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However, it isn’t plain sailing for businesses that are on the path to sustainable sourcing and there are several organizational and operational challenges to overcome.

Why is sustainable sourcing key for FMCG?

Sustainable sourcing means selecting suppliers that operate in an ethical, economical and environmentally conscious way. When you break down each of these factors, there is a whole range of things to consider and many complexities to figure out, such as how to best source materials, attract talent and respond to new consumer purchasing habits. Ultimately, FMCG brands are looking to purchase from the most sustainable supplier companies, businesses that avoid contributing to deforestation, exploitation of natural resources, damage to the environment or violations of human rights.

As value chains grow to increase their production capacity, they tend to expand into territories that have lower operational costs and less regulation. While the immediate costs will decrease, the risk level and need to report on their suppliers’ operational practices rises. ESG reporting is a particular challenge for brands, because they are required to achieve transparency across all of their operations based on accurate data. Maersk stated that only 53% of consumer product companies have significant or complete visibility into their own processes and only about 21% have visibility into their supplier processes, posing a significant risk for FMCG companies.

Sustainable sourcing strategies

Strategies will vary depending on the products and sustainability goals for each FMCG company. But first we suggest evaluating your supply chain and engaging with your current suppliers to address the biggest environmental and social impacts associated with their operations and products. Then you can tailor your sustainable sourcing strategies to make the largest difference and gain the biggest results. Technology solutions like Cleanchain can also play a key role in identifying, tracking and reporting on this information to gain up-to-date visibility across the entire supply chain.

Once you have implemented your new sustainable sourcing strategies, your business will benefit from the following:

1. Risk Mitigation: Reduce business risks associated with environmental and social issues by identifying potential risks in the supply chain and addressing them immediately. 
2. Cost Savings: By optimizing resource use, reducing waste and improving efficiency, companies can achieve cost reductions in areas such as energy consumption, raw material usage and waste management. 
3. Environmental Conservation: Sustainable sourcing aims to minimize the negative environmental impacts associated with production processes, protecting ecosystems, reducing pollution, supporting local communities and conserving natural resources.
4. Social Responsibility: Improve the social and ethical aspects of production by promoting fair trade, safe working conditions and the protection of human rights across global supply chains. 
5. Innovation: Sustainable sourcing encourages the development of new processes, technologies and products that are more resource-efficient and environmentally friendly.
6. Competitive Advantage: Differentiate yourself in the market, attracting environmentally conscious consumers and easily adapting to evolving regulations and consumer preferences. Sustainable sourcing practices can also enhance brand reputation and customer loyalty, leading to increased sales and market share.

The total impact that sustainable sourcing can have on businesses, society and the environment is incredibly powerful, as it enables companies to align their operations with sustainable development goals, reduce their ecological footprint and contribute to a more equal and sustainable world.

Take a look at some more FMCG sustainability trends here

One prominent strategy within this call-to-action is “sustainable sourcing,” sometimes referred to as “responsible sourcing.” What does this concept look like in the FMCG landscape, and why is it so important?

In FMCG, sustainable sourcing is the practice of procuring goods or services throughout the supply chain in a manner that respects the trifecta of sustainability—environmental, social and economic standards. It entails examining every step of a product’s lifecycle, from the procurement of raw materials to the use phase and the end-of-life phase of that product (it’s disposal, recycling, re-use or repurposing), and ensuring compliance with sustainability norms at each stage.

Here are the pillars that form the structure of sustainable sourcing in FMCG:

Environmental Sustainability

This component is about reducing the ecological footprint of a product or service at every stage of its lifecycle. For FMCG businesses, it might involve sourcing materials or components that are renewable or have a reduced carbon footprint, adopting production methods that limit waste and designing products with their eventual recycling or environmentally-friendly disposal in mind.

Social Sustainability

This pillar ensures that FMCG products are created under humane working conditions. It involves ensuring worker rights, advocating for fair trade and eliminating any instances of child or forced labor or other exploitative practices from the supply chain.

