A Sustainable Supply Chain Strategy Comes From The Fundamentals
Steven Jones Engagement Director - Commercial
As we explore in our most recent whitepaper – written in collaboration with Retail Gazette – Ensono Digital has found that the development of a Supply Chain Strategy must pivot from both a renewed focus on the fundamentals and a certain amount of rigour of thought when bringing in new ‘shiny bauble’ technologies. Consolidating data to give a 360 sight of customer behaviour and needs, and bringing supply and demand closer – as well as using this knowledge to design fulfilment and distribution routes and mechanics – are just some of the game changers required to create a robust and flexible supply chain for any retail business. But not only does establishing world class foundations give your supply chain a viable longevity, but it can also unlock a new level of sustainability for your business, help you move the dial towards Net Zero Carbon, and make a greater contribution towards a healthier planet.
The call for retailers to focus on issues of sustainability has come from many sources. Government targets laid out in the 25 Year Environmental Plan sets out goals for improving the environment – including challenges of carbon and climate change, plastic, and waste – and World Economic Forum (WEF) report in January 2021 called supply-chain decarbonisation a ‘game changer’ sending out a call for all retailers and manufacturers to act quickly in joining the ‘Race to Zero’. At the same time, we are seeing increasing customer concerns about the future of the planet, and the attitudes of a new generation of shoppers are influencing where it really makes an impact – in sales. Indeed the 2021 Deloitte Survey on Sustainability and Consumer behaviour found that Gen Z consumers are ‘adopting more sustainable behaviours than any other groups’ with 50% having already reduced how much they buy and 45% rejecting certain brands because of ethical or sustainability concerns.
Is it all just a question of BigData?
It starts (and sometimes ends) with smart stock management. Where and when you hold your stock can have a massive impact on your carbon footprint. Omnichannel retailing is characterised by a more fragmented supply chain than in the past, with a customer driven model of products fulfilled through multiple channels. How, then, to minimise the amount that any one product needs to travel to reach its point of delivery or collection, while also reducing the business exposure on stock holding? Before investing in robotics in warehouse management, or self-driving vehicles and delivery drones in the fulfilment network, retailers should be implementing robust and flexible technology to provide essential predictive analytics, fulfilment management, and an accurate view of stock across channels.
With customers wanting faster delivery or more immediate collection slots, and being reluctant to pay extra for it, one of the most pressing challenges for retailers is how to fulfil orders in the most sustainable way while still meeting the promise made to the consumer. In the Blue Yonder Logistics Executive Survey 59% of high-level logistics executives in retail and supply chain said they plan to offer flexible delivery windows to improve sustainability and – to underpin this – almost half plan to invest in better warehouse management systems (WMS) technology and cloud infrastructure.
Developing a click and collect offering – such as Aldi, Waitrose, Tesco, et al – and having the technology and accuracy of store stock data to allow customers to shop directly from local inventory can be a massive win for sustainability by taking trucks off the road, requiring less packaging, and often preventing impulse and over buying. For home and collection point delivered stock, again, data is key, with transportation metrics such as fuel consumption, distance per delivery, route information, and carbon emissions by route overlaid with customer behaviour and traffic trends all required to plan and execute the most sustainable delivery schedule.
Managing wastage is also a vital part of running a sustainable business as stockpiling slow-moving goods, or stocking perishables near their use by date, can lead to wastage, inventory going to landfills. Equally, holding large amounts of stock in multiple locations requires the energy to light, heat, or chill those premises. With the ultimate goal being to hold the right amount of stock, in the right location, to meet customer demand and minimise the movement of stock across locations – all while fulfilling the customer promise and allow flexibility of choice across channels – smart stock data management is absolutely essential and should be a prioritised investment. Accurate and relevant consumer behaviour data, overlaid with the right analytics, can inform good sustainable practice all the way back up the supply chain, even driving manufacturing schedules and volume management.
Transparency, and choice, for the customer
It doesn’t all lie with the retailer, as the customer has the most powerful voice in any B2C business. In an omnichannel world, providing transparency about the impact of the customer’s choice gives these individuals the power to play a part in improving any brand’s sustainability. 46% of UK consumers are looking for more clarity on the origins of sourcing of products to make an informed choice about the sustainability of their purchase, and yet in a 2021 Forrester report on Sustainability in the Last Mile we find that nearly 60% of retailers fail to educate their customers about the trade-offs in choosing greener delivery options, and more (62%) don’t offer incentives to select the greener options. Possibly this is because they don’t have the data to share with consumers. Perhaps they don’t have the flexibility to offer an alternative option? With the right data, and the right operational and technical mechanics for offering flexible choice, it is possible that most retailers will see a customer driven improvement in their fulfilment generated carbon emissions.
For so many it comes down to technology. The Forrester report shows that, with half of those surveyed experiencing issues with their carrier and logistics partner data, nearly 60% of retail decision-makers plan to implement new technology or increase their businesses’ investment in technology to improve their last-mile sustainability. This, as the our latest whitepaper outlines, is where the focus needs to start. You already understand the fundamentals of an efficient, flexible supply chain, but do you know how to refine and utilise those basic capabilities – such as data, transparency, and right-fit technology – to create a stock management and fulfilment operation that is not only world class but, potentially, world saving?