How Sustainability Will Fundamentally Change Your Supply Chain
As buyers have more access to information, companies won’t have a choice on whether to focus on a sustainable operation or not; it will be as baseline an expectation as one-day-delivery.
By Robin Tunderman
Customers today don’t just expect instant gratification with great service. They expect companies to provide this seamless experience with a minimal carbon footprint. While this past decade has elevated climate change into a mainstream concern, the future is likely to exert even more pressure for companies to transform their operations to dramatically lower waste and reduce hazardous emissions.
These new buyers are more informed and increasingly socially conscious. They are taking a keen interest in where products are coming from, how they are made, and what impact these products have on the environment. This touches almost every aspect of supply chain in every industry: from ethical sourcing to incorporating recyclability into the design, to biodegradable packaging materials, to end-to-end supply chains that can lower waste, buffer, and excess and obsolete inventory.
In the electronics industry, manufacturing processes and the supply chain as a whole constitute up to 80% of a typical firm’s greenhouse gas emissions. And while 74% of consumers recycle containers made of glass, metal, or plastic, 51% recycle electronics at the end of those products’ useful lives.
In the food industry alone, roughly one-third of the food produced in the world for human consumption every year — approximately 1.3 billion tonnes — gets lost or wasted. Food losses and waste cost roughly $680 billion in industrialized countries and $310 billion in developing countries. Produce goes bad before leaving the distribution center. Prepared foods go bad on the shelves daily. Despite programs to donate unused food, companies can’t keep up with all the food they have that can’t get to the register fast enough.
Yet the future of planning holds the promise of reducing this type of waste. Already leading food supply chains are using machine learning from Blue Yonder to optimize perishable inventories. Natsu, a leading provider of ultra-fresh foods to over 3000 grocers every day has reduced leftover stock by 20%. Morrisons, a leading grocery chain based in the United Kingdom, teamed up with Blue Yonder to optimize replenishment. Thanks to this partnership, they saw up to a 30% reduction in shelf gaps while minimizing waste. Morrisons was voted the most environmentally responsible company in the UK for its pioneering work in plastics reduction.
To get ahead of a changing reality, machine learning capabilities are emerging to help planners leverage many more signals (like local foot traffic, cell phone activity, social media inputs from influencers, etc.), allowing companies better understand and adapt to real-time conditions. While most supply chains react to changes that have already happened, there is a greater opportunity in feeding this information back into longer-term planning processes. By understanding what is happening in a certain place, at a certain time, planners can forecast with far more accuracy, holding optimal inventory in the right locations, and significantly reducing waste, excess, and carbon footprint.
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