Companies should seize opportunities to increase packaging efficiencies, improving profitability and sustainability

Since packaging is typically 10-40% of the retail price of products, there is no doubt it adds up to a relevant factor in product cost and waste. Packaging encompasses product design, prototypes and trials, materials, production, labor, shipping, and recycling and/or disposal. The most proactive companies pay close attention to opportunities to increase packaging efficiencies throughout the end-to-end supply chain to improve their profitability and sustainability.

Product Design Collaboration

Product design is at the heart of improving packaging efficiency. Our best clients take a collaborative approach to R&D and packaging design encompassing the end-to-end supply chain. For example, in a healthcare products manufacturer, the packaging engineer worked with R&D, manufacturing technicians, procurement resources, and logistics resources with a specialty in warehousing and transportation. In addition, customers, packaging materials suppliers, equipment specialists, and other resources took part in the collaborative design.

By involving these cross-functional resources, the full life cycle could be incorporated into the product design. In this case, they wanted to ensure the design encompassed the optimal packaging design to meet the customer’s visual, strength, and storage specifications while minimizing the materials, labor, and logistics costs. For example, the objective was to minimize the packaging materials while meeting product specifications. However, the team had to review potentially conflicting factors. For example, doubling the number of units of product per package would make the way the package fit in the box less efficient, the box might not be best designed to optimize the pallet, the pallets might not be optimized to fit on the truck, or the customer might not like the visual design or be able to fit the product in the storage area.

In addition, the product’s performance had to remain intact. Reducing the quantity of materials must not negatively impact the way the product worked for the customer. Compressing the product into the package must not negatively impact the absorbency of the product. Using redesigned materials in the manufacturing process must not impact product quality. This healthcare manufacturer successfully redesigned the product and reduced the total cost by more than 20% inclusive of materials, packaging, warehousing, and transportation costs.

Packaging Efficiencies in Bottling

There are vast opportunities to improve packaging efficiencies in the bottling industry. For example, Niagara has accomplished several key objectives in eliminating waste through packaging and innovation. They designed new packaging that eliminates the need for a cardboard tray in their cases and reduced the amount of plastic in their bottles by 60%. Thus, this packaging requires less materials and uses up less pallet space, allowing the company to reduce carbon emissions and ship more water per order.

Since 2009, Niagara improved its carbon footprint by 59% through innovations in design, lightweighting, and packaging. It has also increased its recycled content usage, which reduced greenhouse gas impact by bottle by 12%. Gaining these results requires a full lifecycle view of supply chain from product design through recycling.

Packaging Efficiencies at Amazon

According to Amazon, it continually works to reinvent and simplify packaging options. The company combines lab testing, machine learning, materials science, and manufacturing partnerships to accomplish this goal. Amazon notes that it avoided more than 2 million tons of packaging materials and reduced per-shipment packaging weight by 41% since 2015. The bottom line is that a significant reduction in packaging will reduce costs and improve sustainability.

Improving packaging efficiency can produce dramatic results. The healthcare products manufacturer, Niagara, and Amazon prove that by focusing on packaging design and innovation, tremendous savings in materials, labor, and freight will flow to the bottom line. In addition, carbon emissions are reduced and sustainability objectives are achieved.

Originally posted in Adhesives & Sealants, March 2024

The post Strategies for Gaining Packaging Efficiencies in Your Supply Chain appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson was quoted in Food Logistics’ Top 10 Trends to Shape Cold Food Chain in 2024 recently. With the help of some supply chain visibility, sustainable measures, more focus on people and the ability to pivot at a moment’s notice, 2024 is anyone’s and everyone’s game to succeed.

Top trends to watch in 2024

Nearshoring, risk mitigation and building resiliency. The top supply chain trends to watch in 2024 include a keen focus on mitigating supply chain risk, reshoring and nearshoring to source reliable production closer to customers, finding backup sources of supply, creating resiliency in the end-to-end supply chain, digitizing the supply chain, and keeping an eye on cybersecurity threats, according to Lisa Anderson, president, LMA Consulting Group, Inc.

