A quick scan of the headlines on any given day demonstrates that the supply chains of fast-moving consumer goods (FMCG) companies are coming under increasing exposure to supply chain risks, such as risks to raw materials vulnerable to climate change and supplier financial viability. At the same time, FMCG companies are under increased stakeholder, regulatory, and consumer scrutiny to perform in a sustainable, transparent, and ever-improving way.
“Risk-proofing” a supply chain requires that businesses make rapid changes to it—and what is becoming ever more apparent is that sustainability and transparency are a key part of this.
The relationship between an FMCG and their facilities management (FM) supplier of choice plays a key role in driving the sustainability and transparency key to “risk-proofing”.
Pay attention to disposal routes and capture the missing loops
While understanding the disposal routes of an organisation’s waste has traditionally been an issue of compliance with waste legislation and consumer-driven transparency, it can provide a richer picture of resource use and management within an organisation.
A firm grasp of disposal routes can tie purchasing, operations, and end-user together; allow these different parts of an organisation to talk to each other; capture the “missing loops” from raw material to final consumer goods, thus enabling improved lifecycle management; and pinpoint areas of high material, commercial, and operational risk.
Businesses are increasingly leveraging these missing loops. For example, British Sugar’s Wissington beet sugar plant takes in 3.5 million tonnes of raw material to produce not only sugar, but 12 different products that go on to be sold, from chemicals to animal feed. Even smaller businesses are “closing the loops” – Toast Ale, for example, make beer out of surplus bread.
Detailed waste and disposal route data can also point out key inefficiencies in procurement: i.e. pointing out where an organisation “bleeds money” by purchasing a given item, only to incur costs to dispose of it. Waste streams can be tracked throughout a single site, such as through a brewery, which would allow an FMCG company to spot inefficiencies in a process if it is producing a lot of waste.
Supplier collaboration is key to Supply Chain risk-proofing
Understanding disposal routes offers several opportunities for shared value with suppliers, which is a key part of “risk-proofing”. First, it enables an FMCG company visibility of and influence over the supply chain beyond tier 1 and can help the FMCG company exert influence over or help control variations in price.
There is also greater opportunity for shared commitment for supplier engagement, in the form of direct relationships with suppliers who can demonstrate where industrial co-products have gone and what they are used for and can share the value of that material.
Imagine, for example, that a global toy manufacturer knows that one of its batch of plastics has gone on to an automobile manufacturer, and receives 50% of the rebate value of that material—and this in the context of an increasingly volatile market! This is the reality FMCG companies are moving toward. An FM company is also able to provide FMCG companies with access to the latest start-ups and up-and-comers that can help FMCGs leverage the best market developments.
Looking for transparent data is key when evaluating a FM provider
The quality of waste and disposal route data is a key element of managing risk. An FMCG company in search of an FM company that provides these services will look for a clear process of data validation: an accredited review process and data specifications validated weights and disposal method.
Once the client FMCG company is fully embedded in the transparent data provided by the FM, both can work together to leverage this data to drive improved commercial relationships with their second- and third-tier supply chains, which is one valuable form of “risk-proofing” the supply chain. However, this relationship enables further risk-proofing, in the form of repurposing materials, rather than disposing of them, which enables concepts like reverse logistics and circular solutions.
By treating waste materials as a resource rather than a by-product the FMCG company is, not only risk-proofing their supply chain, but also achieving financial gains and environmental improvements.