Demands are growing for more sustainable food supply chains, but retailers and consumer products companies can’t achieve those goals by themselves. Sasha Duchnowski, a partner with Bain's Energy & Natural Resources practice, describes the three steps for working with suppliers effectively.
Read the Bain Brief: Working with Suppliers for Sustainable Food Supply Chains
Read the transcript below.
SASHA DUCHNOWSKI: Demands to improve the sustainability of the food systems that we use to feed the world are growing every day. Players in consumer products in retail have set aggressive targets to try to meet those demands. However, they're struggling to really achieve the transformational results that they're looking for, mainly because a lot of the decisions that are going to have the greatest impact on them achieving those strategies sit outside the four walls of their own operations. Those decisions are made by someone upstream from them that they'll need to collaborate with.
One of the pieces of evidence that we see that this is so difficult is that agricultural suppliers often have less aggressive sustainability targets than their downstream retail and consumer partners. The reason for that is because they're closer to the action, and they know exactly how difficult it's going to be to change some of the decisions that are going to need to be changed.
This is a complex issue. Some of the decisions are going to be financial. Do I invest these resources in order to make this process less resource-intensive? Other ones, you're going to be taking two steps forward on one issue and one step back on another.
For example, cattle emit less methane when they digest a grain-based diet than they do when they eat grass. Should I move them to a feedlot earlier, but potentially not have them out in the field where consumers perceive cattle to be happier?
The companies that are doing the best at advancing the ball in their industries follow a three-step approach. The first step is map out the full supply chain. What are the sustainability outcomes that we're looking to accomplish? And what are all the decisions that happen anywhere that might need to be changed in order to influence those outcomes? Who's making those decisions? What are the economic and the noneconomic factors that go into making that?
Step two, construct a portfolio of actions. What decisions need to be changed? Who needs to change them? Why is that difficult? Is there anybody else who can change the way that they behave to make that decision a little bit easier?
Step three, just get started. All of this is going to feel hard. Some stuff is going to be easier than other ideas that you may have. But starting the easy stuff first is going to create the conversations. It's going to create the alignment. And it's going to create the momentum that's going to be needed to eventually tackle the really tough stuff that's coming down the road.
This is not just something that's unique to complex food-supply chains. This type of approach will work anywhere where you start with a natural resource at the very front of your supply chain. It's worth noting this is very difficult because of all the stakeholders that come into play when you start to do the mapping.
But it's really worth doing. It's worth doing for consumers. It's worth doing for customers. It's worth doing for employees. It's worth doing for shareholders. And it's worth doing for the long-term viability of our planet and the ecosystems that we rely on in order to survive and live well.
Even companies making steady progress cannot go much further without collaborating across the value chain.