March 11, 2021
Sustainable sourcing is essential for the next generation of business leaders. Always look for the unique strategy that will benefit both society and the company’s bottom line.
The supply chain management director of Taylor Guitars had a problem. Like many companies that use natural resources (i.e. crude oil, agricultural produce, etc.) as raw materials to make products, the global manufacturer traditionally sourced a higher quality raw material - pure black ebony wood - to make its premium acoustic guitars.
According to Associate Professor of Supply Chain Haoying Sun, depletion of scarce natural resources has rendered this practice economically unsustainable and environmentally irresponsible. Because of transportation costs and the lack of a market, ebony loggers traditionally only brought back streakless wood and left all harvested streaked trees on the forest floor. As a result, 90 percent of the logged ebony wood was wasted.
In the 2020 issue of Manufacturing & Service Operations Management, Sun and her co-authors suggest that companies have two ways to sell “imperfect” products. The first is to sell at a lower price and appeal to consumers who are unable to afford the high-end product. The second is to position the product as “green” and appeal to environmentally-conscious customers. A slightly higher price can even be charged for the imperfect product, if there is enough demand.
Taylor Guitars changed its strategy without sacrificing acoustical quality or price. It started paying loggers an equal rate for all harvested ebony, whether streaked or streakless, and using 100 percent of the logged wood. This backward integration provides access to co-production capability, in which ebony wood of various color purities can enter the production process. Its streaked-ebony “eco guitars” and sustainable efforts have been well received by customers.
“Sustainable sourcing is a big thing for the next generation of business leaders,” said Sun, who launched the UK Master’s of Supply Chain Management program in 2020. Sun brings real-world cases like Taylor Guitars to the classroom, teaching supply chain managers to “always look for the unique strategy that will benefit both society and the company’s bottom line.”