“Since there is heightened risk in the global supply chain due to geopolitics, conflicts over natural resources, ongoing concerns related to the Russia-Ukraine war, South China Seas, new threats in the Suez Canal related to the Israel-Hamas conflict, Panama Canal issues related to drought, and concerns about natural disasters, labor negotiations/labor shortages, and cyber threats, smart executives are taking control,” she adds.

Sustainability. Despite all of the challenges and disruptions the supply chain industry faces, sustainability still remains a key trend for 2024, especially as companies race to deliver on their net-zero commitments by 2030.

“In many sectors, Scope 3 emissions can account for up to 80% of a company’s total emissions. Lowering Scope 3 presents one of the most significant opportunities for decarbonization, and the industry will look for opportunities to gain operational efficiencies,” Gerdeman says. “For example, our clients are using our analytics to optimize the mode, route, and equipment selection for temperature-sensitive goods, saving money by protecting products from freezing or spoilage, reducing refrigeration costs when cold blankets do the trick, reducing fuel costs, and lowering their carbon emissions.”

In fact, global food and beverage production accounts for roughly 34% of global greenhouse gas emissions (GHG), and according to the Food and Agricultural Organization, the food and beverage supply chain is on track to become the industry’s largest polluter. OXFAM found that the emissions of 10 of the largest food and beverage fleets equaled the total emissions of all Scandinavian countries combined.

State of transportation

The driver shortage still exists, diesel fuel costs are still on the rise and U.S. container imports continue to experience an uptick month-over-month.

The Yellow Freight bankruptcy also created a ripple effect on the industry, one that is still somewhat being felt.

“Customers had to scramble, opportunities arose for competitors, and the supply chain evolved,” Anderson says. “Similarly, the threat of a potential rail strike and West Coast port strike caused customers to transition to alternate modes of transportation and pursue alternate routes. The same is occurring with the UPS strike and the UAW strike as supply chains are moving to account for these types of issues.”

State of e-commerce

E-commerce in grocery didn’t really become a thing until COVID-19 forced several supermarkets and grocery retailers to create a B2C arm of their business almost overnight.

Fast forward to what will be 4 years later, and the rise of e-commerce in grocery is here to stay.

Similarly, B2B channels are also growing.

“For example, cold chain needs will explode as computer chip capacity comes online with the expansion of manufacturing with the CHIPS Act,” says Anderson. “Thus, cold chains are expanding at a rapid rate and will continue to thrive in 2024. Cold storage is limited, and even though there are inflationary pressures escalating the cost to build cold storage facilities, growth will be robust. Innovation will be essential to meeting these needs in a way that will provide customer value in a sustainable and profitable manner in 2024.”

What’s to come in 2024?

While 2023 may have been the Year of Bottlenecks, 2024 opens the door to longevity, peace and prosperity.

Yet to achieve those elements, companies must be more proactive, more agile and more forward-thinking.

“Instead of being reactive, forward-thinking executives are making the shift to being proactive. Thus, they are setting up a resilient supply chain with the ability to scale up/ down quickly, utilize backup sources of supply, alternate logistics and transportation providers and routes, and educating a cross-functional workforce. They are also rolling out proactive and predictive demand and supply planning programs such as SIOP (Sales Inventory Operations Planning), forward positioning of inventory and capacity, and predictive analytics. As no client has enough high-skilled talent, the best organizations are automating, digitizing, and using robotics, autonomous vehicles, artificial intelligence, IoT and the metaverse (AR/VR) to best utilize limited resources while supplying customer needs,” says Anderson.

Read the full article here

The post Top 10 Trends to Shape Cold Food Chain in 2024 appeared first on LMA-Consulting Group, a supply chain consulting firm.

With sustainability increasing in popularity and the carbon footprints of end-to-end supply chains evaluated, innovation and manufacturing will skyrocket.

Top manufacturers are prioritizing common-sense sustainability solutions to drive triple-bottom-line results. In fact, there is a significant opportunity for U.S. manufacturers to expand capacity and gain business with a significant advantage in sustainability over China and other manufacturing options. As sustainability continues to increase in popularity and end-to-end supply chain carbon footprints are evaluated, U.S. manufacturing will skyrocket. Technological advances and innovation drive sustainable manufacturing, and, according to the WIPO Index, the United States is one of the top countries in innovation.

