Building branded logistics

Aspire Thought Leadership! Wondering how to build branded logistics? Find out more on how fortune 500 companies use this approach. Come right in

Companies have always designed their supply chains with a high level of “confidentiality”, if not secrecy. Until recently, disclosing the branded logistics was not even an issue. In fashion, for instance, most brands divulged very little or no information about where suppliers were located, the working conditions or the environmental effect of their activities. Over the last few decades, fast fashion has changed how we make, buy, and discard our clothes. But few of us have become really aware of the high cost of our cheap and disposable fashion. The same happens for food chains: we spend a smaller percentage of our income on food today than ever before and this is not because we eat less but because small farms and workers in the food chain sustain the cost of our constant search for bargains.

The call for transparency has taken the majority of companies off guard. In most cases, their reaction has been defensive, cherry picking what to reveal, activating ad hoc initiatives, identifying criticalities and signing up initiatives, certifications and rankings, publicly rewarding their willingness to start measuring themselves and set a path of self-improvement. Things have undoubtedly improved since 2009, when a research report concluded that 98% of environmentally friendly claims were false or misleading in some way. Now investors want to invest in financially stable and successful companies that proactively address ESG criteria in their management and growth. ESG issues are inherently reputational [integrating ESG into corporate strategy]. Our take is that today more than ever, brands and companies need to develop new narratives, fully plugged in their purpose, original and differentiating, but fact-based. It’s time to have real conversations about real things with real people. The sins of vagueness, irrelevance, hiding trade-offs on products promoted as “green” or the plain lack of proof on sustainability claims are increasingly under scrutiny, if not yet by consumers, but for sure by investors and local communities. Nevertheless, a serious fact check and transparent approach might not be enough if facts are not narrated in a way that is engaging, emotional and relevant for the brand audiences. Sustainability data, to be meaningful, need to be “boring” and fact-checking by ranking agencies or investors is not meant to drive emotions, but rather to validate compliance and accountability [enterprise data management]. However, narrating the effect that a brand has on the world should not be jargon-heavy, it should be simple, fun and inspiring. Companies should give customers, employees and suppliers a story that matters.

The branded logistics framework has two aims:

1. to support the creation of a progressive narrative about what happens “behind the scenes”, in particular within the supply chain;
2. to generate strong, unique and positive associations to improve the brand image through relevant stories for all stakeholders according to their specific interest.

The ultimate goal is to make the Supply Chain the strategic differentiator, which connects consumers to their favorite products, but which also enables engagement, trust and transparency. It is a transformative, long-term journey but it can be embarked on with small steps, giving value to what companies already do and then scaling up activities according to the structured process described in the next paragraph and based on what we have learned from our best cases [value matrix].

The branded logistics narrative. From “Care and Check” to Proactivism

In his 2004 article, Simon Zadek3, a senior fellow at Harvard University’s John F. Kennedy School of Government, discussed how most organizations evolve through five stages marking their progress on how they handle corporate social responsibility initiatives: defensive, compliance, managerial, strategic and civil. It’s a learning curve describing how companies progress in the way they deal with CSR bringing it from the periphery to the core of their strategy, while the society outside is also becoming increasingly aware of sustainability issues. Initially, organizations adopt policy-based compliance to avoid the erosion of economic value and protect reputation. Then they start giving managers of the core business responsibility for some sustainability problems and their solutions. In the strategic stage, organizations try to integrate societal issues into their core business agility strategies. In the final civil stage, they engage in collective actions to promote broad industry participation to address society’s concerns; for instance, improving the actual standards in their industries by working together with their competitors, business partners, government, non-governmental organizations or local communities.

Another interesting contribution from literature comes from Kurucz et al.4 who have also set out four general types of business cases for CSR that overlap with Zadek’s. The four approaches include: (1) cost and risk reduction; (2) gaining competitive advantage; (3) developing reputation and legitimacy; and (4) seeking win–win outcomes through synergistic value creation and industry-wide collaborations.

We have outlined a growth path envisioning three stages along which the brand develops an inside-out approach toward ESG issues, where the supply chain is progressively integrated into the brand narrative.

Branded Logistics

As sustainable development is a journey and not a destination, in the same way building a narrative about the branded logistics should follow different steps and stages according to how the organization is evolving and learning, considering supply chain-related issues. Companies are not expected to be perfect and “radically transparent”, but rather to share their journey and as said “radically honest”.

