How do you balance customer expectations with supply chain realities?

Consider this scenario:  You are one of the most loved brands in the country. You’ve built your reputation among the Goliaths of the industry as a pure organic, natural brand.

Now, you switch over from your key natural ingredients of baby wipes to conventional regular ones – Why? Money! Yes, the cost of making them were getting prohibitive for your supplier. What do you do now?

In other words, how do you manage or balance customer expectations with supply chain realities – in other words, walk the fine line of building or killing trust and making or loosing profit?

Here’s what SG did: Without telling this to its loyal customer, it made the switch – Why? SG thought that even though it didn’t meet their sustainability standard, it is not harmful either.

Well…customers realized the change…but only after some 3 months of the product being in the market. And the moms got angry!

SG had to field phone calls from dissatisfied but loyal base of customers – for every one call, there are 200 unhappy ones not calling!

So, what are the options now for SG?

Options: 3 choices emerged and the then CEO Jeffrey Hollender had to take the final call:

  • Clear the shelves immediately of the conventional wipes and wait until the newly formulated wipes were available for sale (90-150 days of empty shelves)
  • Sell-through existing wipes, order no additional conventional wipes, and then wait until the newly formulated wipes were available (60-90 days of empty shelves) 
  • Sell-through existing products, order enough conventional wipes to fill the gap until the newly formulated wipes were available, and switch over to the new wipes without having to leave shelves empty
My opinion: The 3rd option actually makes business sense and any company (not just SG) would want to exhaust the existing inventory, fill the gap with more of the same till the new wipes are available without keeping empty shelves.

But keep in mind that Seventh Generation is not just any company.There are different voices in the company and each option has a very strong voice or message that gets sent out. And balancing those is a challenge.

Perhaps, SG must be prepared to face whatever criticism it encounters. So, it should do now, what it should’ve done earlier:

Immediately remove the products from the shelves, apologize by way of social media to its customers, and tell the complete story behind this fiasco and wait for whatever time it takes for the ‘natural’ replacement

This will salvage some of the lost trust.

Of course, this will severely affect the bottom line also – but that is just one of the pillars of the triple bottom line that SG propagates and by doing this it will be stand behind its claims – which will also be in synch with its mission and vision.

Also, this can be an opportunity to gain further fierce following and broaden its customer base. What in your opinion is the right choice that the company should make – keeping in mind its ethical values and operating principles -which has trust as being the highest component?

(Daniel R. Glodstein and Michael V. Russo of University of Oregon, USA, have laid out the Seventh Generation case study in the Oikos collection. )
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