Supply chain sustainability is quickly becoming a business imperative, as discussed at the Manifest conference in Las Vegas.
Sustainability has become an all-encompassing phrase within food retail, but perhaps its most important application in the industry revolves around the supply chain. Making the business case for why supply chain sustainability is as important as making sales and creating seamless operations, however, can be a challenge.
Over the course of several sessions at Manifest 2024, the supply chain and logistics conference being held Feb. 5-7 at Caesars Forum in Las Vegas, executives from a number of different industries, including Albertsons Cos. Chief Sustainability and Transformation Officer Suzanne Long, made the business case for creating a more sustainable supply chain.
[RELATED: How Albertsons Envisions the Future of Sustainability]
Studying the Data
Considering the fact that a company’s supply chain produces 11 times more emissions than its operations, any sort of corporate environment, social and governance (ESG) or sustainability goals should lean heavily on supply chain operations, according to Michael Whitman, principal and operations transformation technology sector leader at PwC US.
“If you want to make substantial improvements against your ESG or sustainability goals, there’s no way to do it without supply chain playing a key role in that,” said Whitman.
Whitman shared key data from the PwC 2023 Digital Trends in Supply Chain Survey, which found that 41% of respondents believe supply chain strategy and operations are important to executing an ESG strategy, but only 32% say their company accurately measures digital investments in ESG impact on the supply chain. Additionally, a mere 35% of respondents said their companies regularly review and update ESG benchmarks for future investment.
PwC found that several interrelated issues are impacting progress toward more sustainable supply chains, including market shifts and a lack of immediacy due to a focus on the now. While typical carbon-related changes are viewed based on their impact to the product cost structure, Whitman stresses that supply chain decarbonization needs to be reframed as a business imperative with a defined return on investment.
“We really see the need for companies to break from the past where we’ve had this cost center mentality, a cost-cutting mentality, and become a revenue enabler,” Whitman explained.
In order to make the supply chain a revenue enabler, Whitman says it needs to undergo a fundamental shift to become more customer-centric to provide competitive customer experience, digitally integrated, cost effective, and resilient and adaptable to changing customer expectations, legislation and regulations.
The Road to Net Zero
When it comes to sustainability issues within the supply chain, companies are looking at myriad ways to minimize their carbon footprint and work with partners to reach their goals.
Alcoholic beverage company Diageo, for example, is focused on decarbonization, recycling, diversity and inclusion, and more, and has invested in robust sustainability programs in areas where it can make a big impact, shared Lucy Fishwick, Diageo’s VP of logistics. One such program focuses on creating a circular economy for aluminum in the U.K., which will see the company using recycled aluminum for more than 400 million cans of Guinness and pre-mixed Gordon’s and tonic, thus significantly reducing Diageo’s carbon emissions.
[RELATED: PepsiCo Shares Its Sustainability Game Plan at NRF Show]
Starting small and scaling up these types of programs or investments can be an important part of the process for any company, Fishwick shared. Even still, some technology or new initiatives won’t always work, though gathering the learnings and moving forward is imperative.
Collaborating to Tackle Sustainability
Looking at the larger picture of creating a supply chain sustainability strategy, it becomes clear that no one company can do it alone. Suzanne Long, chief sustainability and transformation officer at Albertsons Cos., explained that the grocer is part of a larger food system that spans growers and manufacturers upstream, flowing through the store itself, then moving downstream to the consumer.
“That whole system is part of whatever solution that we have to create,” Long said. “If our company changes the way we order, that has a natural implication upstream and a natural implication downstream. It’s going to send a different demand signal up to [suppliers], it’s going to send a different demand signal for how much product we need, but it also changes the availability of that product to consumers.”
According to Long, many companies make the mistake of only looking at a sliver of that system when making changes instead of the larger ripple effect their decisions will make. Businesses should instead work to get every stakeholder of the larger system into one room to discuss the implications of making changes, however positive, to the supply chain.