Manufacturers are making significant strides in sustainability. There is a focus on sustainability in materials, manufacturing, product life cycle, and logistics. There are countless ideas for improving performance. For example, manufacturers are building sustainability into product design and partnering with suppliers to reduce materials, minimize waste, design for low-impact materials, and transport with a sustainable supply chain. In manufacturing, they can optimize processes to consume less materials and conserve energy and natural resources. There are a host of logistics programs rolling out across the board as well. For example, as regional manufacturing occurs, the distances travelled will be reduced, and as cleaner, energy-efficient modes and options are pursued, sustainability improves.

Pertinent Examples

According to GE, it launched the CFM RISE (Revolutionary Innovation for Sustainable Engines) Program as a part of its commitment to achieve aggressive goals for a sustainable future, including reducing fuel consumption and CO2 emissions by more than 20%. P&G is focused on water usage. Its goal is to increase water efficiency by 35% per unit of production and to recycle five billion liters in its facilities worldwide. Tesla is continually focused on sustainable manufacturing. For example, Tesla recently announced its goal to reduce the use of silicon carbide by 75%, significantly reducing its use of rare earth metals. Instead, the use of a permanent magnet motor will allow the company to scale production more efficiently.

Similarly, a healthcare products manufacturer put together a program to partner with suppliers to redesign materials to decrease usage without impacting product quality and manufacturability. Additionally, the manufacturer brought in the equipment supplier and raw-material supplier to assess how to best utilize its machine to minimize usage and waste, and installed visual inspection equipment to minimize waste due to quality defects. And finally, the manufacturer also brought its customers into the process to assess packaging to minimize plastic and packaging materials while ensuring that the product met the customer requirements, which positively impacted the sustainability of transportation as well.

Regional Manufacturing and Logistics Examples

For a multitude of reasons stemming from the pandemic, including supply chain risk and political risk, the transition to regional manufacturing clusters and reshoring/nearshoring of manufacturing is rapidly increasing in the United States and Europe. China is far less sustainable. For example, China is using the least efficient energy source that emits twice the amount of greenhouse gas than natural gas. According to NPR, China permitted two coal plants a week in the last year, which is six times more than the rest of the world combined. On the other hand, the United States uses mainly natural gas and has advanced manufacturing practices, frequently producing with the lowest emissions in the world.

The logistics arena has also made vast improvements. For example, according to PMSA, the San Pedro Bay Ports together saw steep and dramatic emissions reductions in 2022. The combined numbers reveal drops of 90% for diesel particulate matter (DPM), 97% for sulfur oxides (SOx), 63% for nitrogen oxides (NOx), and equally remarkable declines for other emission categories, compared to the baseline year of 2005. Cleaner, smarter transportation is also a high priority with a multitude of sustainability initiatives being pursued across all modes of transportation including rail, truck, pipeline, and air.

Innovative organizations are partnering with their end-to-end supply chain to create sustainable supply chains. The best-in-class companies are driving the triple bottom line with benefits to people, profit, and the planet. As sustainability gains momentum and end-to-end supply chain visibility is achieved, a manufacturing resurgence will follow.

If you are interested in reading more on this topic:
Sustainability Gains but the Technology Isn’t Always Ready

Originally published in Adhesives & Sealants Industry, November 2023

The post Sustainability Driving Triple Bottom Line in Manufacturing and Logistics appeared first on LMA-Consulting Group, a supply chain consulting firm.

Sustainability remains in the news; however, the technology doesn’t always keep up. For example, Lego has abandoned its most high-profile effort to ditch oil-based plastics from its bricks after finding that its new material led to higher carbon emissions, according to the Financial Times. After two years of development and testing to make a brick from recycled plastic bottles rather than oil-based ABS, Lego decided that it didn’t make sense. This highlights the complexities that arise when conflicts exist in achieving goals. For example, in the Lego situation, eliminating the use of fossil fuels and reducing carbon emissions came into conflict.

