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Route to Market & Supply Chain Blog

FMCG Supply Chain - how green and environmentally friendly is yours?

Posted by Dave Jordan on Wed, Apr 25, 2012

I have always thought it a little strange. The “green “ movement is all about saving the Earth  yet the same colour is used for “green” house gases  (GHG) that are far from green and moving us towards unavoidable planetary oblivion, apparently. Now, there is huge debate about what contributes more to the ozone layer depletion; is it excessive human use of fossil fuels or is it primarily the fact that cows eat enormous quantities of grass leading to “cow house gas” emissions in rather large volumes?

However, that is not the point of this blog. I simply want to take a look at how many FMCG, Brewing and Pharmaceutical companies waste money which if they avoided would have a welcome knock-on effect of reducing their overall emission footprint.

Carbon footprint complex Netsize resized 600

  1. Why are office lights kept on all night? There is nobody in the office yet it is lit up like a Christmas tree with potentially hundreds of lights creating heat and gobbling up electricity for absolutely nil benefit. A simple timer system would secure a decent reduction in the fuel invoice. “But it is included in the rental cost” – it probably is and you are paying for this whether you like it or not. Perhaps this source of waste sounds insignificant when compared to a heavy duty factory but it all helps.
  2. Rain water harvesting really should be mandatory for factories. They usually have expansive roofs which are ideal for channeling and collecting water. Instead of using fresh water that has been chemically treated and pumped from miles away to flush toilets why not use “free” rain water. Ok, if you are located in Riyadh then the opportunity for rain collection is a rarity but if you are based in Manchester UK just think how much you can save and contribute to a cleaner environment.
  3. Solar water heating and electricity generation are becoming increasingly affordable and should be considered for any new factory project. Solar heating of water is probably more advanced yet panel costs are lowering each year. Yes there is an investment but if you are a major user of gas or electricity for water heating and you get a reasonable amount of sun (i.e. not Manchester) then a decent return on investment is achievable.
  4. Do you know how much your business is wasting in write offs and stock you do not need? If you don’t, you should. If we assume a moderately sized business of 500m Euro turnover then depending on the sector you could be running at a waste level of up to 8% of turnover, e.g. short shelf-life yoghurt etc. A detergents business will operate at considerably lower levels of waste but if we assume a modest 1% overall waste then that is 5m Euro down the drain. This is probably the worst kind of waste as you have paid for the product to be manufactured transported etc and then nobody buys it and you have to pay to have it destroyed.
  5. My bug bear is unnecessary packaging. Companies say they have reduced by x% and used more recycled materials but there is still a fair way to go. Innovation decisions need to be business wide and not just marketing wish lists. If you do not keep marketing in check they will add colours, layers, weight, thickness etc all to make their product better than competition. I admit that at the sharp end of the Route To Market shopper decisions can be swayed by packaging quality and appearance but still there is so much that is not required and goes directly into the waste bin (or hopefully the recycling system).

You will appreciate that items 1-5 are not exclusively about Supply Chain but that department inevitably receives the most focus. However, taking a look across the total business will expose numerous areas of waste and unnecessary material consumption.

While many may well blame the loss of the ozone layer on a their local herd of Black Angus cattle, companies can do so much more and it is not rocket science any more.

Tags: FMCG, Route to Market, Dave Jordan, Performance Improvement, Manufacturing Footprint, Supply Chain, S&OP, Low Carbon

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