Branded Logistics: Phase 1. Care and check

Most companies start this path with a reactive approach to ESG issues. The first phase of the model is mostly focused on avoiding the erosion of the brand equity, building awareness about the supply chain structure (care) and effect (check). We all know that mapping today’s supply chains is a difficult task: fashion retailers, for instance, utilize more than a thousand factories globally, many of which subcontract to a second tier of suppliers that brands cannot control [big data in retail]. Hardly any of the well-known brands, whose garments were manufactured in the Rana Plaza factory where many people died, actually had a direct relationship with the garment factories operating in the building. Asking suppliers to adhere to a code of conduct and reveal their source materials and labor practices can take years. However, a better understanding of how the supply chain is structured and what effects the product has along its journey (because each product will always have an effect) is a fundamental starting point for all companies. Learning about effects is the necessary first step toward reducing those effects6. Learning about effects can be difficult and expensive, results cannot be obtained immediately, as some activists and media expect, but brands can be honest and transparent about what they are doing and how they are progressing toward their ESG goals. Brands are facilitated in this process if they have a well-established purpose and a strong organizational culture. These factors may seem invisible during periods of prosperity, but in moments of economic or reputational crisis they represent the anchor that helps companies pull together and move forward. In this phase, key actors are not only the internal organization, but also the most critical first-tier supply chain partners who should be helped to become personally aware about the common relevant issues in terms of ESG. The trend toward “deeper partnerships” over previous “transactional and short-term” relationships is expected to accelerate in industries such as fashion over the coming years, according to analysts7. The roles of the company leaders, the founder and the CEO, are critical for initiating this process and keeping it on track. Successful cases show us that unless the leadership team is fully committed to a culture of caring and checking and internal alignment, few results can be expected. A key success factor in this phase is the role of HR and internal communication teams’ commitment to developing a unifying clear language spanning the various functions. Internal and external alignment takes place through internal media and ad hoc workshops and events. Companies might carry out assessments and gap analysis to understand their strengths and weaknesses with the support of external consultants. The first outcomes of this phase are usually improved codes of conduct shared with suppliers. While the code of ethics sets out the aspirational expectations for business judgment that the company and its employees recognize and accept, code of conducts is set of principles and behaviors, originating from the code of ethics, which should guide employees and suppliers in the everyday conduct of business.

Once internal awareness is achieved, the second step is about achieving full compliance and reporting this. It is still a reactive approach to ESG, but it aims at mitigating the most relevant strategic and operational supply chain risks. This phase encompasses the widespread adoption of standards, certifications and membership in initiatives aimed at reassuring the relevant stakeholders. Key stakeholders can be identified through certain questions.

1. Does the stakeholder have a fundamental effect on the organization’s performance?
2. Can we clearly identify what we want from the stakeholder?
3. Is the relationship dynamic – that is, do we want it to grow?
4. Can we exist without or easily replace the stakeholder?
5. Has the stakeholder already been identified through another relationship?

Companies usually communicate their efforts in terms of compliance in their annual report and nonfinancial information documents such as the sustainability report. Sustainability reporting has been changing from a voluntary, “soft” regulation system to a more concrete, regulated one. There is a variety of languages and terminologies that companies use in certifications that are too technical or obscure for readers or numb in their meaning. Too often, compliance is just perceived as the “risk prevention department”, while there is a wide range of ways to make compliance and ethics more interesting and engaging for employees and suppliers. The best cases are showing that there is room for having a branded approach to compliance as well.

Branded Logistics: Phase 2. Brand narrative

The second phase of the journey moves the brand into the area of proactiveness, developing brand narratives aimed at improving image and reputation with selected targets (consumers, trade partners, local communities and trade unions). Always starting from the brand purpose, the objective is to identify what content, topics and specific pieces of information might be or become relevant for each stakeholder. Assuming that the key stakeholders have been already identified in the previous phase, the challenge for corporate managers is to develop strategies for dealing with each one of them, considering that different stakeholders can, and often do, have different goals, priorities and expectations. Once again, the role of organizational leaders is critical. In teams with brand management, supported by either internal or external marketing services, the leadership team activates the process, combining who the critical audiences are and their specific topics of interest. Are our investors interested in how we use resources or how we dispose of unsold inventories? Are our most trendsetting clients interested in how we design products for sustainability? What are our local communities most sensitive about? Is local know-how preservation an issue? Is eco-packaging a priority for our loyal customers?

