The talks at the April event looked at why and how you improve the sustainability of your supply chain. With this being such a broad and difficult area to engage in, the panel discussed the business case, the complexity of the challenge and how it is set to develop, giving specific insight into the work they each do in this area at ASDA, Pepsi Co and the Carbon Disclosure Project.
Paul Kelly (ASDA) began by highlighting the scale of ASDA, or more accurately Wal-Mart with its 176 million customers per week and 61,000 suppliers globally. This emphasised the scope and reach of the supply chain in the group, and the consequence that “with scale comes responsibility”. Admitting that Wal-mart was late in coming to sustainability, their eventual realisation was soon followed by setting out three aspirational goals by the former CEO and President, Lee Scott. The goals were; to be supplied by 100% renewable energy, to create zero waste and to source and sell products that sustain our natural resources.
With ASDA’s familiar business model “low costs every day” providing low prices for customers, by running a more sustainable business they were able to reduce operational costs by £23 million pounds last year. ASDA utilised this work and ran it in an ad campaign, illustrating how running sustainable products had reduced prices for customers, something that they learnt through their customer feedback had played very well. Customers were agreeing that sustainability could lead to low prices, but that in retail “Sustainability must be affordable”.
After discovering that 92% of their footprint lay within the supply chains of their business, ASDA have adopted a holistic approach to sustainability, “Sustainability 360”, which champions the need for genuine partnership with suppliers and partners and to assume a leadership and stewardship role to lead their suppliers into the future. This all needs to be conveyed to the customers on a simple dashboard in a sustainability index, something they are currently working on using the support and feedback of their top tier suppliers to begin putting together the criteria for this dashboard. He hopes the index becomes universal across suppliers and retailers, therefore competitors need to be engaged as having a familiarity engages the customers and encourages suppliers, it will also help create product innovation.
Fiona Page (Pepsi Co) outlined the complexity of the supply chain of Pepsi Co, a company with 38 factories in Europe and a strong agricultural focus (50-60% of its impact is from inbound upstream supply chain). They are working on segmenting the supply chain to diffuse its complexity, with Pepsi Co being in a position to galvanise the rest of the supply chain. For Fiona, there is a need for new programs to be created with suppliers that are set out in a different way than they were 10-20 years ago.
Fiona leaves us with some dilemmas faced at this stage.
How do you collaborate with many partners and competitors? – Historically a relationship of competition and protection of intellectual property
A need to create a sense of urgency across a supplier base that includes many businesses who do not think they need to worry and/or do not understand the challenge.
How do you manage the pace in different geographies? Many technologies are not available in certain places.
The panel was finished off by Paul Dickinson of the Carbon Disclosure Project. He posited the theory that Government’s have less power than they used to and that business, in many ways, decides future consumption choices – and exerts more influence. Quite some influence, given that he says the biggest democracy in the World is how we spend our money every day.
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