Economic Sustainability

This dimension deals with creating sustainable economic value for all stakeholders in the FMCG supply chain. It means offering fair remuneration to suppliers, upholding ethical business practices and contributing positively to local economies. Also, it involves sourcing high-quality products that meet consumer expectations, thereby ensuring customer satisfaction and loyalty.

As consumers increasingly align their purchasing decisions with their values, FMCG companies practicing sustainable sourcing enjoy enhanced customer loyalty, a stronger brand reputation and increased market share. Additionally, sustainable sourcing offers companies a robust risk mitigation strategy, helping to navigate regulatory, reputational and supply chain risks by encouraging stability and resilience. By supporting FMCG companies that value sustainable sourcing, consumers wield the power to influence a more responsible and sustainable global marketplace. 

The conversation is rapidly moving from “why sustainable sourcing?” to “how can we source more sustainably?” Sustainable sourcing can help FMCG businesses achieve their goals of making their business activities and product impact the world in a more positive way.

For more on FMCG https://marketplace-dev.adec-innovations.com/fast-moving-consumer-goods/

However, all of this data sourcing, processing and management comes at a high price and poses several significant data challenges that impact an organization’s ability to operate sustainability, efficiently and effectively.

8 data challenges that impact the FMCG industry

With 80% of data scientists’ time being spent on data collection, cleansing and preparation for analysis, it’s an obvious area of the business that can be optimized to drive efficiencies. But even seasoned data professionals struggle with sourcing, maintaining and managing data for FMCG businesses because of the vast volumes, continuous changes and increasing obligations to comply with.

Let’s take a look at some of the main challenges organizations face:

 

1. Siloed and disconnected data

Data is often stored in isolated information systems that cannot communicate with one another and the data is underutilized as a result. This scenario is very common in the FMCG industry and can prevent companies from having a complete view of their operations leading to inefficiencies, poor decision-making and missed opportunities.

2. Data security scares

FMCG businesses collect and store a large amount of sensitive and confidential data, including personal information, financial data and intellectual property. This makes them a bigger target for data breaches and cyber attacks, which can cause significant damage to a company’s reputation and financial stability.

3. Poor data quality and poor decisions

For the FMCG industry, inaccurate, incomplete or inconsistent data can lead to errors, bad decisions and costly mistakes. Maintaining data is timely, costly and complex, often leading to companies keeping out-of-date data or data junk and increasing their risk.

4. Data integration and standardization struggles

FMCG companies gather data from a variety of sources, including sales data, customer data and supply chain data. Integrating and connecting this information can be challenging, particularly when data is stored in different formats or systems. Preparing and cleaning raw data for integration is also normally required before it can be imported.

5. Real-time data is a real challenge

Real-time data can be a game-changer for FMCG companies, as they can respond quickly to changing market conditions, customer preferences and supply chain disruptions. However, building a reliable place to access real-time data is very challenging, particularly when information is stored in different formats, systems or silos.

6. Complex analytics and mixed reporting

To stay competitive, FMCG businesses generate vast amounts of data and continually analyze this information to gain insights and make informed decisions. At the same time, analyzing data can be difficult and frustrating, particularly when data is not consistent or easily accessible. With so many different reports, policies, standards, frameworks and obligations to adhere to, it’s a complicated task to say the least.

7. Lack of ESG expertise

ESG reporting is becoming increasingly important for investors, regulators, stakeholders and customers, as they seek to evaluate the sustainability of a business. Yet many organizations lack expertise in the standards, processes and tools needed to effectively manage ESG data, often distracting non-data experts, such as compliance and sustainability managers, from their normal tasks and responsibilities.

8. ESG data and transparency

Pressure is mounting to find more environmentally friendly ways of working to reduce carbon footprints. So gathering ESG data to provide valuable insights into a company’s sustainability performance is critical. Unfortunately, this is often an afterthought for companies, making it a complex, urgent and mammoth task for annual ESG reporting.

 

FMCG companies need to address these data challenges quickly to stay competitive, make informed decisions and drive business growth. By investing in end-to-end data management, organizations can effectively manage their ESG risks and opportunities and rest easy that their data is accurate and consistent for future reporting.