In order to support this analysis, a simple map could be of help once it has been customized to the specifics of a brand.

brand logistics

This map is inspired by materiality maps, but it focuses on topics potentially relevant for the brand narrative that are supply chain-related only. The map presents three levels of depth of the company’ supply chain moving from the perimeter to the core. The external layer represents the internal company operations and factories. The second layer identifies the first tier of suppliers, the more strategic ones and the ones the company deals with directly. The third layer identifies “the suppliers behind the suppliers” – what is defined as the “deep” supply chain. In the meat sector, for instance, EU labeling requirements oblige retailers to share with customers where livestock were born, bred and slaughtered. Some companies are willing and able to integrate such information with visibility on what livestock were fed with, providing visibility over second-tier suppliers.

These three layers of the strategy in supply chain management can be mapped and analyzed for a number of macro topics of stakeholders’ potential interest in combination with materiality maps and risk assessments. Each brand should indeed build up its own chapter list, customized to its specificities.

Once translated into strategic communication goals, these areas of interest should be specific, ambitious, and measurable against an established standard; they should have a medium- to long-term orientation, but show the journey and disclose results toward that term. Finally, their intent should be unmistakable. One company stated as a goal: “Reduce the impact of our packaging on the environment.” From a different company came a sharper version: “Eliminate 20 million pounds of packaging by 2030.” In this phase, the main challenge is being focused on; many companies lack focus. If top management doesn’t prioritize, then individual functions or business units won’t either, with the outcome that resulting activities are fragmented, decentralized, not necessarily aligned with each other and with overall top-level goals.

Knowing what matters to stakeholders, what competitors do, and how to value relevant and unique aspects within the supply chain are all the ingredients a company needs to build a narrative together with its creative partners. This supply chain governance often focuses on people (stories of employees, suppliers and communities) or describes the product journey from raw materials to the final client. Brands should tell stories about what they know, but also about what they feel to make stories personal and alive. Stories can be powerful. Everyone loves a good story, and as a brand, you can use your own story to further engage your audience. However, credibility is the key. Your brand narrative needs to be built collectively from within the company and use a language that the audience can relate to in order to feel authentic. Stories do not come out perfect; brands should continue re-telling the story many times over. It’s a lot of hard work and it takes trial and error to get that story right, because one content that may be relevant for the brand is not necessarily going to speak to consumers or the community. In some industries brands tend to develop special products and projects (such as sustainable capsules or collaborations with textile brands in fashion, limited editions with special local ingredients in food) in order to build additional engaging content about quality or the environmental effect to communicate to final consumers. There are countless examples of fashion eco-collections from H&M to Guess, from Zara to Prada as well as bio or eco private label projects by major food retailers. Luxury is about people and all luxury brands from Gucci to Louis Vuitton and Dolce & Gabbana to Hermes have presented their artisans in store, on catwalks and in advertisements to make the human touch behind their powerful branding machines visible.

From an organizational standpoint, the efforts to integrate all inputs, build relevant projects and fine-tune a unified tone of voice in the brand narrative cannot be the task of one single office or role, but it becomes the responsibility of internal dedicated cross-functional teams. Marketing and brand executives in particular should reflect on the following aspects:

• What aspects of the company’s supply chain have the most current or potential influence on the brand promise and the customers’ buying experience?
• How well am I aligning the brand promise and purpose with the company’s supply chain fulfillment capabilities?
• How do I ensure that my colleagues, who are responsible for supply chain transparency activities, know the brand promise and their role in fulfilling this?

Making this team fully operational with a dedicated budget is absolutely paramount for moving forward and winning over internal silos and skepticisms.

Branded Logistics: Phase 3. Proactivism

Proactivists are advocates for positive change; they are the voice for the industry on the critical environmental, social and governance topics. A proactive brand promotes a call to action, it stands for a cause that must align with the company’s purpose and is relevant for its customer base and all stakeholders [customer value proposition]. It is not political activism, but is action on issues beyond business, as said by Bank of America CEO Brian Moynihan9. It is clear that actively supporting a cause is not only about “saving the world”; it helps companies build loyalty and cultivate lifelong customers who share the same brand values. In the third and last phase, the proactivist promotes a broad industry-wide participation in ESG implementation through actions such as training and education or the support of partners in the adoption of standards on environment or labor. In the word of Adidas VP of Brand Strategy “we’re not just focused on changing how we do business; we’re dedicated to changing how our industry does business”. For brands to become proactivists, it means sharing an authentic and passionate model of behavior to inspire others and generate a shared culture of accountability and transparency. They engage their customers, challenge and reward them, make them understand and feel. They understand suppliers’ business challenges, offering support and developing long-term relationships. The final outcome is that employees, partners, suppliers and investors become advocates and ambassadors of the brand purpose. Activism may bring rewards, but it will definitely carry risks. First of all, brands should practice what they preach, and second, stand for issues that are deeply rooted in their purpose.

