Creating a sustainable supply chain

Creating a sustainable supply chain

There are major opportunities in the future of consumer companies. According to a study from McKinseys by Anne-Titia Bové, there are two major trends that will contribiute to a strong growth projection for the coming years. The first point of interest is that some 1,8 billion consumers are expected to join the market by 2025, a 75% increase over 2010. Additionally, household buying power is increasing and more and more money is spent on consumer goods. The article brings up China as an example as a country which is on its way to gain 100 million working-age consumers by 2030 and it’s expected that their personal spending will double the current rate.

But one condition can greatly slow down a company’s growth; poor sustainability. People, companies and even countries calls for dramatic improvements in sustainability performance, measured in environmental and social impact. As seen in for example the Paris agreement. An agreement which needs CPG companies to lower their carbon footprint by more than 90% between 2015 and 2050 to reach its goal. So, companies must reduce the natural and societal costs of their products and services in order to satisfy their stakeholder and at the same time capitalize on rising demand.

A well-functioning supply chain at every company, not only CPG need to address two major sustainability related risks. The risk of the sustainability impact of providing goods and services to customers, such as unaccounted environmental and societal costs outside its own production, and the sustainability impact that interferes with companies supply chain, such as draughts and weather conditions.

According to Bové there are three approaches to improving sustainability in supply chains. First, get connected with suppliers and localize the critical issues across the whole supply chain using tools such key performance indicators and sustainability standards. The second approach is to link supply-chain sustainability goals to the global sustainability agenda. By using the data acquired companies need to get control over their supply chain and set sustainability goals to reduce the environmental impact. And finally get better by assisting suppliers with managing this impact and make sure the entire supply chain achieves the new sustainability performance.