Hayley Johnson of CO2Sense explores the concept of innovation in the supply chain and how collaboration can act as a catalyst for new ideas.
Never before has innovation been so important. These are challenging times and issues such as resource scarcity, rising energy prices and other environmental pressures are affecting how both businesses and consumer behaviour. There is a growing urgency to translate new technologies and knowledge into usable products that meet an unmet need. Similarly, innovation is a key driver of competiveness and business success. You only have to look at a brand like Apple to see the impact investment in innovation can have on a company’s market share.
Often, when it comes to procuring innovation in the supply chain there is a ‘catch 22’ situation – particularly in the low-carbon sector. Buyers often recognise a need for a new low-carbon alternative, but do not attempt to source it unless it is already in the market. Likewise, suppliers may have the knowledge and technology to develop low-carbon alternatives, but cannot justify the investment without having guaranteed demand. This is known as the buyer-supplier paradox and it hinders the commercialisation of low-carbon products.
The market for low-carbon goods and services is expected to reach $2.2 trillion globally by 2020, but many low-carbon products are failing at the first hurdle as they struggle to reach market due to unknown demand. Collaborative relationships are the solution to this problem and there are a number of policies and initiatives in place to catalyse this process, such as Forward Commitment Procurement (FCP) and Down to Zero, which is the brainchild of BIS and The Prince of Wales’s Corporate Leaders Group on Climate Change. We will be discussing both of these in detail during the webinar and Ben Stone from Wakefield District Housing will be joining us as a guest speaker to explain why his organisation joined companies such as Heathrow Airport, B&Q, and Lloyds Banking in signing up to Down to Zero Procurement Compacts, which demonstrate to suppliers – particularly SMEs – that there is a coordinated and willing market demand for low-to-zero carbon solutions at a competitive cost.
The benefits of supply chain innovation to both the buyer and supplier are clear. For the supplier, it can lead to an increase in sales and new market opportunities. For the buyer, it can help you to meet your carbon footprint/sustainability objectives and save you money. One example of this is Her Majesty’s Prison Service (HMPS) who were throwing away in excessive of 60,000 foam mattresses and pillows at a cost of £3m. This was way out of step with the Government’s sustainability targets and with the budget cuts, it was also unaffordable. Through FCP HMPS identified there unmet need and put a call out to the market to develop a zero waste prison mattress. The outcome? A supplier came forward with a new recycling system that is projected to save HMPS £5m over the life-time of the contract. A win-win situation for both the supplier and buyer.
We will explore this case-study, amongst others, in more detail during in an upcoming webinar on December 12th with Wakefield District Housing.