Logistics Experts Staying Up at Night

In Southern California, there are several regulations going into effect where the technology is simply not ready and will not be ready on time. Thus, Logistics executives say this topic keeps them up at night. For example, there are several trucking regulations that cannot be met with the technologies available, the lack of charging stations, and lack of power. To hear more about manufacturing and supply chain geopolitical and regulatory issues, watch our recent webinar.

Yet Significant Progress Abounds

On the other hand, significant progress abounds. The goods movement industry has invested significantly and was focused on sustainability long before regulations came into the picture. When industry is unencumbered and engaged, dramatic results will follow. For example, according to the PMSA, the ports and supporting transportation community has achieved landmark progress in reducing emissions.

In their press release, PMSA reported that the San Pedro Bay Ports together saw steep and dramatic reductions in 2022; combined numbers reveal drops of 90% for diesel particulate matter (DPM), 97% for sulfur oxides (SOx), 63% for nitrogen oxides (NOx) and equally remarkable declines for other emission categories, compared to the baseline year of 2005.

On the manufacturing front, sustainability has gained momentum. The triple bottom line is abundant for those manufacturers following common sense good manufacturing processes. For example, read our Adhesives & Sealants article, “Common Sense Manufacturing Processes Drive Sustainability Improvements“.

The Bottom Line

Use common sense, take smart risks with good potential to yield sustainability results, positively impacting the triple bottom line, and chalk R&D and trials up to part of the process. On the other hand, don’t throw money down the drain in the name of sustainability when what you are positively impacting in the US will be more than offset in China (as an example). After all, that is not common sense!

If you are interested in reading more on this topic:
https://www.lma-consultinggroup.com/how-packaging-can-contribute-to-the-triple-bottom-line/

The post Sustainability Gains but the Technology Isn’t Always Ready appeared first on LMA-Consulting Group, a supply chain consulting firm.

In this episode of Interlinks, I’m joined again by my colleagues from the supply chain special interest group of the Society for the Advancement of Consulting (SAC) to discuss some of the big issues facing businesses in 2023, namely sustainability, talent, and automation.

Originally posted on Patrick Daly Interlinks Podcast on 3/3/2023

The post Hot Topics in 2023 – Sustainability, Skills, and Automation appeared first on LMA-Consulting Group, a supply chain consulting firm.

Despite all of our hopes for a post-COVID future, in 2022, the world did not return to normal. New disruptions slowed the recovery significantly and inflation created new complications. According to a 2022 report from Interos, supply chain interruptions have cost companies an average of $182 million in lost revenue this year.

Yet there is an upshot to these continuing challenges: By revealing the cracks in the global supply network—all at once—the past two years have spurred a period of tremendous change and transformation. This special report discusses the path forward. Specifically, it talks about how resiliency isn’t optional, organizations must act globally and locally, discusses technical innovations that build resilience, and points out key points related to ESG and embedding sustainability into the supply chain.

Lisa Anderson contributed expertise to the report.

Read the full report here.

Originally published on Warner Communications in February of 2023

The post Forging a Crisis-Proof Supply Chain: The Rise of a More Innovative, More Resilient Industry appeared first on LMA-Consulting Group, a supply chain consulting firm.

Originally published in Adhesives & Sealants Industry Magazine, December 2022

Companies can focus on win-win-win strategies to impact people, profit, and the planet with supply chain strategies that reduce packaging, modify materials, improve processes, and reduce transportation and logistics costs.

By Lisa Anderson, Founder and President, LMA Consulting Group

With the increase in interest in the three P’s of the triple bottom line (people, planet, and profit), packaging rises to the forefront. It is controllable, and there are several options for how packaging can contribute to the triple bottom line. Starting by expanding your view from your suppliers’ suppliers to your customers’ customers, you’ll find several opportunities for recession proofing your business by partnering with supply chain partners to achieve the ultimate win-win-win.

Almost every raw material and finished good requires packaging. If you can minimize packaging without impacting product quality, you will have a direct impact on the triple bottom line by reducing materials and waste while increasing efficiency, effectiveness, and profitability. You could also redesign packaging to better utilize the packaging design to improve the carbon footprint, profitability, and people’s lives.

When assessing sterile medical applications, you could research the clinical requirements for the barrier. Good packaging design, material selection, and composition can minimize the requirements for the barrier. In a non-sterile application, you might evaluate the use of recycled content and biomaterials.

