Over the past 5-10 years companies have increasingly invested in sustainability. However for most companies, and even leading brands, these investment still remain small compared to overall spend on marketing, risk mitigation or operational efficiency. Only in recent years have companies really begun to look at the implications of sustainability across the supply chain and the risks and opportunities it may pose.
However we are now at a tipping point where supply chain sustainability is fast-becoming a central focus for many organisations — even if they don’t call it that. For instance just in recent weeks we have seen a proliferation of activity in this area such as GreenBiz and PricewaterhouseCooper Verge Salon titled “Supply Chain Transparency & Traceability”, Ernst & Young’s new Startup Challenge focused on supplier insights, and a recent report published by Accenture titled “Walking the Walk: Driving Competitiveness Through Ethical Supply Chains.”
It’s clear the momentum is building — this post takes a look at why this is happening and what is next.
Why is this happening?
Across the board companies are struggling to address supply chain sustainability due to the rapid pace of change in 3 areas:
Climate change: Increasing catastrophic events such as floods and more volatile temperatures such as increasing rain and high temperatures impacting crop yields are driving disruptions for businesses and throughout their supply chains. As a result companies need to be more ready than ever to respond and look further into the future to adapt and plan effectively. Such planning and responsiveness require efficient and effective information and collaboration throughout the value chain.
Data access: There is no longer a place to hide or an excuse not to have or release data for companies. The default option is increasingly becoming one of openness and transparency. Indeed, information on companies and their behavior is more easily accessible than ever to companies that resist this change are swimming against the tide. In a time when data is increasingly abundant, fluid and easily analysed at scale we are seeing new opportunities and risk exposure for businesses. Effectively
Millennial Values: More than two thirds of millennial consumers are willing to pay more for products from sustainability-focused companies found a recent poll by the Clinton Global Initiative and Microsoft. The same poll found that “66% of millennials say there is “solid evidence” the earth is getting warmer, and 75% of those respondents say human activity is responsible for it”. These numbers are far higher than any other generation now or when they were at a similar age. We can expect this new wave of consumers to increasingly influence markets whether through their influence in running companies or where they spend their money.
One of the main overall reasons brands a falling short on supply chain sustainability is they are struggling to make this transition for their own business. Then of course when viewed across the supply chain the complexity is compounded. There is no one set framework for sustainability and as a result it remains somewhat of an ideology that differs across industries and even within industries. Companies get confused by this and lost — particularly as such initiatives are split across the two departments of sustainability and procurement. As a result they lose track of the basics and then limit their ability to address these challenges and drive value in their business through innovation.
There is no one set framework for sustainability and as a result it remains somewhat of an ideology that differs across industries and even within industries. Companies get confused by this and lost — particularly as such initiatives are split across the two departments of sustainability and procurement. As a result they lose track of the basics and then limit their ability to address these challenges and drive value in their business through innovation. What will naturally evolve as the “What’s next” will actually be grounded in the basics of data, collaboration, and authentic values and leadership.
Technology will play a major role in this surge of interest as well as present ways to address it. When we look at models that enable such handling of data, enabling collaboration, and fostering communication we immediate think of the vast growth of social media platforms such as Linkedin and Facebook or TripAdvisor and Glass Door. Overall we will see a consumerisation of the supply chain function to be more consumer / customer facing where companies technology harness data, collaborate efficiently from supplier to customer, and communicate their supply chain behavior in authentic and highly responsive ways.
Supply chain consumerisation will transform the £100 billion plus supply chain industry at an accelerating pace delivering the benefits of enhanced customer loyalty and supplier resilience to those who capture the opportunity while the laggards get left further behind after each disruption, quality failure, or competitor advance.
At AMEE we’re excited for this transformation and to be working with leading companies such as SSE who are tackling it head on. Stay tuned as we continue to expand our platform to enable this transformation and support innovative ways to harness data, collaborate, and communicate to drive sustainability forward.