Sustainable supply chains evolving to meet changing consumer needs

As consumers demand more transparency around the sustainability and supply chain of brands, now is the time for organisations to rethink how they’ve been approaching the topics, and beyond that, how their efforts are communicated with consumers.

At this week’s Freight Futures 2030 conference in Auckland, Chris Foord, Chief Logistics & Fulfilment Officer at The Warehouse Group gave the audience a look into The Group’s strategy to build upon its sustainable supply chain efforts.

Foord opened his presentation by covering TWG’s commitment to sustainability, including the carbon neutral three-pronged approach and The Group’s obligations as a member of the NZ Climate Leaders Coalition.

“Our approach with Carbon Neutral covers three key areas: emissions reduction, native forest regeneration and carbon credits,” said Foord. “A key obligation as a member of the NZ Climate Leaders Coalition is for us to see a 32% reduction on our 2015 carbon emissions by 2030. It’s a big goal, and one that we’re determined to meet.”

He noted that these actions in the name of sustainability weren’t undertaken just because it was on trend. Rather, it’s part of the identity of the organisation to care about its role in the big picture of environmental initiatives.

“We have a long history of caring for community and environment, an ethos infused by our founder Sir Stephen Tindall and carried through the voice of our 12,000 employees,” said Foord. “Beyond that, our customers are asking for it. The younger generations, right down to schoolchildren are going on strike to make their concerns loud and clear.”

He also shared the three stages of evolving your supply chain to unlock sustainability benefits. These stages include: measuring your environmental impact, assessing initiatives to mitigate the impact, removing the impact altogether or if possible, improving the impact.

“The starting point for unlocking sustainability benefits in your supply chain is to understand the impact each element has," said Foord. “Once you know how your impact is occurring you can assess different options to mitigate, then you need to act to improve or remove the impact. A well-known example of this process is considering the impact of a petrol car vs a hybrid or electric.”

Foord shared that a major contributor to the overall carbon footprint of The Warehouse Group is logistics, making up 51% of The Group’s footprint. “This makes my team a focus area for improvement, but as stated previously we can improve or remove emissions whilst unlocking service benefits or cost improvements,” he added.

The Warehouse Group has several initiatives underway to improve the logistics impact across the air, domestic transport and shipping areas. These include direct store deliveries, hybrid/electric trucks (including committing to transitioning 30% of its light vehicles fleet to EV by end of 2019), as well as shipping container optimisation.

As these efforts and practices gain momentum and get underway, they’ll have a direct impact on customer choice, delivery options and sustainability. Foord noted how customer expectations are changing – with an increasingly greater focus on choice and convenience.

The Group has the goal of creating a world class omnichannel retail network that leverages physical and infrastructure assets to deliver customer needs and wants in an efficient and innovative way, said Foord.

He added that this goal won’t be simple to achieve, since retail in New Zealand has to change to remain relevant to customers and to survive retailers must offer sustainable choice and convenience with a seamless customer experience.

Omnichannel retail where customers engage across different formats through different channels is challenging supply chains to adapt and avoid sustainability pitfalls, said Foord. The main challenges for supply chains when it comes to omnichannel retail are things like avoiding multiple packages per order, filling trucks appropriately and finding ways to save on fuel cost.

Foord acknowledges that though it’s not easy, building a sustainable omnichannel supply chain and designing a seamless customer experience isn’t impossible and can be achieved by focusing on six key building blocks:

1. Customer centric supply chain strategy
2. Agile and segmented network
3. Advanced planning and order management
4. Distribution excellence
5. Collaboration and integration
6. Digital performance management

At the end of the day, it is important to give customers choice and awareness of what that choice means, said Foord. But he believes that equally important to remember is the one of the key roles of a supply chain function: “To continuously take waste out of the chain while improving service promise, cost and the impact of the decisions you make.”