Supply chain News and trends

Nestlé Purina utilises a variety of fish and seafood items, sourced from around the world and is the first GSSI partner from the petfood industry to join the global partnership network.

A high proportion of the seafood ingredients in Purina’s products are seafood sidestreams - those parts of the fish remaining after fillet removal. Despite this, the company believes that it can further expand its use of responsibly managed and sourced seafood and has set a goal for the ingredients in its products to be 100 percent responsibly sourced by 2030.

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Mountain bike tyres from the Continental Gravity range have become the first products to feature responsibly sourced natural rubber from a project aimed at establishing sustainable natural rubber supply chains. Continental aims to achieve 100 per cent sustainable supply chains by 2050 at the latest, but is going one step further when it comes to natural rubber and intends to cover its entire demand exclusively through responsible sources by as soon as 2030.

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Credibility and visibility in the procurement process are no easy feats. Challenges abound, and no CPG company wants to see their brand’s name in the newspaper because their supplier has done something wrong. 

This was the motivation behind cheese-manufacturing company Bel Brands USA’s decision to align with automated sourcing platform Bid Ops, Jean-Michel dos Remedios, head of procurement, sourcing, and supplier development at Bel Brands, tells CGT. 

Bel Brands USA — maker of cheeses Babybel, The Laughing Cow, Boursin, and more — was looking to solve a major problem. With $285 million in direct and indirect material spend across 3,500 suppliers, they wanted to cut costs and increase their sourcing efficiency, which was getting too difficult to manage.

“We started to use Bid Ops as a resourcing tool to go faster on refuse and reuse, and sourcing events,” says dos Remedios, who did not see the value in previous sourcing investments due to their lack of visibility.

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Companies are ramping up their climate commitments, and with them their ambitions to source materials—such as green steel, recycled aluminum, and recycled plastic—that have lower emissions intensity than their conventional equivalents. Production capacity for many low-emissions materials, however, appears set to fall far short of future demand. For example, our analysis suggests that in 2030 demand for green steel in Europe could be twice as great as the available supply. Projections point to global shortages of recycled aluminum and recycled plastic.

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Last week, the EU institutions reached an agreement on new legislation directed at ensuring that minerals and metals entering the 28-nation bloc are transparently and responsibly sourced and do not play a role in financing human rights abuses and conflict in high-risk areas.
The regulation establishes due diligence provisions for sustainable sourcing practices as of 1 January 2021, covering 95 percent of EU imports of tin, tungsten, tantalum, and gold, commonly used in electronics, jewellery, packaging, cars, and construction.

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Last year, Mars and Danone announced their intentions to invest €50m each into the Livelihoods Fund for Family Farming Scheme aimed at increasing the productivity of smallholder farmers to prioritise key crops including cocoa, sugar and palm oil across 40 projects worldwide.
The partnership reflects an increasing willingness from global food and beverage firms to drive positive change in sustainable sourcing, with both Nestle and Mondelez recently displaying strong commitments to supply chain transparency.

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Owing to its vast Scope 3 footprint, the retail industry at large accounts for over 25% of global emissions and 40% of the global plastic usage. Wary of the situation, and faced with consumer and legislation-induced pressure, the retail industry is starting to act.

An Oxford Economics study showed that 52% of the organizations had commenced sourcing sustainable materials for product manufacturing or merchandising, and 62% claim to have sustainability plans in place. And yet, just under 20% of the retailers are on course to curb their emissions and prevent the rise in global temperatures (of no more than a 1.5⁰C).

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In a successful proof of concept in Indonesia, Unilever applied GreenToken to sustainably source more than 188,000 tons of oil palm fruit. SAP and Unilever are using a pilot of the GreenToken by SAP solution to further increase traceability and transparency in Unilever’s global palm oil supply chain. The tool enabled Golden Agri-Resources and other suppliers from whom Unilever sources to create tokens that mirror the material flow of the palm oil throughout the supply chain and capture the unique attributes linked to the oil’s origin.

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The supply chain crisis has prompted many businesses to focus urgently on sustainable sourcing. It’s a good idea, but they should go even further by integrating their overall environment, social and governance (ESG) strategies into their sourcing plans. 

Indeed, two-thirds of the average company’s ESG footprint lies with suppliers, according to McKinsey. The cost of failure — even at multiple levels down the supply chain — can be catastrophic to a firm’s reputation. Major incidents have brought widespread attention and spurred enterprises worldwide to double down on sustainable procurement.

At the same time, investor expectations, along with increased regulatory oversight requirements — such as the German Supply Chain Due Diligence Act and the UK Modern Slavery Act — are compelling businesses to establish and execute ESG strategies and uphold high ethical standards.

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Business and human rights experts argue that Switzerland should seize the opportunity to require responsible sourcing of cobalt, an in-demand mineral whose risks to human rights are often overlooked.

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The Regulation, as agreed by the EU Institutions, is set to ensure sustainable sourcing for more than 95% of all EU imports of tin, tantalum, tungsten and gold, which will be covered by due diligence provisions as of 1 January 2021.  
In the meantime, the Commission and Member States will work to make sure that the necessary structures are in place to ensure EU-wide implementation.

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