Food & Bev OP – Are Profit and Sustainability Mutually Exclusive?
Phil Lewis, Senior Vice President of Solution Consulting, International, Infor
The world’s population is predicted to grow to more than 9 billion by 2050 and the Food and Agriculture Organization (FAO) estimates that we will need to produce 60% more food to feed everyone, a huge increase that will undoubtedly take its toll on the planet. Add to this the impact of climate change on harvests and the pressing need to reduce waste across the food supply chain, and it is not difficult to see why the food and beverage sector is under ever-increasing pressure to embrace sustainability.
Supply chain pressures, fluctuating customer demands and tastes, and squeezed margins, mean that food and beverage businesses must do more for less. The industry is expected to boost its sustainability credentials, while working hard to save money, staying profitable even when faced with the most disruptive of market challenges.
This leads many to question whether it’s possible to be sustainable and profitable. Most believe not. In reality, however, it is no longer a choice. Sustainability is not just a ‘nice-to-have’ but instead a crucial part of doing business in the food and beverage sector. Firms must reduce their environmental footprint alongside producing enough food to feed a growing population, while turning a healthy profit.
How? The answer lies in innovation. With the right technology, applied in the right way, maximising yield, driving down waste and increasing operational efficiencies, ultimately underpinning a food and beverage sector that is both sustainable and profitable.
Sustainability – a Pressing Priority
The last couple of years have propelled the issue of sustainability towards the top of the priority list. Not only do we have the forecasted 60% increase in food production and associated environmental impact to consider, but food waste levels are massive too, with roughly one third of all food produced in the world wasted each year. More consumers are taking sustainability considerations into account when choosing which products to buy, increasingly looking to brands to prove their sustainability credentials – while regulatory pressure is only set to increase.
Sustainability as an Enabler of Growth
When looking at sustainability it is imperative to examine the business benefits to be reaped from embracing sustainability, an approach that helps to build a strong business case for investing in environmental initiatives. As with other industries, we are increasingly seeing preferential finance options made available to food and beverage businesses who can evidence their environmental credentials. Non-sustainable sources of raw ingredients are becoming more costly. Reducing waste helps the bottom-line and some innovative food businesses are even putting their by-products to good use, turning them into additional revenue streams.
Talent attraction is another major benefit of becoming more sustainable. More employees want to work for ethical businesses. In an industry where the labour shortage is rapidly becoming a major threat to productivity, the ability to take your pick from a dwindling talent pool is a great advantage.
Perhaps most important of all is the increasing consumer demand for sustainable products. More brands are choosing to only work with sustainable suppliers, who can evidence the reduction of their environmental impact, total compliance, and high sustainability standards. Today it’s not about sustainability versus profitability. For the food and beverage sector, it is more a case of sustainability equals profitability.
A Sustainable Risk Assessment
Paying out a substantial investment to secure sustainability does not have to be the case. In fact, smaller, more targeted environmental initiatives are often key to making a real difference.
Individual businesses need to fully assess the risk of not embracing sustainability before embarking on any sustainability endeavours. To do this requires data from right across the supply chain. This data proves tangible evidence of why and how sustainability is a key enabler of business growth and profitability – it ensures businesses can ascertain their current environmental footprint, providing a starting point to identify which initiatives will have the maximum impact on sustainability and profitability.
Collaboration across the supply chain is the key; collaboration facilitated by technology. So complex and multi-faceted are the supply chains that form the backbone of the food and beverage industry, that spreadsheets and manual processes are no longer fit-for-purpose.
Turning Data into Insight
Knowing what to do with swathes of available data makes all the difference. Solutions with sustainability capabilities built-in are essential; technology that grows alongside a business and the rapidly-evolving legislative and regulatory landscape. The application of machine learning technologies to a single, unified source of supply-chain wide information can result in previously undiscovered, actionable insight that will inform which sustainability efforts will have the maximum impact on reducing environmental impact while boosting profits.
For instance, increased forecasting accuracy can reduce waste at all points of the supply chain, as well as saving on the associated costs of over and under production. Yield optimisation is another benefit for both the environment and the bottom-line, again with the right insight enabling a business to optimise operations. Similarly, it is access to supply-chain wide data that underpins innovations such as dynamic best before dates and smart shelves, as well as enabling businesses to supply that all-important provenance information to customers. These all contribute to reducing the environmental impact of the food and beverage industry, while boosting customer satisfaction, meeting – and even exceeding – customer expectations.
It is this visibility, collaboration and insight-based decision-making that is vital if the industry is to play its part in securing the future of the planet while still remaining a profitable sector.
Issued by Perfect Word Consulting (Pty) Ltd
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