purchase is a huge value add.

Product customization can be part of a compelling story about your socially sustainable supply chain; ethically-sourced products made just for you by skilled workers.

Environment.

One of the most effective ways that brands can enhance profitability while promoting environmental sustainability is through waste reduction.

• Investments in extending product life and/or enhancing product circularity (i.e. recyclability) justify higher profit margins (remember that half of consumers are willing to pay more) while reducing the rate of after-market disposal.
• Customization and personalization options further improve the perception of quality. These innovations help reduce returns, which otherwise cut deeply into profit margins and lead to massive amounts of waste.

Chaco is one brand that is working to reduce waste on both fronts.

The popular sandal company offers its repair program, ReChaco, to keep its most popular product out of landfills. Just by offering to repair their iconic Z sandal, Chaco is signaling to consumers that this is a high-quality product built for a long-life.

Chaco reports that in 2020 alone, they saved over 21,000 pairs of sandals from going to landfills.

Meanwhile, their customization program is encouraging consumers to thoughtfully create a sandal they’re bound to cherish (and less likely to try, then return).

Chaco hasn’t reported how much this program has reduced their overall return rate. But if their experience is anything like what other brands have seen, the reduction on returns may be as great as 40 percent.

In addition, as Chaco’s customization program grows, its waste due to overproduction of standard product lines is reduced. Every custom sandal produced with an eager consumer behind it represents movement toward a more sustainable supply chain. 

As it helps reduce returns and overproduction, product customization is a key component of a broader strategy to promote environmental sustainability.

If you’re excited to build a more sustainable supply chain driven by a profitable custom products program, talk to JTB Custom.

We are experts at building product customization programs for profitability and sustainability, two concepts that can and should go hand-in-hand.

While the ability to customize a product fulfills the consumer’s needs – for self-expression, or to purchase the perfect gift, or whatever the primary motivator is – your brand’s sustainability story will keep that consumer coming back.

Using our crawl, walk, run, fly approach, we’ve helped brands like New Balance, The Sak, Chaco, and many others build their customization programs at a manageable pace and cost to achieve an impressive return on investment.

And in doing so, we’ve also helped them achieve their broader goals. As each brand builds a more sustainable supply chain, driven in part by customization, the brand story becomes even more authentic and compelling.

That’s what it takes to build consumer loyalty today. Let production customization lead the way.

Ready to get started? Talk to an expert today.