“Doing good is good business” – One of IGD’s five predictions that will drive change in our industry in 2019. It describes the industry’s move towards more sustainable, green practices, helping to reduce and prevent waste.
Sustainability is now at the heart of many companies’ marketing messages to shoppers, and the supply chain is at the heart of efforts to make progress. The halo effect that comes with an ethical business is an attractive proposition, so expect this trend to be one of the biggest drivers of innovation across the industry in 2019.
Green credentials are a pre-requisite for all shoppers
The challenge for the industry is that shoppers no longer feel environmentally conscious choices should mean paying more. It’s an expectation for all products, no matter the price point or which retailer they are shopping with. 74% of shoppers in our 2018 ShopperVista Category Benchmark Survey stated that they have become more aware of the environmental impact of plastic packaging over the last 12 months, just one example of the impact of programmes such as Blue Planet.
For manufacturers, finding longer term, sustainable production methods within a short-term horizon remains a huge challenge. Shoppers are increasingly demanding action on plastics and waste now, not in the next round of business planning where strategies will be set with 12, 18 or 24-month planning window. This raises the question; How are businesses transforming their sustainability strategies to serve shoppers better now? The following three case studies detail action that’s being taken in different markets.
Where does my steak come from?
Ethical production methods are most important to shoppers in the meat, fish and poultry categories, making it a priority for improvement. M&S has recently launched its interactive sourcing map, allowing shoppers to view the end-to-end supply chain of the products they purchase.
The factories area of its website details the locations and farming methods for its fish & shellfish, beef, milk and wool supply chains. In line with M&S’s “Plan A” strategy, the aim of the tool is to help shoppers make the most informed decisions about where and how the products they purchase are produced.
Source: Marks & Spencer, 2019
“Tinder for Transport”
Unfortunately, I can’t take the accolades for such a catchy headline, that goes to Transporeon, a cloud-based platform provider for intelligent transport planning. Through a pilot facilitated by IGD’s Reducing Wasted Miles programme in 2017, six manufacturers and retailers – some of whom compete – agreed to share information on network and transport flows within their supply chains.
The working group selected Transporeon to collect, analyse and draw insights from the hundreds of thousands of data records, highlighting opportunities to share transport between manufacturer sites and distribution centres and between retailer DC’s and stores.
Although there were many barriers to overcome, mainly centred around trust and competitive advantage, the group uncovered a safe and successful route to collaboration, allowing the work to reveal a clear opportunity, proving the concept’s potential. The work is summarised in this report.
If this pilot can be scaled across the industry, many benefits will be realised, from the environmental benefit of removing countless tonnes of CO2 from the atmosphere, to cost savings from sharing transport. It’s a true example of an initiative that translates “doing good” into a great business result.
Factories for plants… farms?... not quite
In a collaboration between JD.com and Mitsubishi Chemical in China, a hydroponic “plant factory” has been built, spanning over 11,000 sq. m of space in a closed production environment – the key differentiator between a farm and factory.
Using hydroponic technology and solar light sources, the factory can control temperature, humidity and light conditions to maximise the output of crops grown, including spinach, lettuce and coriander. For JD.com shoppers, this is a way to source nutritious, safe products, free from disease that are environmentally beneficial and less resource intensive than traditional farming methods – a win-win for all parties. Although in its infancy, this method of farming could be beneficial for environmentally extreme climate zones where resources are at a premium and pressure on land challenges traditional agriculture – think California or Dubai.
The driver for innovation
As we have seen with the three case studies explored, environmentally friendly innovations are springing up at various points in the food chain. From farming and manufacturing to logistics and stores. What’s different is that businesses are using these innovations as a source of competitive advantage, not just to fulfil a sustainability measure in annual reporting.
If you’d like to find about more about sustainable supply chains, take a look at our Resilient and Responsive topic area to access the latest insights.