First, why value, not supply? Because the route from production, to manufacture, to use, to disposal should create value for both the environment and society. Transactions, monetary or otherwise, should be driven by a desire to meet social and environmental objectives, as well as economic ones. And networks? Because nothing is truly linear: the pathway from production to disposal should be seen as a loop, where someone’s waste is someone else’s raw material input. But these loops don’t exist in isolation: they interlink in networks.
Sustainable value networks are still a pipedream for most locally and globally sourced commodities. Based on my own insights from initiating and running projects to build value into supply for a range of commodities, such as dairy, tea and grain, I’d like to offer five steps for anyone in a position to influence their immediate loop or wider network. These aren’t sequential: picking one will nudge us closer to sustainable value.
- Reframe your view. Think value, think networks. Immediately you’ll see new opportunities to integrate sustainability into processes and products.
- Turn the smouldering platform into a burning one. Despite huge volatility in global markets, constant interruptions in the supply of everyday products from potatoes to bread, and heart-breaking disasters in the garment factories of Bangladesh, many individuals with the power to transform global and local value networks are, sadly, asleep on the job. Time to take them to the future, spelling out the inevitable consequences of a failure to act today.
- Create long-term partnerships. Too many procurement teams still think the solution to commodity scarcity in one area is to source it from another. But what happens in the future when there is nowhere to switch to? As the ‘switch not stay’ brigade use short-term contracts to secure short-term security of supply, opportunities to help the production regions of the world adapt to a changing climate, for example, are lost. That will ultimately mean only one thing: price hikes that place the end product out of most people’s reach. Long-term partnerships offer an alternative approach, benefitting both producer and buyer and ultimately securing long-term supply.
- Build in flexibility. The days of massive, fixed production facilities, used by just one business, are numbered. The supply systems of the future will feature fixed assets that are shared (already some businesses are sharing distribution hubs) and greater, local vertical integration of production, manufacture and supply.
- Integrate your brand strategy with your supply strategy. In a hyper-connected world, it is unlikely that the majority of end-consumers will remain a disconnected entity at the end of a supply chain. We’re seeing the emergence of a connected consumer, who may also be a producer, and who wants more assurances around product origin and production processes. (Horsemeat anyone…?)
Sally Uren is Chief Executive at Forum for the Future.
Photo credit: Nick Woodford/Forum for the Future