A Circular Supply Chain and Increased Expectations
Imagine a supply chain where daily deliveries are made directly to your doorstep with the packaging materials picked up the following day for reuse Imagine this being done using a fully electric vehicle. Imagine also that this is done in the early morning, avoiding adding to traffic congestion? Very green and very circular.
This was the milk delivery system used in the UK for most of the 20th century. It even incorporated an intuitive kanban system where each empty glass bottle was replaced by a full one of the same type. Customers would leave short handwritten notes in the necks of the bottles if their instructions changed. Of course, the product range was limited and the demand patterns were stable.
At the same time, more exotic products not stocked in shops could be ordered for home delivery from enticing newspaper adverts. “Please allow 28 days for delivery” was a standard phrase. The example I found was supplied by a company called “Post Haste”.
Neither business model is thriving in a world where you can order any item you want and have it delivered the same day. In this world waiting for “next day” can be disappointing, and who wants to disappoint customers? A fast-changing world, enabled by the internet, instant payment methods and supply chain innovation has transformed our expectations and expanded the range of products we can easily get our hands-on.
The Future of Demand
Demand is normally stated in terms of want. We fulfill “wants”. Needs form part of what is wanted. If you wanted the New Scientist Diary in 1988, you had to want it enough to write a cheque, get a stamp (and maybe a postal order – at extra cost) from a post office, write an envelope and post it in a box. This was not a one-click impulse buy.
For now, our expectations are sky-high, but will this remain the case in the future? There can be an inherent conflict between our wants and the impact of the supply chain on the environment. The environment is not restricted to climate. Demand for single-use plastics and diesel cars have both suffered in recent years due to increased awareness of their environmental impact. This awareness has translated to tighter regulatory frameworks and increased costs for consumers. We still want to travel and to buy things. But we have adjusted our behavior. We take used bags to the shop. We buy a different car or no car at all. We shop on-line.
All of these choices have contradictions. On-line delivery companies switching from large cardboard boxes to small plastic envelopes enable more deliveries from a single van. Great for emissions and congestion, but not for plastic waste. A change to cardboard envelopes appears to be happening.in the more agile companies.
So here is the point, we know that consumer demand can be influenced by green factors, but our solutions to these challenges must in themselves be sustainable. Whist the consequences of climate change are – quite literally – a slow burn, there can be sudden changes in demand as culprits are identified and alternatives are sought. Any organization that does not know where they are vulnerable or does not seek to mitigate their vulnerability will at some point find themselves feeling the heat.
The Ability to Supply
Products and packaging are not the only points that consumers are concerned with. Supply chains and delivery methods are increasingly being questioned. For the most agile organizations, these questions are being asked internally. The organizations that don’t wait for customers and regulators to ask are the ones who will retain the ability to supply.
Even in the world of fast fashion, questions are being asked. Big retailers are considering the long term viability of trying to get catwalk copies into stores within a few days. Should they still be flying “wear-once” clothes around the world to meet fleeting demand? Will that supply model be cost-effective or acceptable in the future?
On the other hand, a new breed of clothing manufacturers is starting to make waves with a slower fashion. At their most green, there are jeans that you buy “dry”- not pre-washed, bleached or distressed. The wearer is encouraged not to wash them – but to air them. Not only that, but they can also be brought back to the retailers for free repair. If they are no longer wanted, they can also be brought back for resale as vintage or for recycling, depending on condition. All they lack is an early morning all-electric delivery vehicle.
Adapting our supply chains to become more environmentally sustainable does not mean slowing down the pace of change. Indeed, we may need to anticipate and react to changing circumstances much more quickly in the future. Looking ahead and pre-empting is key. Our customers’ expectations now (“I want it today”) may not be the priority tomorrow.
In the 2020’s we must face the challenges of perception, regulation, taxation, and disruption (to name 4 factors) that are inevitable due to Climate change. There are challenges due to both the fight against climate change and the consequences of it.
Organizations that embrace sustainability will gain a competitive advantage. They will be shapers, not followers of demand. Their brands will increase in value. They will reduce waste. They will be better insulated against shocks. They will be well poised to survive and succeed in what could be turbulent times ahead.
If you Think Things Aren’t Changing…
Between deciding to write this blog and completing it, the following has happened
- The UK has left the EU
- Coronavirus has broken out and impacted global supply chains
- 7 villages, 4 main roads and 1 railway line near where I live have flooded
- I bought some new jeans