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Akhila Vijayaraghavan headshot

Global Food Companies Desperately Require Supply Chain Upgrades

According to Environmental Leader, there needs to be a sharp focus on the way that food companies manage their supply chains. According to Verdantix, an independent analyst firm, which benchmarked the sustainable supply chain strategies of the 12 largest global food firms, only four make the cut. Their report  Sustainable Supply Chain Benchmark: Food Sector states that only Danone, Heinz, PepsiCo, and Unilever have invested in wide-ranging codes of conduct to guide their suppliers’ environmental performance. 

The other eight include Associated British Foods (ABF), ConAgra Foods, General Mills, Kellogg, Kraft, Mars, Nestlé and Sara Lee. These companies "need to invest in environmental supply chain policies to anticipate NGO scrutiny, better manage reputational risk, plan for resource scarcity and deal with competitive pressure." Together these companies represent collective revenues of $390 billion.

Verdantix identified three potential sustainable supply chain strategies for food producers to follow:

  • Establish leadership strategies that mandate environmental and social standards, target 100 percent sustainable supply of agricultural and raw materials and engage directly with farmers to improve performance. For example, Danone, Heinz, Nestlé and Unilever typically have a CEO-led, long-term vision for sustainable business.

  • Use opportunistic strategies motivated by country-specific product sales opportunities, such as Kraft’s commitment to source 100 percent certified sustainable coffee beans, but only in Europe. These firms should undertake audits of high-risk suppliers in areas like palm oil, and subscribe to industry data sharing platforms to reduce cost and increase the breadth of supplier data collection.

  • Set baseline sustainable supply chain strategies that reflect a reactive, lower-cost approach to managing social and environmental issues in the supply chain. For example, ConAgra Foods relies primarily on a North American supply base, which reduces its risk profile and need to invest in auditing and enforcement of supplier codes of conduct.

A recent NRDC reportWasted: How America is Losing Up to 40 Percent of Its Food from Farm to Fork to Landfill, found that there are losses and inefficiencies in the food supply chain that result in food waste. Large companies can certainly alleviate this problem with better management. According to the report, retailers are losing as much as $15 billion a year in unsold fruits and vegetables alone.

The lack of metrics when it comes to supply chain management is the major reason why there is such a vast discrepancy between companies. This was reflected in a recent study by Green Research - they found that, 62 percent of executives surveyed at major global companies said a lack of measurement standards impairs their efforts to track supply chain sustainability performance.

It is quite shocking that multinationals with access to global markets have not yet come up with environmental standards to guide the food industry. The global food industry therefore needs to come up with baseline standards that not only helps to improve their individual supply chains but also acts as industry best practices.

Akhila Vijayaraghavan headshotAkhila Vijayaraghavan

Akhila is the Founding Director of GreenDen Consultancy which is dedicated to offering business analysis, reporting and marketing solutions powered by sustainability and social responsibility. Based in the US, Europe, and India, the GreenDen's consultants share the best practices and innovation from around the globe to achieve real results. She has previously written about CSR and ethical consumption for Justmeans and hopes to put a fresh spin on things for this column. As an IEMA certified CSR practitioner, she hopes to highlight a new way of doing business. She believes that consumers have the immense power to change 'business as usual' through their choices. She is a Graduate in Molecular Biology from the University of Glasgow, UK and in Environmental Management and Law. In her free-time she is a voracious reader and enjoys photography, yoga, travelling and the great outdoors. She can be contacted via Twitter @aksvi and also http://www.thegreenden.net

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