Today’s multi-polar business world—marked by an increasingly

inter-dependent global marketplace—is underscoring the importance

of sustainability. Multinationals are increasing their commitment to
reducing carbon footprints. Customers are making decisions to favor
companies and products that are environmentally and socially
responsible. To learn more, read this, the second-part of a continuing
series that explores global issues that impact high performance
in retailing.

Building Sustainable Retail Supply Chains
‘Green’ supply chains, once considered a flavor-
of-the-month management fad, are becoming
a fixture of retail operations. Consumers are
demanding it. Analysts are rewarding it. And
the C-suite are increasingly onboard. In fact,
87 percent of Fortune 1000 CEOs believe
sustainability is important to a company’s
profits and 73 percent of CEOs believe
sustainability affords them cost savings1.
But what exactly is sustainability? For today’s
businesses, sustainability can be defined as:
long-term economic and brand value driven
by strategies that positively impact the
environment and the social community in
which a business exists. Traditional supply
chain strategies balance cost and service level.
Now sustainability is a third lever that addresses
cost, service levels and environmental and social
impact.
Some companies, such as Innocent Drinks and
The Body Shop are founded on sustainable
principles, and sustainability is already built into
major functions, including the supply chain.
Other companies are innovating products and
services, such as low-temperature washing
powders that utilize their current infrastructure
and require minimal additional investment.
Clearly, sustainability for an organization
extends far beyond the product portfolio, with
the supply chain being the most visible and
measurable area of focus.
If the case for sustainable supply chains is so
clear, why aren’t all retailers getting involved?
Realistically, a board of directors will
only invest in the supply chain where
there is a clear business case. And one
may argue that until legislation
becomes clearer, it is difficult to know
which caps may be placed on the
industry and what the level of trade
offs are. That said, a significant step
in sustainability is simply refocusing
on efficiencies as energy costs rise.
In other words, creating cash by
optimizing the end-to-end supply chain
model, based on sustainable principles.
Putting the right capabilities in place
to measure and manage sustainable
impacts of your company will also put
you in a position of strength once
legislation becomes stricter.
Specific tools and methods, such
as a supply chain carbon footprint
calculator, need to be incorporated into
traditional supply chain assessment
areas including:
• Strategic sourcing and supplier
engagement
• Network and transport optimisation
• Balance the economics of stock
levels, service and order quantities
• Reduce waste / increase recycling;
returnable crates, re-usable
packaging
• Improve efficiency of site operations,
from warehouse to in-store; power
usage, water consumption, waste
output, cooling, heating and lighting
requirements.
• Provide integrated service
management; returns/reverse
logistics/parts management
High performance can be delivered by
leveraging a sustainable supply chain.
1
Sources: Accenture end-consumer survey on Climate
Change 2007, Accenture’s Achieving High Performance in an
Era of Climate Change Survey 2007, Davos CEO Study, Price
Waterhouse Coopers Study, 2005. Mark Albion, True to
Yourself, 2006. 2002 Corporate Citizenship Study, Marc
Gunter, Faith and Fortune, 2006, Goldman Sachs Research,
“Introducing GS Sustain,” June 2, 2007,
2
“How the myth of food miles hurts the planet,” The
Guardian, March 23, 2008.
By implementing changes before the
competition, your organization will
become more efficient, and will have
a better grasp on its environmental
impact in the widest sense. Companies
that adopt sustainability now will be
better positioned to respond to
changing legislation and consumer
demands. Along the way the company
will build consumer and marketplace
credentials that help build the value
of their brands.
Supply chain directors are in a unique
position to articulate the complex
interactions that exist in this arena.
One example: A well-known Cranfield
University study2 has debunked many
popularly held ideas about carbon foot
printing when it comes to food supply.
One trend that had customers buying
locally grown food was proven by the
University to rest on faulty logic. Why?
The carbon emissions expended to raise
green beans in the UK are actually
greater than those used to raise the
same crop in Kenya and fly them into
the UK. Western methods rely on
tractors (that burn diesel) and modern
irrigation systems. In Kenya, farmers
employ manual labor and low-tech
irrigation. And buying products from
Kenya bolsters the local economy.
Sustainable supply chain center stage
After decades in a supporting role,
sustainability has finally made it to
the business world’s center stage. Both
consumer groups and governments
have signed on to a sustainable future.
Retailers like Wal-Mart and Tesco are
widening their sustainable supply chain
efforts, getting their suppliers on board
as social responsibility and economic
viability have, finally, converged. From
our own research on sustainability1,
it is clear that most CEOs view this
change as an opportunity, rather than
a threat. Supply chain executives are
uniquely positioned to lead the charge
on most initiatives, creating a win for
the environment while also helping
their organizations drive toward high
performance.
To find out more, contact:
Toby Paxton
toby.paxton@accenture.com
+44 207 844 3242
Nav Nair
nav.nair@accenture.com
+44 776 777 5300
About Accenture
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capabilities across all industries and
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companies, Accenture collaborates
with clients to help them become
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the fiscal year ended Aug. 31, 2007.
Its home page is www.accenture.com.
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