The tragedy in Japan plus the unrest in the Middle East has again brought Wall Street’s attention upon the concept of “derisking.” Derisking is a strategy that looks beyond meter, pump or cash register price to evaluate all costs and risks.
For example, reliance upon foreign oil brings risks of supply disruption and recessionary enducing price spikes. Its economic costs not captured at the gasoline pump include a continuing negative trade deficit that is undermining the dollar’s value and hundreds of billions of Federal tax dollars spent annually on military expenditures to protect foreign oil fields and shipping lanes.
Derisking is also growing in consumer awareness with each new report of children toys imprinted with lead, medicines that fail quality control standards and the flood of pirate merchandise that are cheap in price and consumer protection.
There are two attractive paths available to businesses and consumers that offer lower risk. One is Buy Local. A major advantage of buying a product made in the United States is that it’s production is subject to quality and health health regulation enforced by a court system.
And a Buy Local supply chain for a business is less risky in today’s just-in-time inventory/manufacturing systems.
The other path for derisking is buying “green.” Here is a telling quote from Andrea Thomas, a Senior Vice President for Walmart, on how consumers are increasingly focusing upon green products, ”Our customer is becoming much more articulate about needs in this space.” And in response Walmart has been very aggressive in “greening” their supply chain and product offerings to align with their customers’ search for ”in me, on me and around me” solutions.
The key to business success in growing Buy Local and Going Green revenues is price competitiveness. Large businesses like Walmart and smaller ones like Valley Forge Fabrics are growing revenues by aligning VALUE with the consumers’ search for values.
If you are business seeking to grow revenues, or seeking to “derisk” your supply chain, the paths of “going green” and Buy Local are best practices that offer price competitive solutions.
Bill Roth is the founder of Earth 2017 that focuses upon the emerging smart, health and green economy. His book, The Secret Green Sauce, profiles best practices of businesses making money going green.