Competitive retail nature placing supply chain performance at risk

EXCLUSIVE: Retailers need to ask "honest" questions as to whether current emphasis on competition over collaboration is actually stifling business growth and transparency, by damaging supply chains that can't cater to minimal standards from day one.

That is the view of a panel convened at edie’s Responsible Retail Conference, which met in London on Wednesday (21 September) to tell delegates that traditional conversations and relations with supply chains weren’t allowing for “systemic growth” – which could lead to businesses failing to meet new consumer demands.

With the spotlight falling on recent retail failings – such as the Hugh’s War on Waste TV series which highlighted the shortcomings of both food and garment waste – building retailer Travis Perkins’ head of environment and sustainability Jez Cutler claimed that the competitive nature of retail was a “fundamental problem” that needed addressing.

“Retail is all about competition,” Cutler said. “It’s a fundamental problem, because in this space you only have to be bigger than the next guy and it doesn’t really drive up performance and you end up playing on quite a low playing field. For me, the fundamental challenge is about differentiating between competition and deciding whether this should be about collaboration instead. We have to be honest with ourselves.

“There’s this ideology that products have to be perfect and I think this drives the wrong decisions. We’re all too scared to admit that there’s problems with supply and production creation and by going risk adverse we make harsh decisions in our supply chain. I think there is something to be said to create a supply chain of continuous improvement. We need to allow the space to get better rather than implementing minimum standards from day one.”

Cutler argued that businesses were being too harsh on suppliers, and were severing ties with any mills or factories that showed an inability to comply with environmental standards, instead of giving them the time to grow and adapt.

This ideate was also addressed by the director and founder of value-chain data analysts Historic Futures, Tim Wilson, who is actively striving to introduce a new mapping system that allows companies to examine individual supplying mills and what impacts these mills were having on products.

Wilson claimed that businesses were focusing too much on the analytical approach to supply chains, which in turn would fail to implement efficient operating models due to a consumer switch that generates more frequent product purchases in less bulk.

“There’s a need for more systems based thinking,” Wilson said. “Supply chain maintenance and feedback loops need improving. In the current day there’s an unpredictability of orders. In regards to consumers, there’s been a move to smaller and more frequent orders, which is generating all kinds of poor consequences on sustainable development impact because it wasn’t thought about as a systems approach, but as isolated occasions to cater to demand.”

Some companies, such as Amazon, have already adapted to this shift in consumer demand and have launched new initiatives to compensate. The panel claimed that by engaging with suppliers, products could be manufactured in a way that minimises waste while still being tailored to consumer demand.

Policy drivers

Joining Cutler and Wilson on the panel were delegates from the Bangladesh Accord and Caffe Nero, both of which had shared supply chain success and concerns with edie prior to the event. Speaking at the event, Caffe Nero’s master of coffee Giacomo Celi noted that the company’s effort to triple its sustainable farming training scheme would benefit farmers and the coffee industry by spreading best practice across suppliers.

The Bangladesh Accord’s executive director Rob Wayss also spent his time on the panel to highlight how companies could work with governments and non-profits to enhance transparency in struggling supply chains and promote safety measures.

Both Celi and Wayss noted that governments had a role to play, but that discussion between the private sector and government officials was usually a slow progress, a concept which Wilson described as a “blunt method to promote change”.

While Wayss noted that it was the duty of governments and organisations of developed countries to guide and – if necessary – discipline governments from developing nations, Forum for the Future’s principal sustainability advisor Heidi Hauf called on delegates to approach governments in a new manner to entice supply chain transparency and promote change.

“I challenge us all to approach and interact with governments differently and work with them in other ways, using apparatus that hasn’t been tried or isn’t normal to increase acceleration in these areas,” Hauf added. “I realise that collaboration and diagnosis in regards to these issues take time, but businesses have proved that they can turn to new methods to develop change.”

Matt Mace

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