By Harris Fogel, Global Vice President – Consumer Products, SAP
Midsize companies are challenged by every definition of “unsustainable.” Operational structures have become untenable against the current dynamics of macroeconomic instability. Consumers are largely ignoring products and services that upset the ecological balance by depleting natural resources. Regulatory auditors are carefully watching their labor practices to spot noncompliant and unethical activities.
Even governments worldwide are applying “plastic taxes” to products and packaging to reward business that prioritize circularity in the environment and penalize those that do not.
And nowhere is this statement more accurate than in the consumer products industry. From inflationary pressures and supply chain issues to shifting consumer behaviors, they’ve been forced to shake up their business models to seek more viable ways to stabilize their operations and weather the current economic storm.
A tactic that most midsize consumer products companies have adopted lately is including environmental and social sustainability in their revenue growth strategies. Findings from the SAP Insights report, “The Transformation Mindset,” underscore that this focus joins traditional moves such as introducing new products and services, expanding into new market segments, and improving brand reputation.
Redefine “sustainable” for a more competitive world
Whether organic or inorganic, growth in the consumer products industry is ultimately about selling more of a product that people already have and making better use of trade dollars and pricing power. Accomplishing this goal calls for promotions that are planned, optimized, and executed with speed, agility, and precision. However, no one should underestimate the power of listening to consumers and understanding their desires, wishes, and sentiments.
Brands that fulfill or surpass the expectations of consumers, industry activists, investors, and governments prioritize outcomes that protect human and animal health, minimize waste, and limit their environmental impact. In this scenario, this level of focus typically transcends every business area, particularly R&D, production, logistics, and labor management.
However, connecting the links between sustainability and revenue growth is compelling business leaders to ask a wider variety of questions, for example:
- How does sustainability change the pace and direction of ongoing growth
- How can supply chain planning processes become more agile while improving margins?
- How can you provide end-to-end visibility – from promotional planning to demand and supply chain planning – for a “one version of the truth” forecast
- How can the business better care for its people and empower the workforce more?
Getting the right answers requires a well-defined vision of a sustainable business. But for every department and stakeholder to understand, buy in, and act on that strategic concept, companies must balance sustainability goals with product innovation, promotional activities, demand planning, supply chain capacity, and inventory availability.
Embrace planning, optimization, and visibility
With planning and optimization capabilities and visibility, the entire company can meet demand while demonstrating the values their consumers hold close to their hearts – especially during challenging economic times.
By acquiring the ability to plan for future demand, optimize processes, and gain enterprise-wide visibility, brands can offer outcomes that are critical to long-term retailer relationships and ongoing revenue growth, including:
- Supply chains that pivot to new suppliers and service providers when manufacturing capacities are low, logistics are delayed, and existing resources, components, and ingredients are limited
- Operations that proactively identify products that may not be safe for consumption or use
- Virtual and physical store shelves that are stocked with high-demand, high-quality products
Take, for example, Stemilt Growers. The vertically integrated grower, packer, shipper, and marketer chose a cloud-based ERP to digitalize and automate its warehouse product management processes – from order creation to freight payment and carrier handoff.
This approach helped accelerate Stemilt’s growth by supporting a growing network of asset-based and brokerage carriers on a centralized platform. By standardizing the carrier base, the company can plan better and optimize lane and route performance. In addition, exception management became more unified, covering everything from the delivery process to customer experience. Even transit event reporting became more timely and actionable.
Such a step toward creating a more resilient business can be potent for midsize consumer products companies. Whenever a supply shortage arises upstream and downstream, Stemilt can determine early which products grocery and wholesale stores have on hand, its capacity to deliver more, and new opportunities that can fill the gap. This capability goes beyond having good forecasts or collaborating with selling partners – it’s about having 360-degree visibility to prepare, pivot, and act as a unified business network.
Be part of a more sustainable industry and world
Throughout the consumer products industry, midsize companies have experienced significant consumer and regulatory pressure to progress toward delivering on their sustainability commitments. And most of them are responding with strong leadership and ambitious sustainability plans, according to SAP Insights. However, they must also fuel ongoing revenue growth while fulfilling this desire.
How can midsize consumer products companies evolve their strategies to be more sustainable? It begins with improving planning, optimization, and visibility across the broader value chain – where upstream and downstream relationships work together as a global ecosystem that produces products and services that consumers trust.
This article was previously posted on Forbes.com