Pertinent Examples

As it relates to packaging design, material selection and composition, an adult incontinence manufacturer wanted to redesign the materials to perform better yet use less materials in the product for a win-win-win for the customer, manufacturer, and supplier. The R&D, Package Engineering, Purchasing, and Supply Chain teams collaborated closely with the supplier to develop new materials that would achieve the objectives. After several iterations, trials, and revisions, the team accomplished the triple bottom line. Less materials were used in the product, less packaging was required, less waste occurred on the lines with close alignment between operations, equipment suppliers, and key suppliers, and the product performance and customer satisfaction improved.

From a logistics perspective, the resulting packaging was designed optimally to maximize the product in the box, on the pallet, in the warehouse, and most importantly, in a truck so that they could gain up to 20% additional product on the truck for the same price. It also optimized warehousing and storage requirements so that they could shut down an overflow storage facility, not only reducing the movements but also reducing damage and wasted packaging materials.

In another example related to this manufacturer, the team was able to minimize the waste associated with the construction and elastomeric adhesives as well as the fastening tapes by focusing on the manufacturing process. Operations put attention on centerlining the process, asset care, and people development, and these “basics” delivered consistent results over time. Since materials were a preponderance of product cost, these saving went straight to the bottom line, but, more importantly, the people felt engaged, and the customers could count on receiving quality products that met their specifications on-time so that they could serve their patients.

In a life sciences manufacturer of proteins, a cross-functional team focused attention on forecasting sales by package sizes so that they could better align their operations resources to priority tasks to have the right products in the right package in the right place at the right time. Since they had several custom products in custom sizes, it wasn’t a simple task to standardize what was achievable while gaining a directionally correct view by package sizes so that they could set their bottling schedule to align with customer demand. However, after creating a demand plan to support sales growth objectives and translating that plan into bottling requirements by size, they were able to reduce waste, minimize non-essential inventory, and support aggressive growth targets with high on-time-in-full percentages and reduced lead times, creating loyal customers.

Winning Strategies

In each of these examples, the manufacturer communicated and coordinated across the end-to-end supply chain to achieve success. Within each supply chain partner, a cross-functional team participated to ensure the packaging and product was designed, redesigned, and adjusted with the supplier, manufacturer, customer, and even the end customer in mind. The most successful companies are focusing on win-win-win strategies to impact people, profit, and the planet with an eye across the supply chain to reduce packaging, modify materials and composition, improve processes, and reduce transportation and logistics costs while improving overall performance to the customer.

The post How Packaging Can Contribute to the Triple Bottom Line appeared first on LMA-Consulting Group, a supply chain consulting firm.

Posted in Adhesives & Sealants Industry, November  2022

With the increase in interest in sustainable materials and manufacturing, there will be a significant opportunity for U.S. manufacturers that use common sense, good manufacturing practices. In fact, because manufacturers have realized that it is far less environmentally friendly and energy efficient to produce in Asia, India, and the like, as sustainability increases in popularity and end-to-end supply chain carbon footprints are evaluated, U.S. manufacturing will soar. Technological advances and innovation drive successful sustainability in manufacturing, and, according to the World Economic Forum, the United States is one of the top countries in innovation.

Are you focusing on sustainable manufacturing? Successful companies are stepping up their efforts in sustainability. There are countless ways to improve sustainability while following common sense manufacturing practices. For example, manufacturers have rolled out lean initiatives, maintenance improvements, and machinery and equipment upgrades that have reduced the waste of materials. There has also been significant focus on rolling out improvements to reduce energy, material, and water waste. Additionally, companies have started using cleaner energy such as natural gas and renewable sources.

Pertinent Examples

According to Siemens, Coca-Cola HBC Australia has a priority to be as environmentally friendly and carbon efficient as possible in manufacturing. It has invested in a high-speed line that is not only one of the fastest in the world, but also energy efficient and water efficient. Additionally, 100% of the electricity comes from renewable sources, and Coca-Cola HBC Australia has put metrics and reporting in place to measure energy and water consumption.

