Supply Chain Sustainability Trends in 2020 and Beyond

Whether we’re in a global pandemic or not, one constant remains: our need to eat. The companies that bring consumer goods to market – like our local grocery stores and chain restaurants – rely on the sustainability of their supply chains to make their goods available as efficiently as possible and to remain profitable while pleasing their ever-demanding customers.

But what does it take to design a sustainable supply chain? Let’s examine some of the biggest winners of 2020 and what it will take to be successful in the long-term.

What is supply chain sustainability?

The term ‘sustainable supply chain’ often can mean different things to different people. As a consumer, supply chain sustainability may mean that your local Target or Walmart is always stocked with toilet paper. As a business leader, supply chain sustainability likely looks a bit more complex, considering things like the environmental impact of your raw material extraction, packaging and transportation practices.

So how are leading companies bringing these two ideas together – meeting consumer demand without making a dent on our planet?

Examining supply chain sustainability trends in 2020

Recent events have certainly brought about a number of changes to demand patterns and routes to market, especially for companies in the food and beverage business. Those shifts have also put a significant strain on their supply chains. It is interesting that in the midst of this upheaval, two organizations in particular have made waves about supply chain sustainability. Suntory’s CEO was interviewed for a podcast by Earth911 concerning their innovative approach to water science and use of recycled plastics. And Coca-Cola bottler, HBC, was recognized for its positive social and environmental impact.

Beyond the beverage market, Profit Point sees a more consistent focus from a wide variety of market segments where improved supply chain sustainability is becoming more critical to the overall strategy and future outlook of leading companies. Dow’s Vision 2030 stipulates that all packaging materials they sell will be reusable, recyclable, compostable or biodegradable by 2030. And of course, Georgia Pacific would not have raw materials if they didn’t understand the value of sustainability.

 

Profit Point’s Strategic Network Analysis Process (SNAP)

Why supply chain sustainability can ensure long-term viability

The companies highlighted above recognize that in order to achieve long-term viability in their markets, they must prioritize supply chain sustainability as a strategic enabler and incorporate it as a cost of doing business. But this is more easily said than put into practice. In a recent journal article for The MIT Press and in her book, “Reimagining Capitalism in a World on Fire,” Rebecca Henderson details the cost of “externalities” that must be taken into account for a sustainable enterprise. In order to stay in business, these corporations must be profitable.

A further incentive – many leading companies have already recognized that sustainable supply chain practices have a positive influence on consumers’ spending habits. Investopedia cites that 55% of consumers are willing to accept higher prices from companies that adopt sustainable practices, while “green marketing initiatives can prove essential in building and maintaining a valuable brand.”

Profitability leads to resiliency

In the aforementioned book at the opening of the first chapter, Henderson quotes E. O. Wilson:

“The real problem with humanity is the following: we have Paleolithic emotions; medieval institutions; and god-like technology.”

The number of options we have today for ‘supply chain analyzers’ almost makes it seem like supply chain sustainability is a commoditized process. However, the expertise required to make it simple is not simplistic. Just think of the many major clothing retailers that have committed to more sustainable practices, only to find themselves in a PR tornado after their suppliers have been found to operate manufacturing facilities at sub-par standards that put both the environment and the safety of their employees at risk.

At Profit Point, we have designed more than 200 supply chains over the last 25 years and have developed a proven process for ensuring optimized profitability. But we know just profitability is no longer enough. Over that time and working across various industries, we have developed a keen sense of what questions to ask to ensure your supply chain is also a sustainable supply chain.

Supply chain is complex. We can help you make better, more profitable, more sustainable decisions by design.

About Eric Deahl

Educated as an Industrial Engineer, Eric has been providing planning and scheduling solutions throughout his career to numerous industries, with a particular focus on the value chains in manufacturing and distribution. He came to us from the optimization team at FICO, and prior to that was the leader of the Optimization and Supply Chain Solutions team in North America for IBM. Eric has a particular interest in understanding how organizations differentiate themselves in a marketplace and then applying technology to enhance that differentiation through operational effectiveness.

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