End-to-End Data Management

DataAssured is an overall approach to (automated) data acquisition, processing and delivery, helping the FMCG industry quickly overcome these data challenges. By addressing each step in the data management lifecycle, businesses can make informed decisions, improve their sustainability performance and drive efficiencies across the business.

Outsource your burdensome ESG data management and reporting tasks today with DataAssured. Learn more.

 

The Fast-Moving Consumer Goods (FMCG) industry has been in the spotlight for many of these conversations, and FMCG businesses are quickly embracing new practices and initiatives to ensure they are operating in a way that is socially and environmentally responsible.

Let’s explore some FMCG sustainability trends and why looking at sustainability can help you get started into making sure all your ESG data is in order.

Sustainability Trends in the FMCG Industry

• Packaging Innovation Packaging is a crucial component of the FMCG industry, and companies are increasingly looking for ways to reduce their environmental impact by innovating with their packaging solutions to move toward zero waste. This includes designing more sustainable packaging, using recycled materials and exploring alternatives to plastic such as glass, cornstarch, mushroom and seaweed!
• Sustainable Sourcing Sourcing sustainable raw materials is a big challenge for FMCG companies, but it is no longer possible to ignore. Sustainable sourcing requires a transparent supply chain that consistently tracks ESG data in an accurate way. Sustainable sourcing ensures that companies are not contributing to deforestation, exploitation of natural resources, damage to the environment or human rights violations.
• Circular Economy A circular economy is an environmental approach that prioritizes sustainable development through the reuse of materials and the minimization of waste. Companies in the FMCG industry, such as Patagonia, Ikea, Unilever and H&M, are implementing circular economy practices, using recycled materials, reducing waste and developing closed-loop systems.
• Carbon Neutrality Carbon neutrality is a critical goal for many FMCG companies as they seek to reduce their carbon footprint. It means investing in renewable energy, reducing energy consumption and emissions across the value chain and offsetting any remaining carbon emissions. It’s an industry challenge that won’t disappear anytime soon. The World Economic Forum recently stated Food and FMCG industries together produce more than one-third of global emissions, which mainly come from their upstream supply chains.

Why Good ESG Data is So Important

Reliable Environmental, Social and Governance (ESG) data is critical for measuring a company’s sustainability performance and its impact on society and the environment. It is imperative for FMCG companies to get a good handle on their ESG data and reporting for the following reasons:

• Transparency – Good ESG data provides transparency into a company’s sustainability practices, enabling stakeholders to make informed decisions about their investments and operations and remain competitive.
• Risk Management – ESG data helps FMCG companies identify potential environmental, social and governance risks, enabling them to effectively mitigate these risks.
• Brand Reputation – Consumers are demanding more responsible and ethical practices—and that trend is not going away. Good ESG data can help companies build a positive brand reputation by demonstrating their commitment to sustainability.

Starting to examine the sustainability status and progress of a company means diving into sustainabilty data. This is where a lot of businesses get stuck, because sustainability data can be quite complicated. But the very process of starting to focus on one area, such as sustainability, allows you to replicate the same investigation into the two other types of ESG data (social and governance), providing you will the tools you need to achieve greater ESG conformance and a more positive brand reputation.

FMCG companies that prioritize these sustainability trends and implement good ESG reporting will ensure that they operate in a socially and environmentally responsible way and consequently, be better positioned to succeed in the future as sustainability regulations and reputations continue to mount in importance.

Explore how DataAssured can help your organisation manage its data quality, build trust across the FMCG industry and enable quicker, more impactful decisions to achieve your sustainability goals.

You may also like to read our eBook: Generating Value with Sound ESG Data Management

A well-managed supply chain is more dynamic and flexible, better able to meet the changing needs of consumers and the wider market. It can allow brands and retailers to optimize their prices, improve the allocation of their inventory, and identify potential problems at an early stage. How can a brand or retailer improve its SCM? There is no catch-all solution that will work for every supply chain, but there are some broad principles that have been shown to result in SCM successes. CIO, the business magazine from Boston’s International Data group, have identified six core components of good SCM: Planning, Sourcing, Making, Delivering, Returning, and Enabling.