In this last stage, where brand managers or the CMO take the lead, the narratives have to be measured, revised and tested again. Keeping practicing is what the best companies do in particular when they want to engage stakeholders in an ongoing conversation.

Below exhibit sums up the three phases of the branded logistics narrative in terms of focus, actors involved, targets of the brand narrative, key success factors and key media to broadcast the narrative.

Davines. Building Branded logistics in Beauty

Davines Group, a certified B Corporation since 2016, is a best-case example of a purpose-led brand looking at its business as a positive force, capable of generating profit and at the same time creating a virtuous impact on its eco-system.

Founded in Parma, Italy in 1983 by the Bollati Family, Davines started as a research laboratory, producing high-end hair care products for renowned cosmetic companies worldwide. After a decade, the family decided to brand their formula. Their own brand Davines – sustain beauty hair care products was created exclusively for professional hairdressing salons, followed in 1996 by [comfort zone] – conscious skin science, skin care brand for premium spas, beauty and fitness centers, supported by specialist training initiatives. The skin care lines were further expanded in 2018 when the Skin Regimen-modern plant chemistry brand was born and in October 2020, the company launched the new Sacred Nature, the first CO2 negative organic skin care.

Today, the Davines Group value chain comprises all steps from research and development to production, which takes places almost entirely in the carbon-neutral site in Parma, and distribution within the professional beauty channel, its own e-shops and as well as in some selected e-tailers. Distribution activities in particular are carried out in over 90 countries, both through branches and distributors. Over 70% of turnover comes from exports. The role of foreign branches is to activate and promote Davines and Comfort Zone brands through initiatives such as events and shows, training and technical presentations of professional products. Business growth in the last decade has been remarkable. Turnover has grown on average 12.5% in the last decade, with an average EBITDA of 11.5%. The workforce increased from 180 in 2000 to 700 in 2020.

There were three drivers behind the establishment of a branded logistics.

1. The ecosystem alignment on transparency and sustainability. The innovative vision started top-down, but very soon the process followed a bottom-up approach, where the sustainable beauty challenge was taken up with passion and commitment, first by all the employees and then by the stakeholders. Understanding the importance of interdependence has inspired the company to share its B Corp culture with its partners all along the supply chain. Without transparency there can be no beauty. Beauty cannot exist without sustainability. Sustainability cannot exist without transparency.
2. The dream team as enabler. The vision of the entrepreneur Davide Bollati, coupled with the pragmatic attitude of CEO Paolo Braguzzi, have created over the past 15 years a strong and high-performance organizational culture that is also glocal: strong local roots in Emilia Romagna and an international orientation.
3. Walk the talk. The Group has implemented a comprehensive system of metrics and advanced communication tools, quantifying the return on its sustainability investments and linking sustainability to a business case.

The origin. Sustainable beauty

The Bollati family intuition was about blending the original family feeling and the artisan spirit with cutting-edge cosmetic technologies to produce the best beauty products. The core values of ethics and sustainability inspired the original company mission “sustainable beauty” at a time when these concepts were just in their infancy. Davide, the visionary leader who helped the family laboratory evolve into a multinational organization, was the son of the two founders whose backgrounds were in pharmacology and international exposure. His dream was to make not only the best products, but also contribute to the well-being of the company ecosystem. Product-wise, sustainable beauty meant formulations favoring the use of ingredients with a natural origin, often from Slow Food presidia12, generated with renewable electric energy and packaged minimizing the environmental effect. At a higher level, sustainability for Bollati meant the responsibility founders owe to themselves, to the people with which they work, customers, and to the world in which the company lives and operates. Sustainability was about growing without diminishing the opportunities for future generations. Making the world a better and more beautiful place had to become the company’s purpose.

Building a B Corp

Sharing a dream, instilling a sense of ownership and fueling passion meant aligning all employees on the core values of sustainability, inclusivity and innovation. The key moment was the creation of the Carta Etica. First written in 2005 by a philosopher with the support of all Davines employees, Carta Etica is a collection of shared ethics and company guidelines. It does not contain rules or instructions, but rather proposals for desirable ethical behaviors in the workplace to improve the quality of life for all.

The need to align and inspire people around the company purpose of sustainable beauty was acknowledged right from the first initiatives implemented: the “Sustainable Beauty Manifesto” in 2007, the “Charter for Sustainable Research” in 2009 and the first edition of the “Sustainable Beauty Day”. “I Sustain Beauty” project was organized in 2014, the same year the Group started the partnership with Slow Food organization.

