3 Ways to Help Revive Stalled Sustainability Initiatives
When it comes to being sustainable, consumer goods companies are facing higher expectations and increasing scrutiny on a global scale. Gone are the days when corporations could fall back on blatant greenwashing or claim “not my problem” while pointing the finger at tier-2-and-beyond suppliers.
The pressure comes from two primary sources. First, consumers are growing more concerned with sustainability and the environmental impact of the products they purchase. A 2018 Nielsen survey discovered that “67% of Americans say they will be prioritizing healthy or socially conscious food purchases.” Nielsen also found that sustainability is profitable — sustainable products saw sales growth of anywhere between 3% and 14%.
Furthermore, the firm found 64% of U.S. households are buying sustainable products, a number that continues to grow annually.
Second, governments are using their rule-making and regulatory powers to punish bad actors, disrupting supply chains as a result and reminding businesses of the need to take charge of their suppliers’ operating principles and practices.
The most conspicuous example remains the U.S. Customs and Border Protection agency’s landmark 2020 decision to issue a detention order on cotton products sourced from parts of China. It marked the sixth such enforcement order from the U.S. import authority in the space of three months against goods made by forced labor from China’s Xinjiang Uyghur Autonomous Region (XUAR).
The key learning for CG companies is:
1. Sustainability is not a fad; stakeholders have now made that clear.
2. Benefits accrue to those companies taking sustained action as part of a strategic plan. One-offs signal a lack of genuine commitment.
3. Incontrovertible proof of claims is required. There are no excuses, given the widespread availability of modern commercial platforms boasting feature sets designed to verify sustainable operations.
Enabling Technologies and Their Role in Sustainability
To support sustainability initiatives, here are three broad categories for those in consumer goods to consider: transparency and traceability, vendor management and artificial intelligence (AI).
Companies can guarantee supply chain transparency when they can effectively track the journey of their products from the sourcing of raw materials to the delivery of the finished goods. Without comprehensive knowledge of all N tiers in the supply chain, the brand cannot verify sustainability. The solution: creating a “digital thread” that maps their entire supply chain and creates chain-of-custody documents.
While track-and-trace technologies provide a map of your supply chain, vendor management solutions bring that map to life by allowing companies to monitor vendor accountability, transparency, and adherence to prescribed standards of engagement. Sometimes called Corporate Social Responsibility (CSR), these platforms compile survey and inspection data into a central repository for analysis that informs real-time sourcing decisions.
Companies benefit from this transparency because functional leaders can collaborate to make better decisions about the supply chain’s ability to fulfill the demand plan. In addition, these decisions can reduce risk, ensure compliance and protect against misinformation.
As companies achieve the ability to consistently validate, track and manage all the key data points related to their supply chains, more mature and sophisticated solutions — based on AI and machine learning — can be successfully implemented to continue the sustainability journey.
Companies enjoying the greatest benefits from AI are those with the patience to use the technology to create targeted solutions for specific business problems, rather than applying it generically simply to make a deadline or appease restless stakeholders.
Here’s an example. Perishable waste five times higher than the industry average was costing a global packaged food company an estimated $100 million per year. The company traced the root cause to manual forecasting and flawed, labor-intensive order processing procedures.
To address the problem, the company leveraged an AI-based toolset to more accurately model demand in far less time versus the now-discredited manual method. The proof of concept showed a 40% to 50% reduction in waste, as well as a 50% reduction in dedicated labor hours.
‘Do Nothing’ No Longer an Option
CG companies that fail to adopt technologies that support sustainability will face increasing challenges on multiple fronts, including unforgiving consumers, relentless regulators and competitors who grab the sustainability high ground and use it to build an enduring competitive advantage. The good news: the necessary infrastructure, architecture and portfolio of solutions are available now.
Mark Burstein is executive VP, industry principal, at Logility. A seasoned expert in fashion and retail working with the world’s most renowned brands, he is active in industry organizations including the National Retail Federation (NRF) and sits on the board of the American Apparel & Footwear Association (AAFA), the California Fashion Association and Goodwill Industries. He earned an MBA from Emory University and a bachelor’s degree in Finance from the University of Florida.
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