Canada Goose and a Supply Chain Lesson

SMITH BRAIN TRUST – Winter-chic outfitter Canada Goose has been shaken amid a controversy that Maryland Smith’s Gary Cohen says underscores the need for transparency across supply chains.

For years, Toronto-based Canada Goose has assured its fashion-conscious consumer base that the inner coziness of its $1,000 posh parkas came from humanely sourced goose feathers and fur from coyotes in “overpopulated” regions.

That ethical sourcing claim was part of the brand’s chi-chi ethos, and helped it build a reputation as a winter-wear darling among celebrities. sports stars and other affluent cold-weather-bearers.

But now, following an investigation by the Federal Trade Commission about “potentially false and misleading advertising,” Canada Goose appears to have backed off that claim, in a move that has its reputation and its share price under pressure.

No longer does the brand claim to “ensure” ethical sourcing. Instead it states that it’s “committed to” ethical sourcing.

The company has also removed a down “traceability” video from its website. The video, which appeared to show suppliers with live geese, came into question two years ago when People for the Ethical Treatment of Animals said the same suppliers were caught on camera grabbing geese roughly by the necks and shoving them into crowded cages, even stepping on the animals. Canada Goose has said that those suppliers weren’t connected to the brand.

It was a tough situation for the Goose.

Cohen, clinical professor of Supply Chain Management and Director of the Supply Chain Management Center at the University of Maryland’s Robert H. Smith School of Business, has seen similar situations before. Often, a manufacturer sources materials from a far-off supplier, who outsources from another supplier, who sources from another.

“Most supply chains today have greater and greater levels of complexity,” he says.

Companies today source raw materials from all over the world, sometimes creating elaborate supply chains that allow them to get certain products, with certain specifications at a certain place at a certain time. Suppliers, under strain to meet the demand, might subcontract an order, and that can leave a manufacturer in the dark.

It happens across industries, he says, and it reflects a growing challenge across global businesses.

“Supply chains, above all, need to be transparent,” says Cohen.

Without it, there are risks. Cohen cites an example of a children’s toymaker who sourced a metal hinge. The supplier the manufacturer had worked with in the past decided to outsource the order, and the supplier’s supplier used a metal for the hinge that did not meet Rockwell hardness specifications. It was too soft, Cohen says, and broke, potentially putting children at risk.

Cohen recalls the 2013 collapse of the eight-story Rana Plaza garment factory in Dhaka, Bangladesh. More than 1,100 garment workers died in the collapse, which turned the world’s attention to the dangerous, substandard working conditions in the country’s garment industry. The disaster brought calls for safety inspections and greater accountability in supply chains.

“When you simply look at your supplier and your customer, that’s not the supply chain. When you start looking at your supplier’s supplier, and your customer’s customer, now we are talking about supply chain.”

Today, Cohen says, with blockchain technology, network infrastructures, supplier analysis tools and other technology, companies can greatly increase transparency across their supply chains. Additionally, more than 80% of companies with high visibility supply chains conduct on-site inspections. “That’s critically important,” he says.

But there’s more to be done, he says.

“Every lapse in quality matters,” he says. “They can really tarnish a brand’s brand equity. And it takes so long to build brand equity.”