Similarly, an absorbent products manufacturer focused on how to reduce materials, packaging, waste, and transportation costs to achieve the win-win of margin improvement and carbon-footprint reduction. Since pulp is one of the most water-intensive manufacturing processes, the manufacturer focused attention on updating and maintaining equipment, waste reduction and recycling, and auditing water usage. In the converting process, there was an intense focus on reducing waste and scrap by working with equipment suppliers, engineering, and operations resources, and by partnering with suppliers on material development. The company partnered with several suppliers to adjust material compositions and to jointly develop materials to run more efficiently on the lines with 20%+ less scrap and to reduce material composition without impacting product quality.

From a transportation standpoint, the R&D engineers and the packaging engineers redesigned the products, packaging, and manufacturing process to compress the product as much as possible without impacting quality. They also reduced the packaging materials and designed the product to maximize the pallets that would fit on a truck. Additionally, the logistics professionals implemented a transportation management system (TMS) to analyze transportation routes, carriers, and how to maximize the number of boxes on a truck. The system put together multiple-stop truckloads for shipping lanes to minimize transportation expenses as well as the carbon footprint. The bottom line equated to a 20-40% advantage.

A building products manufacturer focused attention on electricity costs and usage. It pursued several improvements to become more energy efficient. In addition to partnering with the local electric company and hiring an energy expert, the company conducted an energy audit and put together energy plans. It incented its people to work in non-peak hours to strategically schedule downtime during peak hours. The company also retrofitted and upgraded equipment, optimized air compressors, and improved its industrial furnace energy efficiency.

Resilient and successful organizations are partnering with suppliers on material formulation and adjustments, partnering with equipment manufacturers to optimize the use of the equipment to minimize waste and maximize efficiency, and are innovating within their organization to find ways to reduce energy, water, and material usage. Sustainability will not occur without internal and external focus. The most successful companies are focusing on win-win-win strategies to impact people, profit, and the planet. As sustainability gains momentum and end-to-end supply chain visibility is achieved, there is an opportunity for a U.S. manufacturing renaissance to follow.

The post Common Sense Manufacturing Practices Driving Sustainability Improvements appeared first on LMA-Consulting Group, a supply chain consulting firm.

The Popularity of Sustainability

Sustainability has become popular with consumers, employees and an imperative of large companies. After all, who wouldn’t want to participate in saving the planet? In fact, I was interviewed for an Earth Day special “Our Changing Climate” (you’ll see me featured in a few segments around 20 minutes in). From a corporate perspective, according to IBM Institute for Business Value, 51% of CEOs now rank sustainability as their greatest organizational challenge.

If Only It Were Easy

A BIG first step is to understand reality and start thinking about your carbon footprint. That is far trickier than it might seem. Think about these examples:

As a consumer…

We think about recycling, driving electric cars, and participating in environmentally-friendly initiatives. But, do we think about our contributions to pollution? For example, we might love the inexpensive products we can purchase from Amazon, largely produced in China (which uses mainly coal in production which emits twice the amount of greenhouse gas than natural gas), transported across the world in trucks, container ships, airplanes, and more.

To make matters worse, who doesn’t want the order to be delivered to your doorstep? Unfortunately, shipping truckloads of products to one location (store) to pick up when you are already out is far more energy efficient than packaging 1 product (like a toy) in a box (definitely not green) and then shipping that box direct to your front door. That truck will go door to door all day long.

If you are an electric car fan, you should be concerned about world events because lithium batteries are mainly manufactured in China. Also, mining raw materials like lithium, cobalt, and nickel is labor-intensive, requires chemicals and enormous amounts of water—frequently from areas where water is scarce—and can leave contaminants and toxic waste behind. There is much to consider if you are thinking about the end-to-end supply chain. And that is before considering that we have electricity shortages in many US states.

As a manufacturer….

We think about saving costs, meeting Board expectations and customer pricing targets. That might lead us to source from places like China. The pollution is so bad in China that the government shuts down sections of the country prior to big events so that visitors aren’t engulfed in deadly air. China also has shortages of electricity and water, and so will turn to more to coal than they already are (with the majority of manufacturing dependent on coal). On the other hand, the US has advanced manufacturing practices, frequently producing with the lowest emissions in the world.

