Redesigning Supply Chain for Sustainability Produces Results

June 5, 2008
New study of future supply chains discovers benefits such as reduction in transportion, handling, lead time and lower emissions.

A new study from Global Commerce Initiative and Capgemini, "Future Supply Chain 2016: Serving Consumers in a Sustainable Way" finds that there is a strong correlation between sustainability and the future supply chain of the consumer products and retail industry. The study presents a new integrated supply chain model that takes into account sustainability parameters such as CO2 emissions reduction, reduced energy consumption, better traceability and reduced traffic congestion, as well as traditional measures like on-shelf availability, cost reduction and financial performance.

The study found that the total potential impact of this supply chain redesign is significant, including reduction in transport costs per pallet, reduction of handling costs per pallet, reduction of lead time, lower CO2 emissions per pallet and improved on-shelf availability.

"Regulations as well as resource scarcity, climate change, security, require new thinking, new approaches and new collaboration on infrastructures," said Jos Luis Duran, Chairman of the Management Board, Carrefour group, and GCI Co-Chairman.

The starting point to build the future supply chain is to identify solution areas that cover existing problems and those anticipated for the coming decade, noted the report. Seven key innovation areas were identified:

  • in-store logistics
  • collaborative physical logistics
  • reverse logistics
  • demand fluctuation management
  • identification and labelling
  • efficient assets
  • joint scorecard and business plan

"There is a real need for breakthrough change, as the past does not reflect the future the industry will face," said A.G. Lafley, Chairman, President and Chief Executive, The Procter & Gamble Company, and GCI Co-Chairman. "The future supply chain report makes a strong case for change by identifying the innovation that currently exists in the form of new solutions, leading practices, example supply chains and new ways to calculate the impact of the new parameters on the supply chain."

The Future Supply Chain project, involves 24 retail and consumer packaged goods companies and several industry and standards organizations. Participating organizations include; AIM/ECR Europe, Black & Decker, British American Tobacco, Carrefour, Colgate-Palmolive, Crown Europe, Freudenberg Household Products, GlaxoSmithKline, Groupe Danone, GS1US, Johnson & Johnson, Kellogg Europe, Kraft Foods, Loblaw Companies Ltd., L'Oreal, MGL METRO Group Logistics GmbH, Nestl, Philips, Procter & Gamble, Reckitt Benckiser, Royal Ahold, Sara Lee International, SCA Packaging, Symrise, Unilever and Wal-Mart Stores, Inc.

The study is available at www.futuresupplychain.com

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