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Based on research into consumer attitudes about sustainability and how it affects their purchasing decision, Accenture identifies six lessons for supply chain executives.
Historically, manufacturers have viewed sustainability as primarily a brand enhancer but its impact extends far beyond brand image. Sustainability is a tangible benefit, and one that touches virtually every facet of a business’s operations, from risk management and cost reduction to generating new revenue. Supply chain executives must, therefore, be active participants in the strategic conversation about sustainability so that they can understand the importance of their decisions and practices to this increasingly consequential goal.
Recent research suggests that a good starting point for this strategic conversation is understanding what matters to the customer. To gain deeper insight into consumer attitudes about sustainability, and how sustainability affects their buying decisions, Accenture recently surveyed 4,000 consumers throughout the Americas, Europe and Asia.
Nearly two-thirds of the consumers we surveyed said their perception of a company is strongly influenced by the company’s environmental and sustainability policies. Only 10 percent of respondents claimed such policies have little or no influence.
More than 80 percent of Chinese and Brazilian consumers say their perceptions are strongly influenced by a company’s policies, versus around 40 percent of consumers in the United States and the United Kingdom.
The top three concerns are reducing air and water pollution (43 percent each), and greenhouse gas reduction/mitigation of global warming (33 percent).
The fourth annual Carbon Disclosure Project Supply Chain Report 2012 reveals that Asian and European companies have similar disclosure practices, while North America and the rest of the world lags.
An important finding is that that while consumers say sustainability matters to them, they are not fully informed about it. Less than half said they were familiar with the policies of the companies they buy from the most.
The overwhelming majority (77 percent) of consumers hear about the sustainability policies and actions of companies through traditional media outlets. Companies can clearly do more with the channels under their own control, such as advertising and packaging.
It is also worth noting that consumers base buying decisions on sustainability until it affects the price they have to pay. Only a small minority (15 percent) is willing to pay more than the average price for sustainability.
The research findings offer some important early lessons for supply chain executives:
Assess and reduce your risks. Investigate the practices and records of your suppliers, and encourage responsible environmental practices—or rethink relationships with suppliers whose environmental practices are questionable.
Take your rightful seat at the sustainability strategy table. CEOs believe their companies should be integrating sustainability into the supply chain but as a supply chain executive are you aware of this?
Calculate the sustainability benefits of the supply chain. And then develop ways to get credit for them.
Monitor and safeguard your brand. Third-party environmental rating services can help companies raise consumer awareness—but companies need to be aware of the ratings and the methodologies used: good ones, so they can promote the use of such services and quickly take advantage of any constructive criticisms; unfair ones, so they can dispute them and seek correction.
Think local. Consumer sentiment toward sustainability ought to be a consideration in supply chain design.
Control your destiny. Supply chain executives should recognize their role in the company’s sustainability strategy and proactively take steps to align supply chain management to it.
Nick Blonkowski is a consultant in Accenture Operations Management Consulting. He has significant experience throughout the supply chain from demand planning through transportation in a variety of industries. He currently leads Accenture’s North American Sustainable Fulfillment offering and is based in Washington, D.C.
Derek Jones is a senior manager in Accenture Operations Management Consulting. He has an extensive background in distribution operations and inventory management for a variety of industries. He currently leads Offering Development for the Integrated Planning and Fulfillment practice, and is based in Tampa, Florida.
Sundip Naik is an executive in Accenture’s Management Consulting practice. He has an extensive background in global supply chain transformational programs focusing on network design, fulfillment strategy, distribution re-engineering and transportation operations. He has worked in the consumer goods, retail, communications and high-tech industries. Most recently he has led Accenture’s North American thought leadership and offerings within the Planning, Fulfillment and Sustainability areas. Naik is based in Atlanta.
Saurabh Raman is a consultant in Accenture’s Management Consulting practice. He has a wide-ranging background in supply chain operations, including warehouse management, private/ dedicated fleet management and procure-to-pay services. Raman’s primary experience has been in the communications and high tech and consumer goods industries. He is based in Philadelphia.
March 15, 2012
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