By: Beatriz AlegrÃa
According to Nielsen, 2018 was the year of the green consumer.
The supply chain of the future will create a seamless path from idea to completion in an affordable, efficient, fast, and sustainable way. At least that is what Millennials are demanding. This segment of the population, which according to Nielsen, encompasses young adults born between 1977 and 1995, has a holistic vision of the world that translates into eco-friendly choices and an expectation of fast and cost-effective solutions to meet their wants and needs. So much so, that according to Nielsen’s latest research, Unpacking the Sustainability Landscape, a whopping 48% of U.S. consumers say they would definitely or probably change their consumption habits to reduce their impact on the environment.
And who is the driving force behind this green impulse?
Definitely Millennials, who according to the same study are twice as likely (75% vs. 34%) than Baby Boomers to say that sustainability is shaping their consumption choices.
If 2018 was the year of the influential sustainable consumer, as Nielson reports, then what does this mean for the supply chain of the future? As it turns out, it is much more than just going plastic-free. Consumers want to pay more for green products, but their decisions are influenced by other factors than the product itself. In an increasingly globalized world that offers plenty of opportunities to decrease manufacturing costs, the smartest companies have realized that sustainability and social responsibility should be their top priorities to stay attuned to what society is demanding from them.
In the era of social media, customers, employees, and suppliers are sharing their opinions in an unprecedented manner—and monitoring companies closely. A sustainable supply chain is no longer “the right thing” to do, but rather the way to be successful in an increasingly competitive economy in which stakeholders are basing their decisions on publicly available information. Dr. Robert Sroufe, Murrin Chair of Global Competitiveness at Duquesne University’s MBA Sustainability Program, explains that the supply chain of the future will have to adapt to the new trends because “the integration of environmental, social, and governance data about firms is available to millennials who want to work for, interact with, and purchase from firms who are considered the most sustainable in their industry.”
Purchasing and Production
In this context, clarity in purchasing and production will be key. Millennial consumers like to know what was used to make their products and who made them. For instance, companies like The Body Shop or Lush have centered their strategy in being very transparent about sourcing materials in an ethical and responsible manner, tying their key raw ingredients to their corporate social responsibility. “Think about and design procurement solutions that are part of closed loop economies,” advises Dr. Sroufe. For instance, by “using the Social Cost of Carbon dioxide (SCC) in financial analysis and decision making [manufacturers can source] products and services that have a net positive impact on the environment,” Dr. Sroufe adds. As it turns out, being sustainable has a direct impact on the bottom line of the business. “This integration can be rolled up into annual sustainability report and enable inclusion in the UN Global Compact, Dow Jones Sustainability Indices, CDP (formerly called the Carbon Disclosure Project) and other sustainability rankings,” he
Inventory Management
Millennials are also shaping traditional inventory management. This generation is single-handedly responsible for the change in the retail landscape and the boom of the e-commerce platforms, so they demand solutions that, according to Dr. Sroufe, will allow a “real-time interaction that is two-way between organizations and themselves. A focus on both visibility and transparency within the supply chain, like seeing their order moving around the world on its way to them, or customization of products and services, will make Millennials feel companies are paying attention to them and they are special.”
Transportation and Distribution
The expectations of the Millennial generation are also shaping the best practices for transportation and distribution. According to research from Radial, Millennials are very critical of the speed of deliveries and condition of the goods and expect fast and reliable shipping and easy returns as part of the core service of a business. And this is where the experiential supply chain plays a major role.
“Millennials want a tangible shopping experience with a customized experience. This can mean access to new products before the general public, and they want these experiences and product right
In this sense, controlling the flow of information to meet instant inventory demands and offer good responses to custom orders will be key to thrive in the e-commerce ecosystem of the future.
However, one of the major changes in the supply chain is already taking place: the integration of recycling as a core component of the process. By either using recycled materials or communicating clearly which parts of a product can and should be recycled, major companies are tapping into the sustainability trend as part of their business strategy.
Just this past January, Samsung announced that it will gradually remove all plastic from its packaging, and a coalition of major brands have begun to distribute their products through Loop, a new zero-waste platform that will distribute common household staples in reusable containers.
Millennials have spoken, and the industry is listening.
