Achieving the United Nations’ Global Goals for Sustainable Development could create market opportunities worth US$12 trillion. A collaborative platform has been launched to help businesses realise those opportunities. Jonny Williamson explains how.
When questioned, most manufacturers would say that sustainability is relatively high on their agenda. The cost of resources rarely falls, environmental requirements are ever more rigorous, and businesses are acutely aware of the ‘feel-good factor’ surrounding corporate social responsibility (CSR) activities.
And yet, so much of a product’s environmental impact is trapped within the supply chain, with no scalable method to unlock it. It’s estimated, for example, that for most retailers and large brands, upwards of 80% of their cost and risks reside within their supply chain.
The $12 trillion question is – “How feasible is it for a company to take responsibility and ensure best practice across its entire supply chain, comprising dozens if not hundreds of companies?”
There have been several disparate initiatives in the past, some of which have garnered positive results, but broadly speaking, the challenge has been too complex, and the business case not adequately communicated, for sector-wide solutions. That is, until now.
The brainchild of digital business guru, Martin Chilcott, and his sustainability-focused company, 2degrees, Manufacture 2030 is a digital, subscription-based platform to help companies cut their costs, reduce risk and minimise environmental impact through better supply chain and cross-industry collaboration.
Coinciding with the target date set to achieve the UNs’ Global Goals for Sustainable Development, the founding principle of Manufacture 2030 is to enable retailers, brands and their manufacturing suppliers to move beyond just squeezing contractors to stay competitive. This includes finding new ways to collaborate and innovate to create further savings and reduce the risk and impacts of disrupting the supply chain.
Founder and CEO of 2degrees, Martin Chilcott, explained that he has an ambitious plan to see every manufacturing factory reduce its use of resources – i.e. heating, water, energy, compressed air, materials – by half over a 10-year period. Doing so would not only greatly reduce their environmental impact, but significantly boost competitive advantage.
According to Chilcott, the business case for sustainability has never been stronger, with the goal of “sustainable manufacturing” representing “an incredibly big prize”, but progression doesn’t appear to be happening at any notable scale.
“Incremental gains, that of the 0.5% or 1% improvements, tend to be messy and difficult to manage, with a potential risk to output and quality. As such, most businesses focus more towards broader, step-change projects. There’s nothing wrong with that approach, but it does ignore the much longer tail of smaller gains, which when combined can add up to something dramatic.
“Manufacture 2030 offers a cost-effective, scalable interaction globally, alongside additional benefits the likes of boosting trust, confidence and communication within the supply chain. Rather than being the problem, scale will become the solution.”
Put simply, Manufacture 2030 helps companies achieve greater operational excellence through improved resource efficiency, by encouraging those in the supply chain to work together to help solve challenges.
By encouraging supply chain-wide cooperation, intelligence concerning the best use of resources, cost efficiencies and risk mitigation can be shared to unlock further insights and opportunities. For example, if an average factory could match best in class energy efficiencies, it could save as much as £100,000 annually on its energy bills alone, Chilcott noted.
Manufacture 2030 has several founding partners, namely: npower Business Solutions; Mars Inc.; William Jackson Food Group; WRAP; CDP Supply Chain Initiative; University of Cambridge; The Carbon Trust; World Business Council for Sustainable Development (WBCSD); Lancaster University; Globality, and navista.
The platforms founding retail partner is British consumer business, the Co-operative Group. Sarah Wakefield, food sustainability manager for Co-Op, explained why the business decided to become involved. “Over the next few years, Co-op have ambitious plans to reduce the environmental impact of our products and actively support our suppliers to make sure our supply base is resilient to a changing climate.
Co-op’s research shows that big retail has a role to play in supporting best practice and accelerating change, but liaising directly with every member of an extensive supply chain presented a challenge for Wakefield and her relatively small team. Co-op is hoping to use Manufacture 2030 to easily share best practice with its supplier base, offer quick resolutions to questions and challenges, and limit the time spent on reporting.
“The Golden Rule”
The intent sounds admirable, however the open lines of communication across the supply chain creates a vastly improved level of visibility for the business sitting atop the pyramid. I questioned Martin Chilcott about what guarantees suppliers have that any gains or cost-efficiencies they make won’t immediately be lost through ‘prescient’ contract renegotiations.
He told me, “By becoming part Manufacture 2030, every business agrees to adhere to what we call “The Golden Rule” charter, i.e. the OEM won’t come after a supplier’s savings. Any gains made in the supply chain absolutely remains within the supply chain, otherwise the platform wouldn’t work.
“Manufacture 2030 seeks to create sustainable partners running sustainable businesses. Trust is a founding principle of that mission, and it’s vital that trust be created, embedded and maintained. If you speak to any business, the importance of growing a long-term, future-proof supply chain is significant. That overarching need outweighs any desire to make a very short-term, small gain through a particular supplier’s cost-efficiencies.”
“What is possible?”
In regards to sustainability and society’s environmental impact, it is all too easy to focus purely on the negative aspects of what will happen if humanity doesn’t change its behaviours. What’s needed, according to the director of Research in Industrial Sustainability at University of Cambridge, Professor Steve Evans, is a shift towards the more positive outcomes of “what is possible.”
Evans, who also sits on The Manufacturer’s Editorial Board, noted that industry should be able to yield around 7% improvements regularly and sustainably. Currently, it’s less than half that.
“Manufacturers are not as efficient as they could be. 10% of costs are labour, which sees on average a 3% improvement in efficiency per year. 50% of costs are associated with resources like parts, material, energy, water and waste, which are only seeing a 1% improvement on average per year.
“There is a huge untapped opportunity in resource efficiency. To make it happen, collaboration and knowledge sharing is essential, and if done properly, could see resource efficiency increase to 7% per annum, halving total manufacturing resource use within 10 years,” he said.