Following on from the discussion of Puma's work in identifying hotspots, this "9 steps to supply chain sustainability," post focuses on Step 7 - collaboration & innovation - with Sainsbury's 20x20 plan as a case study.
“Coming together is a beginning, staying together is progress, and working together is success” - Henry Ford
Coming together
UK retailer J Sainsbury has just looked back at the first year of its 20x20 Plan. You can see some highlights here. A hugely encouraging result was the 3.7% absolute reduction in emissions from direct and indirect sources from 2010/11 to 2011/12.
En route, Sainsbury’s has engaged with external experts and peers, across a variety of channels. British organisations like AB Sustain, Forum for the Future, WRAP, and Green Mondays have all been on hand to help Sainsbury’s execs engage with sustainability stakeholders.
2degrees has had a small part in this. In our January Summit, which kicked off this blog series. Panellist, Mark Rigby, who led the development of the 20x20 Plan, clearly took heart from the recommendations from Helen Fleming, Tesco’s Climate Change Director, on encouraging peer-to-peer learning in the supply chain.
Judith Batchelar, described as “Sainsbury’s Sustainability Goddess” also made good use of our Supply Chain Working Group. She and Gavin Neath of Unilever compared notes on the “daunting” challenges of soliciting information on the supply chains of 4,500 products, in order to target waste reduction.
Despite these successes at Sainsbury’s, observers at last week’s review expressed disappointment that collaboration with branded suppliers, in a way which marries commercial results and sustainable innovation, remains elusive.
Sainsbury’s has seen a number of well-intentioned projects “Consumer Futures”, in partnership with Unilever, generated some good marketing coverage. And interesting conversations have developed around the promotion of water conservation around Lake Naivasha in Kenya.
Yet commercial insiders at Sainsbury’s concur with CEO Justin King’s observation that, at least with branded goods suppliers, on the strength of the evidence so far “competition is more important than collaboration for getting things done".
Tom Idle’s recent post, which contrasts collaboration and cooperation, is worth a review. The examples above show that it is relatively easy to cooperate in running events, writing joint reports and thinking up sustainability-led product concepts. But out in the consumer marketplace, with thin margins, fiercely competitive discounting (by brands and retailers) and distracted shoppers, few people have the surplus time to invest in truly collaborative activities. Add twitchy anti-trust lawyers to the mix and competition almost always prevails.
Staying together
So people increasingly believe collaboration can start to “get things done” in areas where – for whatever reason – an intensely demanding end customer is not part of the equation. I like the example from Richard Pamenter which Tom quotes. GSK didn’t ask suppliers to provide green products, or to innovate photo-degradable packaging, or to miniaturise the product. They simply asked them, where there were no commercial grounds for objection, to use a standard polymer for inbound packaging. Richard’s manufacturing colleagues could then reroute this “waste” packaging as a new, consistent source of secondary raw materials for Ribena bottle manufacture. The existence, or not, of a “green Ribena shopper” wasn’t important – this innovation makes a good environmental and commercial business case on its own, and establishes a foundation for more innovative buyer-supplier collaboration.
Companies like Asda, Kingfisher, and Tesco also take a similar upstream focus – whether with directly owned supply bases or fully independent suppliers. They seek to first understand the common resource efficiency issues at sites which generate and handle the products that ultimately get sold in-store. Then they introduce process improvements and technologies to those suppliers which have constructively shared their challenges. Again, this represents clear progress beyond simple discussion fora.
Working together
Collaborative working with suppliers, where there are strong competitive forces, actually requires innovation. No question. Jack Cunningham, one of the architects of the 20x20 Plan, is sceptical of the ability of industry alliances and think tanks to achieve this.
“Sainsbury’s has always preferred a benchmark approach to innovation - it has served the development group model very well, as well as Goods Not For Resale,” says Cunningham
Sainsbury’s attitude to its Dairy Development Group – one of ten different agricultural commodity producer groups - tells this story. Sainsbury’s Own Brand buyers benchmarked milk production practices, technologies and costs. The dairy farmers’ competitive instinct, to beat the leading practices of their peer group, was fuelled by £40m ($64m, €49m) of investment support from Sainsbury’s and generated category-wide financial, animal welfare and carbon savings. But it also created enough goodwill to forge an industry-leading sustainable “cost of production” deal, at 30.56 pence per litre ($2.22/gallon, €0.38/litre).
Beyond benchmarking, commercial sustainability innovation is focusing on platforms which facilitate strong buyer-supplier commitments such as product exclusivity or collective purchasing. This is a long way from simple cooperation, and sharing of stories. But Cunningham cautions that unmanaged portals or networking spaces won’t turn these ideas into successes. “'Sharing' platforms can be directionless and need proper facilitation, otherwise it's … like a comments page on a Guardian news article - everyone sharing their view, just to be heard, not to be useful.”
What’s your experience of sustainability-driven collaboration and innovation in your business? Does it generate sustainable benefits? Your useful thoughts below!
Check out Step 8 - Tracking Benefits, or catch up with the rest of the 9 Steps series on supply chain sustainability.