Sourcing and Monetizing Waste Key to Greening Food Supply Chains, Report Finds

Sourcing and Monetizing Waste Key to Greening Food Supply Chains, Report Finds

Food companies large and small are beginning to address the environmental impacts of their supply chains, and seeing benefits from cost savings, smaller carbon footprints, and lower risks from food pathogen outbreaks, according to a new report from the Aberdeen Group.

The study by Jhana Senxian, "Sustaining the Global Food Supply Chain: Three Keys to Gaining Competitive Advantage," interviewed in-depth the sustainability practices of 40 food and beverage companies based around the globe to find out what successful strategies companies are using to improve the safety, cost efficiency, and sustainability of their supply chains.

In order to figure out what is working for these companies, Aberdeen separated respondents into leaders and all other companies by looking at five categories: decreasing energy costs per dollar of sales, decreases in waste relative to sales, decreases in operational costs per dollar of sales, growth of customer base from sustainability initiatives, and reductions in defective goods in the past 12 months. Top companies in the survey, whether food and beverage manufacturers or farmers and produce distributors, had by and large adopted a handful of key practices.

Ethical and sustainable sourcing was by and large the most common practice among sector-leading firms: 76 percent of respondents were keeping a close eye on where products and raw materials came from. The other two practices widely put to use are an environmental accounting or waste monetization program (67 percent), and responsible end-of-life management of products, with 61 percent. See below for Aberdeen's list of the five organizational traits of a responsible firm.
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And as a result of these and other green initiatives, these leading companies saw significant benefits, including:
• a 19 percent decrease in energy costs year over year;
• a 17 percent decrease in waste and disposal costs;
• a 15 percent increase in customers acquisition as a result of their sustainability initiatives;
• a 13 percent decrease in defective goods in the preceding 12 months;
• and a 5 percent overall reduction in operating costs year over year.
In addition to these financial benefits, Aberdeen surveyed respondents for what is driving the adoption of sustainability projects. Competitive advantage was cited most often, with 56 percent of companies ranking it as a key driver, followed closely by a company's overall corporate responsibility strategy at 49 percent. See the chart below for the full list of drivers.

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The full report, "Sustaining the Global Food Supply Chain: Three Keys to Gaining Competitive Advantage," including the three steps that every company should take to green their supply chains, is available for free download from Aberdeen.com.
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