The second milestone in the process of moving the organization forward was in 2016, when it achieved B Corp network membership. Certified B Corporations are a new kind of business that balance purpose and profit. They are legally required to consider the effect of their decisions on their workers, customers, suppliers, community, and the environment. This is a community of leaders, driving a global movement of people using business as a force for good. Within this network, Davines found the codified vision of a business that can do good both in terms of profit, people and planet.

After the certification obtained in 2016, another step forward was the decision to align the company’s strategic objectives with the Sustainable Development Goals (SDG’s), defined in the UN Agenda 2030, projecting them into the corporate strategy. This gave the company a goal for continuous improvement that was expressed in the activation of new projects, and in defining objectives and monitoring results that are presented each year in the annual sustainability report. So, in addition to environmental commitment about waste, plastic, water and carbon neutrality, new and ambitious projects in terms of people and the wider community welfare were adopted13.

The creation of this culture and strategy required a high amount of investment: dedicated financial and human resources as well as a redesign of the supply chain were mandatory to implement a real change. But as the investment rises, so does the awareness that the company builds sources for a sustainable differentiation. It becomes a radical shift in the way of doing business that sets the company apart from the competition on product and price.

Becoming a proactivist

In 2018, the company set itself a harder challenge by not only committing itself to SDGs, but also sharing them with colleagues and stakeholders. Davines committed to spreading good social and environmental sustainability practices among suppliers and increasing the number of those adopting them. Particular focus is devoted to renewable energy and B Corp certification14. Training, education, engagement strategies have been key in this phase. For instance, the publication of the new book, “An Extraordinary Manual to Make the World a Better Place”, a collection of 124 ideas to promote the application of SDGs in hair salons, is concrete support for those partners who want to improve the world through their work. In a further effort to share the importance of SDGs, the company also organizes internal workshops for colleagues and external workshops for B Corp companies.

This path gave a boost to the group employer branding strategy. Over 600 employees and partners contributed to the definition of the “trust index”, measuring internal trust. Results awarded the company with the certification “Great Place to Work, 2019” with an annual validity. The extension of trust is the key enabler of a sustainable organizational culture. Evidence shows that employees who experience a high-trust environment are more likely to be willing to take risks that could benefit the company, while high-trust organizations are more likely to report higher levels of innovation and elevated levels of financial performance relative to their competition.

Next, the principles of Carta Etica were made tangible with the opening in 2018 of the 36,000 m2 Davines Village, internally named as the home of sustainability and designed by the starchitect Matteo Thun. The Village is more than a new head office for the company; it is a focal point in life where people can work, learn, be inspired, experiment, and welcome those who come to visit. It is a place for discussion, for the birth of new ideas, it is about a community of beauty professionals: every day sees visits from secondary school and university students, as well as hairstylists and skin care specialists who attend the academy to become professionally enriched, get inspired and have fun. Employees and guests can eat at the Village bistro, managed by a 5-star catering firm serving zero km products. When not being used as a restaurant, the bistro becomes a place to work as beautiful environments inspire beautiful products.

An additional project is Davines Village scientific garden, an “open-air laboratory”, where researchers go to collect samples in order to test natural ingredients for use in formulations. The garden contains about 6,000 plants, including aromatic herbs, medicinal herbs, fragrant plants and plants for dyeing. The greenhouse is temperature and humidity controlled, and broadens the range of botanical species available, because it can hold plants that are typical of temperate, humid tropical, and dry tropical zones. The arboretum is a tribute to how they celebrate the multicultural world, because it is made up of trees and plants typically found in the countries where Davines distributes its products.

The road ahead

Today, the group faces two challenges and is committed to addressing them with two very specific initiatives.

1. An activist brand always has to move forward. Together with trust, the key word for the future is regeneration, the next phase of sustainability. Inspired by this vision of Davide Bollati, a coalition of global leaders and changemakers called “Regeneration 20|30” was created in 2020 to act as a regenerating force for society and nature, based on the belief that human activities and businesses should create conditions conducive to life, respect human dignity, and reignite trust in society.
2. If employees and the community of beauty professionals are now aligned with the vision, the final client, the user of Davines beauty products, has to be engaged with a new brand narrative. This is the challenge for all companies willing to promote their branded logistics: be “creative” and find new ways to connect with their customers, find an informative, emotional and engaging way to align them with the brand purpose and make them fans, advocates and storytellers of their products and what happens behind the scenes.

In order to involve the global teams and the professional community in this journey toward sustainability and regeneration, many initiatives and programs are in the making and will be part of the strategic HR, education and commercial plans for the years to come.