Sustainability is not just about switching existing materials to more sustainable materials or getting certification. It goes deeper than that. At a brand level, it is about purpose over profit to solve problems in society, rather than be the cause of them. At an operational level sustainability is about embedding the brand strategy & purpose into the organisations’ supply chain activities; to “walk the talk”, rather than just greenwashing. It is about making sustainability part of your company DNA and ensuring that all your practices and business outlook are also sustainable. It is also about ensuring natural resources such a soil and raw materials are regenerated, so as to pass on a healthy planet to the next generation. Through the creation of the UN Sustainable Development Goals and in light of the climate emergency, the momentum for sustainable practises has slowly started to take off in the business world.
Contrary to the awakening to sustainability, supply chain management and logistics are not new ideas. The idea of the effective flow of materials and information started already thousands of years ago in Ancient Egypt to build pyramids and great dams. Also recognised as a strategic capability during military wars; there are several examples in war literature, of how getting logistics & supply wrong could win or lose a war. However, it is only during the 20th century that business organisations began to recognise that effective supply and logistics management can lead to a significant competitive advantage. As such concepts in supply chain management have been developed in the last 100 years. there now exists well-established tools and methods of how to optimise the flow of material and information to reduce inventory & cost and maximise service levels. The extent of implementation and fine-tuning of these methods and tools varies across businesses and industries. In an attempt to measure supply chain maturity of companies, or the degree of adoption of these tools and methods, several bodies assess and rank companies globally (e.g. Gartner top 25 best supply chains). After decades of working in end-to-end supply chain management across multiple Industries, we at Altrubi believe the crux of a well-oiled supply chain lies in the art of inciting collaboration and consensus to balance cost reduction, asset utilisation and customer experience across the extended supply chain.
So, with this in mind, how does sustainable business practise relate to logistics and supply chain management? Well, firstly, according to the Ellen McArthur Foundation, ushering in a new circular economy, will require an unprecedented level of commitment, collaboration and innovation to take us from a linear economy to systemic change. At Altrubi, we believe that because supply chain leaders are pivotal in inciting better collaboration and consensus, they are instrumental in achieving systemic change and making the circular economy a reality.
For example, if today a Company with a mature supply chain can balance inventory, cost-to-serve and customer satisfaction to maximise profit, through integrated business planning (or S&OP), then why can that business not, tomorrow, bring in natural capital such as CO2 emissions; water consumption or even human capital into the equation? We just need to find a way to monetise the cost of human and natural capital in this process. And some such as Kering already have this in what they call an “EP&L”. From this perspective it becomes rather obvious that by changing the inputs in supply chain management, we can get a whole set of different outputs adapted to business in the 21st century. The processes are already there. They are well established and understood by supply chain leaders across many industries. The best in class practises just need to be shared, adopted and tweaked to serve the objectives of sustainability across all Industries.
Take sustainable procurement as another example as to why supply chain leaders are pivotal. The tools and processes of professional buyers have often only been narrowly focused on the commercial and quality aspects, however, there are emerging methods to incorporate human and natural capital into the buying equation, so that instead of just buying quantities of products, the procurement process is also assessing the end-to-end impact of the product supply chain on the environment and society. This is of course much more complex to assess but is achievable through collaboration with both suppliers and distributers. In particular there is much to be learnt by combining best practises from both private and public sector procurement.
Similarly, the art of supply chain network design has traditionally focused on maximising profit, however if you tweak current tools and practises, both environmental and social impact can too be incorporated and balanced to get an optimum fit for sustainable business practise. Not to mention, that if you reduce the number of kilometres travelled through better network design, you will not only reduce cost, but also CO2 emissions.
What about Innovation? Achieving systemic change and a shift from a linear to a circular economy will require a significant amount of innovation. In less mature supply chains, designers and product development teams will often not ask the supply chain leader for their input at the design stage of new products. Rather products are designed first and then handed over to the supply chain team for implementation. To build sustainable products, all aspects of the supply chain as well as the customer requirements, must be incorporated into the product design. Sustainable products need to fulfil a customer need, but also need to be reusable; easy to handle and ship; be produced ethically and designed to regenerated soil when natural resources are taken from it. The design of products in 21st century will require supply chain leaders, as well a key collaborators and partners in the extend supply chain. Only companies with mature supply chains mindset of “continuous improvement” and “win/win”, will be able to tap into cutting edge innovation and synergy between stakeholders in their Industry.
For these reasons, only companies with a high level of supply chain maturity will be fit for business the 21st century. In other words, achieving a mature supply chain will be a strategic component of maintaining a competitive edge and ensuring the high market value of a Company. Not only will the purpose of the brand need to be well reflected in the operations, but also they will need to deliver profit and innovation.
As long as an organisation’s supply chain remains immature, it will only be able to reduce its negative impact on the current linear economy. To really have an impact and achieve systemic change and a circular economy, a high level of orchestration, collaboration and innovation is required to balance natural, human and productive capital. It is for this reason organisations that are serious about sustainability should first take steps to build supply chain maturity. In doing so they will build their capability to better collaborate internally, innovate through partnerships with suppliers, who share the same values and design better products for people and planet, profitably. This is the new strategic role of the supply chain leader in the 21st century.
Who is Altrubi?
Altrubi is a training and consulting business in sustainable supply chain management. We only work with Food or Fashion brands that don’t need to be convinced about the merits of doing business sustainably.
We believe that improving supply chain maturity is a significant part of a brand’s journey to realising the circular economy.
Using 20+ years of multi-Industry best-practise, we have developed a unique 7-step method that help supply chain leaders of brands build the highest level of supply chain maturity, allowing them to influence and lead systemic change in the Food and Fashion Industries.
Our vision is a world of fashion and food doing good for our planet economically, socially and environmentally, with a strong sense of purpose reflected in both brand and supply chain.