How Supply Chain Leaders Manage Resource Scarcity

Richard Howells

For 150 years, Nestlé has brought countless beloved brands into the lives of its consumers.

Gerber, for instance, is the go-to solid food for parents with infants. Pet lovers depend upon Purina and Friskies to feed their furry, four-legged friends. And when chocolate fiends get a craving, they often reach for a delicious Butterfinger, KitKat, or Crunch bar.

With $92 billion in annual revenue, Nestlé was recently ranked as the world’s top food and beverage company, according to the 2016 FORBES Global 2000.

And while the organization’s viability is unquestionably stable, there is one serious issue that does concern the folks at Nestlé: resource scarcity.

By helping farmers, Nestlé helps itself

Like all supply chain companies, Nestlé is heavily dependent upon its natural resources to drive its business forward. The organization is particularly reliant on certain raw materials, including cocoa and sugar, which are essential to many of the items it produces.

To combat resource scarcity, Nestlé launched the Creating Shared Value program in 2009. The initiative involves providing “technical assistance to farmers in Africa and other developing markets to help them boost crop yields,” per a recent SCM World report.

The program features a combination of best-practice sharing, investment support, and nongovernmental organization collaboration to ensure the raw materials that Nestlé needs most are developed in a more sustainable manner.

With an ample amount of resources, operations at Nestlé’s production plants can remain uninterrupted, and consumers can continue to enjoy the company’s many indispensable products.

There’s more than one way to overcome resource scarcity

Nestlé is merely one supply chain organization that has developed a creative approach to addressing its resource scarcity concerns.

In a new report, SCM World outlines an array of leading supply chain companies, in a range of different industries, that have deployed unique and useful strategies to deal with the challenges around resource scarcity:

  • Cisco Systems: Reducing material waste is a primary component of Cisco Systems’ sustainability initiative. Over the past nine years, the IT conglomerate has generated more than $1 billion in value through the return, recycling, and reuse of older products.
  • Schneider Electric: Schneider has a Waste as Worth initiative in place that focuses on recycling obsolete stock and reusing metals and thermoplastics previously in circulation. The company also monitors and controls energy usage in real time at its 300 global sites to ensure power is used efficiently. These measures have resulted in a 25% reduction in water consumption, a fourfold reduction in greenhouse gas emissions, a 13% reduction in energy intensity, and an 83% to 91% increase in waste recovery.
  • Unilever: Consumer goods company Unilever has instituted a zero-waste-to-landfill target at its 240 manufacturing plants around the globe. To date, the organization has lowered water usage by 20% across 90 of its sites, partly through the deployment of 35,000 Internet of Things-enabled sensors and the use of Big Data analytics. It’s also managed to raise its annual consumption of renewable energy, such as biomass, wind, and solar power, to 28%. By 2020, Unilever expects to reduce its reliance on coal, which currently accounts for 7% of the company’s energy needs, to zero, cutting greenhouse gas emissions by 43%. These actions will result in more than $200 million in cost savings for the enterprise.
  • IKEA: The world’s largest furniture retailer has developed a resource independence strategy that also takes into account ethical sourcing. Its ambitious goal includes a 100% target for raw material sustainability – for items such as wood, metals, and plastics. As a founding member of the Better Cotton Initiative – a program dedicated to promoting the sustainable cultivation of cotton – IKEA became the first major retailer to exclusively use sustainable cotton in its products. The cotton requires up to 50% less water and fertilizer and up to 30% less fertilizer to grow.
  • BMW: Supply chain experts at luxury vehicle manufacturer BMW use social media to address resource scarcity. The company developed a keyword-based, self-learning tool that monitors data from chat rooms, blogs, Twitter, and other sources. The tool flags potential supply chain risks, including floods, earthquakes, and other events that may impact resource availability, enabling staff to respond appropriately.

A road map for resource scarcity success

There’s no one tried-and-true way to conquer your resource scarcity concerns. Supply chain leaders are addressing their issues in a number of different ways.

There are, however, certain characteristics that many of these organizations share, from building a clear picture of their future resource requirements to setting clear sustainability goals.

Read the entire SCM World report, Resource Scarcity: Supply Chain Strategies for Sustainable Business, for more insight on how today’s top supply chain companies are reducing, or altogether preventing, natural resource shortages.


About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.