Planning

In an ideal world, effective SCM would allow a brand to meet customer demand precisely, providing exactly as much product as consumers are interested in purchasing, at the times and places that they want to purchase it. Working towards this ambitious aim requires extensive planning. Each resource involved in manufacture must be made available in the right quantities, at the right times, in the right places. This planning must be built on a foundation of reliable data. Choosing which metrics to use to measure the efficiency and effectiveness of a supply chain can be one of the most important SCM decisions that a brand makes.

Sourcing

With data gathering underway and plans set out, brands must begin the process of selecting suppliers which are well positioned to bring those plans to fruition. This involves answering a number of questions. Is this supplier able to process materials in the quantity required to meet demand? Does that supplier have working connections to deliver their finished components to the product assembly site? Once the best candidates have been chosen, brands also need to be able to monitor their work and manage their brand-supplier relationship over time.

Making

Many different materials, components, and processes are involved in the manufacture of a product, and consequently, quality control is a central factor. Good SCM assesses the quality of raw materials before accepting them, implements processes to minimize errors on the production line, re-examines the quality of the final product and ensures that this quality will not be damaged during packing and shipping. Ensuring a high level of quality at every stage of manufacture not only results in satisfied customers, but also reduces the work that must be done further down the supply chain.

Delivering

The logistics of supplying products to consumers is highly complex and involves processing orders, scheduling delivery, dispatching loads, invoicing customers, receiving payments, and countless other minute tasks. Good SCM works to coordinate these different logistical elements as precisely as possible, to ensure rapid delivery and minimize overproduction. Most products manufactured today are distributed along a number of different routes to market. The same product may be sold in a company’s own stores, on its website, through other physical retail partners or via third party online retailers. Often this distribution will require outsourcing to haulage and delivery partners, increasing the need for careful monitoring and precise processes.

Returning

However effective a company’s SCM is, some challenges are unavoidable. Errors in quality control may result in defective products reaching the market. Shipping problems may create delays for the consumer. In the worst cases, large quantities of product may be damaged or lost, resulting in unfulfilled orders. Handling these problems is also a core part of SCM. A supply chain must be flexible enough to handle returns of defective products, address customer concerns about delays, and issue cancellations and refunds in a timely fashion where appropriate.

Enabling

At each stage of the manufacture and distribution process, there are a number of support systems at work behind the scenes that must also be managed: finance, HR, IT, facilities, portfolio management, product design, sales and quality assurance. Effective SCM involves building the connections required, within a company and externally, to ensure that these enablers are properly resourced and maintained. In modern SCM, one further key principle underpins all of these components: sustainability. As we enter a new decade, more and more companies are becoming aware that they cannot take real, impactful action to improve the sustainability of their operations without involving their supply chain. Discovering new ways to reduce waste, minimize energy use, and end the use of hazardous or carbon-intensive resources will be a growing focus of good SCM in the years to come.

In part one of our discussion on POPs, we defined POPs, their governance and their main categories.

According to the United Nations’ SDG 12 knowledge platform, the Stockholm Convention on Persistent Organic Pollutants “established international frameworks to achieve the environmentally sound management of hazardous wastes, chemicals and persistent organic pollutants. With six exceptions, all Member States are party to at least one of those conventions.” Managing POPs is also included in Target 12.4 of SDG 12. In addition, the United Nations Development Programme (UNDP) identifies most of the SDGs and how chemical safety or the sound management of chemicals and waste are fundamental to achieving them. You’ll find that list and case studies in a report called Chemicals and Waste Management for Sustainable Development by the UNDP.

“The Dirty Dozen”

The dirty dozen, or the 12 initial POPs, were first made official in 2001 at the Stockholm Convention, leading to stronger regulations banning them in many countries. POP is a general designation—a class of toxic chemicals that are organic or carbon-based. But what are the different POPs that are being addressed and how present are they in our lives and surroundings?

What are the different Persistent Organic Pollutants (POPs)?

