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Supply chain visibility key to solving waste, says Avery Dennison

Avery Dennison

Overproduction and waste are worsening the supply chain crisis and hitting businesses to the tune of 3.6% of their annual profits with nearly 8% of stock spoiled or discarded, according to a research project conducted by Avery Dennison.

This loss includes 4.3% of stock that spoils in the supply chain before it even reaches the shelf with a further 3.4% discarded due to overproduction. This loss amounts to US$163.1bn worth of inventory, states The Missing Billions: The Real Cost of Supply Chain Waste.

The data analysed 318 global firms and found that while companies are acutely aware of the problem, they are not investing the budget required to fix it. Respondents said that on average 28.9% of their organisation’s sustainability impact comes from the supply chain.

Over nine in ten businesses surveyed stated they are under pressure to become more sustainable with 60% claiming it as a ‘high’ priority. However, respondents cited challenges to achieving supply chain resilience including ‘integrating disparate systems’ and ‘insufficient coordination among internal stakeholders’.

The report also highlighted an intention to address these issues. A substantial 61% of organisations have already deployed solutions to track unique items but this will rise to over 95% as a further 34.6% ‘plan to’ as companies seek to improve supply chain visibility and traceability.

Blockchain investment will see the single biggest leap – 97% of companies surveyed plan to invest in this area within five years (compared to 12% today). Within five years some 99% of companies plan to use smart devices (including sensors and drones), and 97% will use industrial IoT.

Francisco Melo, senior vice president and general manager at Avery Dennison Smartrac, said: “The current supply chain disruption is leading to a waste crisis making the case for sustainable practices even more urgent and necessary. There is a huge opportunity for organisations to accelerate digital transformation that will help to create longer-term systemic change. The moral and economic case is clear and the study shows the desire from organisations to embrace technological advancements for the benefit of business and the planet.

Melo adds: “Digital triggers such as Radio Frequency Identification or RFID, provide unprecedented end to end visibility in a highly efficient and accurate way. Connected products not only shine a light on supply chains but also reveal valuable new information to enable consumers to make better decisions, including transparency and carbon footprint data.”

The report also looked at consumer habits highlighting a shift in the desire for durable products with ‘durability’ ranked by one in two global consumers as a top five concern, suggesting there is an opportunity for business to shape the future of sustainability by putting a greater focus on product durability and in enabling the circular economy.

Initiatives by businesses to achieve greater transparency can have benefits for consumers too. Over 43% agreed that when buying clothing, “transparency about a product’s journey to the consumer is important to me” and ‘being more transparent about materials/ingredients used” was ranked as the top driver for making more sustainable decisions when buying food and beauty products – stated by (37%) and (35%) of shoppers respectively.

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