By Graeme Hamlet – senior principal, REPL Group, part of Accenture
As we’ve explored in previous articles, the concept of sustainability is far broader and multifaceted than simply the environmental element, spanning instead the ‘five capitals’ of natural, human, social, manufactured and financial capital. By understanding this, sustainability leaders will be able to define the sphere of influence for their organisation to bring about positive change, making use of an array of tools, including data science.
Armed with this new sustainability mindset – and the right technologies – leadership teams can start to make a tangible difference across the business, including one of the most significant elements for any retailer or manufacturer: the supply chain.
The supply chain, at a glance
In some ways, the supply chain can feel like a pretty vast and unwieldy subject. So, what exactly do we mean by it? Simply put, it encompasses all of the infrastructure, systems and operations that take a product from its point of origin – be that a farm, a factory or a lab – to the end consumer – then how the item is disposed of.
Think of a coffee bean. First, it needs to be harvested from a coffee plant, then dried, packed up into sacks and passed to exporters. Once sold to individual coffee companies, those beans are roasted, packaged and distributed to a huge network of retailers, restaurants and brands. The packaging and waste product are then thrown or away, or increasingly more commonly today recycled as part of a growing circular economy. Every stage of that process is considered part of the supply chain. As is the technology and data that underpins many of those activities, be it during production, logistics, selling, consuming and waste disposal.
The vastness of the supply chain is one of the reasons that there is such a wealth of associated sustainability benefits, with each mappable to both the United Nations Sustainability Development Goals, and those same ‘five capitals.’
Addressing the ‘five capitals’ in the supply chain
With each of the ‘five capitals’ there are a raft of opportunities to make changes and improvement at every stage of any supply chain.
Financial: By improving both stock management and decisions around sourcing, businesses can benefit from lower logistics and waste disposal costs. Equally, by improving the transparency of their own progress on sustainability, such as via reporting, they can demonstrably improve both employee and consumer engagement, with a knock-on impact on revenues. Tesco, for instance, has been lauded for its decision to routinely reveal data on its levels of food waste.
Human: A more efficient supply chain, one making use of automation, can mean a smaller workforce is required. But on the flipside, the remaining employees can benefit from a far safer environment, a reduction in wasted delivery journeys due to improved stock management and tasks that have a reduced physical impact on the body. At the same time, a focus on sustainability more broadly can generate brand new roles and opportunities to oversee both the planning and management of initiatives. This same focus can improve employee engagement and wellbeing.
Social: A holistic view of the supply chain can increase trust between stakeholders, be they producers, suppliers or logistics teams, with each aligned behind a common goal or purpose. A reduced environmental impact, via reduced emissions or waste will benefit the local community too, as will improvements to stock availability and the use of data to ensure what is available is demographically relevant to local consumers. Store staff may also benefit from additional time to spend on value-add activities, such as customer service.
Environmental: Improvements within the supply chain have the capacity to make a huge difference to environmental impact. Improved stock management and sourcing can lessen the impact on natural resources, while reducing waste and emissions. There is also the potential to reduce IT related emissions by using cloud deployments, as well as via enhanced route planning to create more efficient logistics operations. The potential for fewer or smaller warehouses too creates further opportunities to reduce emissions and even explore the possibilities of rewilding vacated space. The Co-op’s commitment to achieve carbon neutrality across the supply chain for its own brand ranges is likely to encompass nearly all of these elements.
Manufactured: By creating a more efficient supply chain, companies can reduce the overheads associated with manufacturing, with positive benefits on both cost and climate. Equally, improved stock management can help to reduce packaging volumes, while leaner stock levels can help reduce the size of the fleet and storage capacity. In its efforts to move toward zero additional packaging, for example, Amazon combined lab testing, machine learning and strategic manufacturing partnerships to create sustainable improvements across its own supply chain.
Making a difference, at every stage
There are so many opportunities within the supply chain to unlock sustainability, across each of the ‘five capitals.’ Simply put, the right technology can help a retailer not only reduce waste and emissions throughout their operations, but also improvement both internal and external engagement, building better relationships with employees, suppliers, consumers and also their local communities.