A ‘How-to’ Guide for Successful Supply Chain Collaboration
Corporate sustainability strategies are evolving and it is no longer enough to get our own house in order. We must look beyond the boundaries of our own operations and consider the social and environmental impacts of the entire value chain from material sourcing through to recycling. This is not a call for altruism, but rather a prerequisite for long term business continuity and a greater competitive advantage.
Over the next 20 years, the global middle class will increase to an estimated three billion putting more pressure on an already fragile and resource constrained environment. It is crucial for companies to shift their mindset from individualistic “wins” to holistic “triumphs” hence, invest into resource efficient value chains with bigger ambitions and better returns. The theoretical approach I speak of is collaboration, a method used to consider opportunities, assess risks, set targets for sourcing, reducing our carbon emissions and material recovery to build a secure and resilient supply chain while creating long-term value for our customers.
To remain competitive and bring long term value to customers, we need to develop new and innovative products while delivering cost and operational efficiencies. We need to support customers to avoid regulatory risks (i.e. packaging bans) and raise public awareness around renewability and recycling in order to increase packaging recovery rates – which will ultimately help further their brand equity. I believe these are needs that not only face Tetra Pak, but many other companies as well. Nevertheless, they are big tasks; none of which can be tackled alone. However if we function in symbiosis with our suppliers, customers, business partners and other stakeholders, we can develop a sustainable supply chain and accomplish our goals.
Establishing effective and sustainable collective actions is easier said than done. Competitive interests, dissimilar organizational cultures, and conflicting objectives are just a few factors that can undermine success. With careful planning, these pitfalls can be avoided. We have learned much about collaboration in the pursuit of our sustainability goals and consider these five factors a key to success:
The “how-to” guide for collaboration
1. Commitment from the Top: Getting support from executive management is crucial to moving things forward. Without the CEO on board, resources may not be sustained to carry the initiative through to completion.
2. Multi-party effort implies bringing the right partners to the table: The right partners whether they come from public or private sectors, will share a common sense of risk, responsibility, benefit among interested parties, have “skin in the game” via a financial commitment, and have corporate targets or commitments that compel them to act. We have found that it is not always clear who the right partners are from the outset but coming up with the “Ask” first, helps us pinpoint the influencers we need involved.
3. Broad representation and buy-in, internally and externally: To bring partners on board, the “Ask” must be supported by a strong business case that generates shared benefits and appeals to core interests. This is imperative to build buy-in with both external partners as well as internal decision-makers. 4. The challenge in a multi-stakeholder process is to appeal to a range of perspectives. Success of collective models will depend on a two-way (or multi-way) dialogue which leads to stronger outcomes than those achieved through unilateral action.
5. Clearly articulate objectives and terms of reference: Come to an agreement at the beginning of the collaborative process to avoid future conflict.
Sustainable funding: Allocate project costs fairly among parties and provide sufficient funding to support the initiative over time.
In other words, collective action is about coordinated engagement among interested parties within an agreed-upon process in support of common objectives.
Procter & Gamble case study
Procter & Gamble leveraged collaborative efforts to create and promote an energy efficient detergent for cold water laundry. The company worked with its suppliers to develop a low-temperature, concentrated washing detergent and brought washing machine manufacturers into the fold to provide consumers with widespread access to low-temperature settings. Government and NGO partnerships were leveraged in the rollout of an awareness campaign to encourage consumer uptake. As a result of this value chain collaboration, there has been a significant reduction in energy use and greenhouse gas emissions and a transformation of consumer behaviour and expectations.
Carton Council case study
The Carton Council was first established with commitment from carton packaging manufacturers who had a common goal to expand carton recycling throughout the U.S. Recognizing it couldn’t do it alone, the Council actively engaged in cross-sector public-private collaborations to establish infrastructure for collection, appropriate sorting technology, consumer awareness campaigns, and a sustainable business model for the collection and recycling of carton packages. This is a strategy that breaks the bounds of traditional partnerships and is having a dramatic impact on expanding carton recycling access in the US.
Tetra Pak case study
Tetra Pak’s renewability strategy follows a similar trajectory in which we define a gold standard for sourcing raw materials. We engage with our suppliers, NGOs as well as industry partners to build a sustainable supply of input materials that we rely on for packaging material production in all markets where we operate. By developing a chain of custody for our paperboard fiber, we can trace where it is coming from and how they are managed which will allow us to safeguard against social and/or environmental disruptions.
Industry partners have also been critical for us to deliver on our green innovation ambitions. Tetra Pak partnered with Braskem, one of the world’s leading biopolymers producers, to develop polyethylene from sugar cane derivatives. A cap composed of the bio-based plastic was first launched in partnership with Nestlé Brazil in 2011 and we are now using the material to replace fossil-fuel derived plastic within our packages’ material. In February, Tetra Pak piloted the use of bio-based LDPE in Coca-Cola Brazil’s Del Valle juice beverage packaging and there are already plans to extend this successful pilot to other customers. This is a great example of collaboration that is helping us get closer to our ambitious renewability and climate goals.
Seizing opportunities in a resource constrained world
According to the World Business Council for Sustainable Development, we will need to increase resource efficiency tenfold to keep pace with a burgeoning population. Seizing opportunities in a new era of collaboration to produce the leanest, most resource-efficient value chains is not a choice, it’s a competitive imperative. A value chain mindset recognizes that a company is no stronger than its weakest link and it can only go so far working alone. Strengthening the chain by working together can hedge against resource scarcity, regulatory risk and consumer backlash and lead to innovative product lines, new markets and enhanced brand value. What better reason do you need to look beyond the fence?
Author: Elisabeth Comere