Sustainability in the supply chain is an important development for small businesses to understand and to prepare for. Sustainability has gone mainstream. Last week, Dan Barber in the New York Times reported that 80% of consumers now look for whether or not food products are sustainable. Fast Company says that even more, 86%, of consumers care about sustainability for any product, not just for food.
An Underwriter Laboratories survey of 1,202 manufacturing companies found 81% of them agree that sustainability affects their competitiveness in the marketplace. Two thirds of the manufacturing companies strongly agree that the environment is becoming more important to consumers. The survey was diverse and included firms that make consumer electronics, appliances, food, and building materials.
What is sustainability?
Strictly speaking, sustainability refers to biological systems remaining productive over time. For example, sustainable agriculture includes rotating crops so that the nutrients in the soil remain healthy rather than planting the same crop year after year and depleting the soil’s nutrients. Another biological example is responsible fishing that does not deplete a species of fish so that the species can replenish its population.
Here is a broader definition from the Environmental Protection Agency: “Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.”
The common usage of the term sustainability in the supply chain refers to responsible execution of a balance between business, social and ecological interests. Green initiatives, eco-friendly, fair trade and ethically sourced are all part of the sustainability trend.
Wal-Mart, the largest grocer, only buys Brazilian beef that does not contribute to the deforestation of the Amazon. Seafood sold in U.S. Wal-Mart stores is certified as sustainable by the Marine Stewardship Council.
Wal-Mart has developed a Sustainability Index program that applies to 200 product categories. Early this year Wal-Mart announced the program would be expanded to many more supplier categories other than food. The program measures sustainability throughout the supply chain including:
- Raw materials that go into products
- Processing and production of products, including packaging
- Transportation to distribution centers and stores
- Customers use of products
- Disposal at the end of the product’s life, including recycling, landfill disposal
Although some certifications are available, no one certification provider has become dominant.
Target has developed a Target Sustainable Product Standard. The standard will soon be used to provide consumers with a 100 point scale that measures 7,500 products on the sustainability of ingredients, ingredient transparency and overall environmental impact. Target has on-going initiatives to reduce transportation fuel usage and the amount of cardboard that goes into packaging.
Naturally (so to speak), Amazon and other retailers all have their own programs as well. You should expect your retail partners to ask more questions and increase their requirements for the sustainability content of your products and your participation in the supply chain. Click here to read a case study about one of our fashion clients that uses ethically sourced and sustainable materials.
The EDI Impact on Small Businesses
Your retail customer’s sustainability programs may affect the frequency of their EDI orders as they incorporate sustainability practices into their transportation modes.
Packing requirements may change how you ship. For example, to reduce cardboard content, your retail customer may change how you pack product in cartons and thus affect the formulation of your EDI Advance Ship Notices.
Of course one more reason that EDI is here to stay is that EDI itself contributes to sustainability by eradicating paper orders and invoices as well as eliminating the use of fuel for the transportation of mail. Becoming EDI compliant is one more way of demonstrating your small business’s commitment to sustainability.
Contact us anytime to find out more.Sustainability in the Supply Chain Has Gone Mainstream by Steve Brewer