However, if manufacturers are producing in the US, energy costs can be significant. For example, California is has one of the highest energy costs in the US, and in some cases, it is double the price. Of course, customers do not care about manufacturers problems; instead, they care about the cost, quality and service. Thus, manufacturers will migrate to where they can survive, and the best companies innovate to thrive.

As a supply chain organization….

We think about serving customers on-time to customers’ expectations with quality products in the most environmentally efficient manner. Of course, customer expectations have evolved to immediate delivery with the ability to change our mind as conditions change. Of course, to serve customers with immediate delivery, we attempt to navigate inventory stockpiles, expediting requirements, more frequent deliveries, last minute changes across extended distances with a far greater proportion of last mile deliveries to support e-commerce needs.

As part of a food supply chain….

The world needs to eat. On the other hand, the food supply chain navigates the complexities of sourcing to production, and transportation to packaging and accounts for 26% of global greenhouse gas emissions according to the United Nations Food and Agriculture Organization. The global packaging emissions is hard to imagine at 1.34 billion tonnes by 2030.

All Is Not Lost: Manufacturers are On Top of It

Several segments of the end-to-end supply chain have been working hard to improve sustainability. For example, US manufacturers have implemented factory floor improvements, lean principles and technological advancements that allow them to reduce energy loads, material and water waste. They have also transitioned to using more natural gas and renewable sources of energy. Smart factories of the future are already here, and the strong will keep getting stronger. Inventories are being managed tightly to minimize waste while ensuring appropriate supply of key materials and products with best practice planning processes.

The Global Logistics Network Has Invested Heavily

There are lofty goals from decarbonizing marine operations to hydrogen rail to autonomous trucks to electric vehicles to wind powered container ships. Vast progress is being made although not necessarily quick enough to keep up with California laws, leaving heaps of frustration among logistics professionals. IoT, artificial intelligence, blockchain, and a host of other technologies are supporting the quick pace of change in the logistics industry. Renewable technologies are coming along and progress is being made. And, distributors already focus keenly on optimizing transportation routes, minimizing shipping costs and efficient warehousing and keep searching for opportunities for improvement.

Standouts Exist In Every Sector

Progressive companies are taking bold stands. For example, Tetra-Pak’s ambition is to deliver the world’s most sustainable food package.They have already reduced greenhouse gas emissions by 36% from 2019 to 2021 largely due to their quest to find the world’s most sustainable food package. What is impressive is that they are setting a global standard for aluminum packaging and paying attention to the end-to-end supply chain. That isn’t easy if you have to worry about what’s happening with everyone before you in your supply chain.

Innovation to the Rescue

Alaska has been promoting a potential new renewable energy source largely unique to a geographic section of Alaska. The Alaska governor is encouraging investment in harnessing Cook Inlet tides to produce a reliable energy source, particularly “green hydrogen. This is one of the most energy rich places on the planet – onshore wind, offshore wind, coalfields, oil, gas, tidal, geothermal.

Let’s Not Get Ahead of Ourselves

As much progress as is occurring, we have to remember a few critical factors:

• If we want to have a net positive impact, we cannot ignore the full equation. We should consider the end-to-end supply chain carbon footprint and not get stuck in a narrow vision of what helps 1 aspect of the supply chain but causes a worse situation for the total supply chain. Think end-to-end supply chain footprint.
• If we harness energy sources, we must have a way and place to store energy.
• If we want to succeed, we cannot throw out the old sources (which might be far greener than the current alternatives) before we have new sources that will support our needs at scale and reliably. Remember the Texas storms causing issues for the power grid because wind turbines freeze? Or California’s brownouts and blackouts?

How Can SIOP Help?

SIOP (Sales, Inventory and Operations Planning, also known as S&OP) is a process that aligns demand with supply and all stakeholders on a single vision and path forward on a monthly cadence to incorporate changing conditions, customer needs, and improvements in the end-to-end supply chain. SIOP starts with customer demand and translates that demand into products, materials, engineering and manufacturing requirements, logistics needs, and much more. Similar to calculating high level manufacturing and labor requirements and comparing to available capacity so that you can reallocate and expand capacity, offload and/or insource products, and find alternative suppliers and partners, you can do the same for sustainability requirements. Would it be interesting to “see” your carbon footprint across your end-to-end supply chain?