• Aldrin – a pesticide; widely used to protect crops and control insects. This toxic substance is easily metabolized by plants and animals and persists in soil by strongly binding to particles. It bioconcentrates (easily accumulates) in aquatic organisms, exceeding amounts in the organism’s environment. Aldrin is toxic to humans. Effects include headache, dizziness, nausea, general malaise and vomiting, muscle twitching, myoclonic jerks and convulsions.
• Chlordane – a pesticide used in agriculture. It is highly insoluble in water and is semi-volatile. It binds easily to sediments in water and bioaccumulates in the fat of organisms. It is also widely used against termites. Observed effects on humans included significant changes in their immune systems.
• Dieldrin – a pesticide used for soil insects. It has caused serious health and environmental concerns, leading to its ban in many countries. It binds strongly to soil particles and is resistant to leaching like aldrin. This substance has been known to contribute to cases of liver and biliary tract cancer.
• DDT – a pesticide used to protect crops (cotton). Its wide use started in WWII as protection from malaria, typhus and other vector borne diseases. Restrictions began with growing concerns over biodiversity and environmental damage, particularly on wild birds. It is highly insoluble in water and is semi-volatile. It is also lipophilic, easily combining in the fat of organisms leading to bioaccumulation and biomagnification. DDTs are said to be almost anywhere, even in the Arctic. It is banned in 34 countries.
• Endrin – a pesticide used on crops. It is also a rodenticide. Endrin, with aldrin and dieldrin, has contributed to the occurrence of liver and biliary tract cancers. Studies have shown inclusive evidence of its effect on immune responses.
• Mirex – a pesticide mostly for ants. It is very resistant to breakdown and is very insoluble in water. It also bioaccumulates and biomagnifies. Mirex has been found in human fat. Experiments have confirmed its carcinogenic properties in animals.
• Heptachlor – a pesticide used on cotton insects and grasshoppers. It is highly insoluble in water and is volatile. It partitions and spreads in the atmosphere. It also binds on sediments in water and bioconcentrates or bioaccumulates in the fat of organisms. Heptachlor and endrin have been found to have been a significant factor in the occurrence of bladder cancer.
• Hexachlorobenzene (HCB) – a fungicide that is a byproduct of manufacturing certain industrial chemicals. From 1954 to 1959, people in Turkey ingested HCB through tainted seed grains. Symptoms included photosensitive skin lesions, hyperpigmentation, hirsutism, colic, severe weakness, porphyrinuria and debilitation. 3,000-4,000 people developed porphyria turcica. Mothers who ingested the seeds passed the HCB to their children. The mortality rate of these children was 95%.
• Pentachlorobenzene (PCB) – a fungicide, dyestuff carrier and flame retardant is also produced unintentionally in thermal and industrial processes. It can also be found as an impurity in solvents or pesticides. It is harmful when swallowed.
• Toxaphene – an insecticide used in agriculture and used to control ticks and mites. It was the most widely used insecticide in the US in 1975. Studies found that there is inadequate evidence for adverse effects and carcinogenicity in humans. However, there is sufficient evidence from experiments on animals.
• Dioxins and Furans – may be released into the environment through the production of pesticides and other chlorinated substances. They have been detected in emissions from the incineration of hospital waste, municipal waste, hazardous waste, coal, peat and wood and in car emissions. Their health effects include chloracne, depression, peripheral neuropathies, fatigue, hepatitis, enlarged liver, personality changes and abnormal enzyme levels.

The Central Concerns Regarding POPs

• POPs are toxic and among the most dangerous substances produced intentionally or unintentionally.
• Effects include death, disease, birth defects, cancer, allergies and hypersensitivity and damage to the nervous, reproductive and immune systems.
• Some POPs are endocrine disruptors.
• They concentrate in living organisms through bioaccumulation or bioconcentration, meaning they are easily absorbed by fatty tissue.

Better Chemical Management is Critical

Since these chemicals persist for years and can circulate globally through the grasshopper effect, production processes, such as agriculture and manufacturing, are urged to innovate in order to eliminate them and create a more sustainable future. International frameworks are helping make this happen and align businesses with safer environmental practices, chemical management protocols and the Sustainable Development Goals.

CleanChain helps organizations achieve transparency and real-time insight into the chemicals used throughout their supply chains. Contact us to learn more about how we can help you achieve your sustainability goals.