Turning the supply chain green: how retailers can improve sustainability without sacrificing CX  

Wayne Snyder, VP Retail Industry EMEA at Blue Yonder shares some practical tips on how retailers today can turn their supply chain green and ensure sustainability remains top of their agenda. 

You can’t seem to open a newspaper or click through online today without seeing retailers looking to improve their sustainability approach, like a number of the UK’s largest grocers announced last week. In fact, recent studies indicate that the majority of consumers believe in ‘conscious consumption’ as a result of the COVID-19 pandemic, with as many as 69% believing brands should make it easier to consume more consciously and sustainably.   

 Whether driven by evolving customer expectations, shareholder demands, or an increasing sense of responsibility to the ‘greater good’, retailers are recognising the benefits greener operations can bring, not just to the planet, but to driving efficiencies and supporting customer retention.  

 And the secret is out – sustainability delivers impact, whether it’s eliminating £144 million in food waste each year, satisfying consumer demands for more transparent and ethical practices, or reducing the hundreds of millions of pounds in excess inventory sent to landfill annually. If retailers can transform their operations to promote sustainability throughout the supply chain, they will boost their credentials and create lasting reputational gains which impact the top and bottom lines.  

 But where to start? The good news is that there are a number of practical ways retailers and supply chain vendors can go green, without having to overhaul their existing systems and processes: 

 Leveraging flexible options
Throughout 2020, retailers were pushed hard to fulfil online orders based on store inventory, as consumers were unable or unwilling to go to the shop for necessities. This made sense while stores remained closed, but there were also serious logistical and cost implications to consider, and the model ultimately needed rethinking. Instead, retailers should now move to a more flexible, hybrid fulfilment model to service customers better based on the optimisation of their orders. Why? While the shops have re-opened, consumers are still readjusting their buying behaviour and testing what suits them best moving forward – and that could be through online, in-store experiences or click-and-collect. 

 This means the need for alternative fulfilment methods is very real and has meant that retailers have started to work smarter: collaborating with each other, acting more intelligently over the last mile to roll out deliveries using electric vehicles (EVs) to cut emissions as well as costs. If retailers can enable more flexible options for consumers to choose between speed and sustainability, while also ensuring back-end operations are as efficient as possible, they’ll be doing their part to cut down on CO2 emissions and wastage packaging – plastic and cardboard.  

 Making convenience synonymous with sustainability
Retailers will need to work harder coming out of the pandemic to strike the right balance between convenience and experience while promoting more sustainable practices which consumers are increasingly looking for. The easiest way to do this is through the customer experience (CX). By teaching customers that sustainability can be synonymous with convenience, we’ll see improvements across key areas such as operations, recycling, transportation, and waste reduction. 

 One tangible example is the re-imagining of the store itself.  

 Let’s take immediacy of purchase – a key differentiator for brick-and-mortar retailers who hope to see footfall increase. Whether supporting customers with pre-purchase comparisons or helping with the immediate exchange or selection of alterative products, person to person touchpoints provide the unique opportunity for stores to again drive footfall, eliminate the need for an environmentally costly returns process. 

 Leverage technologies to improve performance and prediction
AI now has the critical role of adjusting and optimising operations based on past trends and future forecasts.  This is particularly critical in grocery, where it has become an integral part to eliminating food waste through forecasting, replenishment and smart pricing methods which promote sustainable clearance strategies not yet available to e-grocery providers. Localised intelligent pricing is a key area being used to eliminate waste. The ability to use AI technologies to optimise the right price to clear inventory in a store, such as an item approaches its expiry date, enables retailers to reduce waste whilst improving profits. This is one area where the shift to online has made the situation worse. 

 The impact can be seen more dramatically in grocery, where the delivery of fresh, good quality items has been imperative for grocers to build trust with consumers but leaves retailers unable to ‘sell-off’ expiring good as they do through the store. This places an even greater focus on the need for accurate demand forecasting capabilities, which  the development of machine learning algorithms can support with. Leveraging smart technologies enable retailers and vendors to ingest many factors and data points to accurately predict sales – imperative for the reduction of food waste.  

 This new approach also helps retailers understand risk and variability so that item-level decisions can be made. And while AI has become a catch all term, there’s good reason for this – for retailers specifically, machine learning models can generate synergies and efficiencies in-store, through storerooms, through to micro- and macro-warehouses. Innovations like smart shelving, traceability – that is the ability to track the production of a product from source to store – and the optimisation of smart equipment, whether computing power or energy-efficient lighting and appliances, allow retailers to benefit from both worlds, both speed and sustainability  

 Investing in trusted partners
Decarbonising supply chains is hard. Even green-leading companies struggle to get the data they need and to set clear targets and standards for suppliers and vendors to adhere to, and that’s even before addressing the issue of transparency. 

 To set and meet sustainability benchmarks, sourcing reliable, sustainable supply chain partners is nearly impossible to enforce without a collaborative approach. To build a better future, seeing clearly from factory to store is crucial in ensuring that businesses who have committed to environmental change are able to have a positive impact, unhindered by forces unknow to them. Businesses have begun to take this mission more seriously in recent months, as mega-retailers like ASOS and illy have all made commitments to improving ethical transparency across the supply chain – some even going so far as to demand ‘ethical manufacturing’ pledges.  

 Transparency is key; through supply chain control towers, retailers can view their inventory across the supply chain to mitigate issues and evaluate the most sustainable approach whether be around their supply base, manufacturing processes, shipping or transportations. Incorporating new KPIs around emissions and other sustainable goals enables retailers to make more holistic decisions. The next level of transparency will come when sharing this information with customers to enable more informed purchasing decision. 

 Collaborating for efficiency in the last mile
Even before the pandemic hit, many retailers were using new sustainability drives as a way to grow customer share. This sentiment has not gone away: while many of us have been content to order items online when stores are closed, questions are now being asked about the environmental impact, and this needs to be factored into the delivery proposition. This could be addressed with greater collaboration designed to reduce the number of deliveries across multiple retailers, or providing delivery options that can reduce the environmental impact, such as only receiving a delivery when someone else nearby is receiving something too, or opting for delivery in an EV. 

 It’s clear that, as we enter the new normal, sustainability is going to be increasingly important for consumers, and therefore showcasing and instilling sustainable practice will be a critical element of success for retailers and the supply chains they depend on. To achieve this goal, businesses need to shift their thinking from solely focusing on convenience in a crisis mindset, towards longer-term planning and flexible fulfilment models.  

 While technology unlocks a host of potential for streamlining efficiencies and – therefore – eliminating waste, getting back to basics, and back to the store will be equally valuable in ensuring that retailer, consumers, and the wider economy is better able to ‘go green’.  

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