Start with what you know, build on your information until it is directionally correct, and sustainability becomes simply another potential element of your SIOP process. Incorporating this segment into your process, you will have another data point to incorporate into your strategic decisions and tactical action plans. At a minimum, you are participating in understanding your current state in terms of sustainability and further engage your stakeholders in the SIOP process.

Refer to our blog for volumes of articles on these topics and read more about how to implement SIOP in our book, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue & EBITDA Growth. If you are interested in talking about how to roll out a meaningful SIOP process to support profitable growth while starting and/or upgrading your sustainability journey, contact us.

Did you like this article? Continue reading on this topic:
Getting Ahead of Inflationary and Deflationary Pressures Using S&OP

The post Using SIOP to Make Better Informed Sustainability Decisions appeared first on LMA-Consulting Group, a supply chain consulting firm.

Our clients continue to experience an unprecedented level of volatility and complexity. The common themes include:

• Continued supply chain disruptions: From computer chips to commodities to everyday components/ materials, clients continue to experience shortages and/or extended lead times.
• Continued challenges in finding people: Whether you are looking for a production employee or a Director of Supply Chain, no client is having an easy time finding talent. The best realize they must keep the top talent they already have!
• A Focus on Taking control: Whether you are reshoring, nearshoring, sourcing new suppliers, adding backup suppliers, offloading or partnering, the best are taking control of their ability to support customers.
• Understanding the customer: Customers’ needs are evolving with changing business conditions. The best are staying on top of their ideal customers’ changing needs and preparing for where the puck is going, not for where the puck is.
• Preparation for Inflation & Deflation: There is no doubt clients are experiencing increasing prices yet there are also deflationary pressures. The successful are preparing for both in a smart way so that they can take advantage of opportunities yet not be weighted down in cost and inventory.
• Opportunities Abound: Because there is a wave of owner operators looking to sell and stodgy organizations are cutting costs, slashing inventory and delaying investments and new products with worries over what’s coming, opportunities will abound for those prepared for growth and investing in technology, automation and talent to ensure the growth can be successfully delivered and profit flows to the bottom line.

Winning the Game

The most successful clients are emerging with a winning formula:

• Retaining, developing, hiring & supplementing talent to think three moves ahead (as in a game of chess)
• Providing this visibility to the organization and key partners (customers, suppliers, trusted advisors)
• Making the appropriate strategic decisions, investments, and allocation of resources to support the path forward
• Ensuring the successful execution of these plans – after all, 80% of success is in execution
• Incorporating sustainability so that the processes will carry forward into the future

How Can LMA Support You?

Our ideal clients are thinking about these strategies for winning the game. Our best expertise is in helping clients to:

1. Determine how to think three steps ahead – develop processes to look ahead, evaluate strategies and facilitate key decisions for creating your future (instead of reacting to your future) with supporting processes such as IBP (Integrated Business Planning), also known as S&OP (Sales & Operations Planning) or SIOP (Sales, Inventory & Operations Planning)
2. Partner with the client to execute “make it happen”, also known as S&OE (Sales & Operations Execution) in technology circles.
3. Leverage processes, tools, ERP systems and related technologies (automate what makes sense and manage exceptions)
4. Teach the client to fish.

We prefer complex environments (ETO, CTO, collaborative ordering/ VMI, combined BTB/ BTC, high-tech/ high-touch, etc.) which lead us to industries such as building and construction products, life sciences/ healthcare products, aerospace and defense, industrial products, and food and beverage. We are driven by our passion for advancing manufacturers.

And we are thrilled to have recently been included on key lists:

• Top 55 Supply Chain & Logistics Expert
• Top 10 Women in Supply Chain
• Top 16 ERP Expert

Please keep us in the loop of your situation and how we can help your organization thrive during these times of volatility and disruption. There will be more winners created than at any other time than since emerging from the Great Depression. To gain additional ideas and insights on how to best navigate these volatile times and thrive, read our new eBook Thriving in 2022. Learning from Supply Chain Chaos. Download your complimentary copy.

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