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Using IT to focus on reducing excess inventory and improving sustainability

David Bicknell | No Comments
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A recent blog post on the Harvard Business Review has raised the issue of inventory, its impact on sustainability, and what IT can do about it.

The piece, by Andrew Winston highlighted organisations' previous inability to do much about their estimation processes, and what the consequent excess inventory's impact is on sustainability,

Winston suggests that the world is sitting on roughly $8 trillion worth of goods held for sale.That's $8 trillion worth of embedded environmental footprint, which could be reduced, saving money, energy and material.

The problem is that when it comes to managing inventory levels, organisations are falling down on demand planning i.e.predicting how much product customers want. As Winston points out, consumer product goods (CPG) companies spend a fortune on demand planning. And they have to: P&G's 2010 total inventory, for example, was valued on the balance sheet at $6.4 billion. 

Effective use of IT can play a significant role in making operations more efficient and sustainable. Winston suggests that using both demand sensing software and good management practices has helped P&G cut 17 days and $2.1 billion out of its inventory, saving money in manufacturing, distribution, and ongoing warehousing - and carbon, material, and water.

You can read the complete piece here


SAP study suggests sustainability is now part of 'core business' for retailers

David Bicknell | No Comments
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A recent study conducted by SAP says sustainability is no longer a back-of-mind topic for retail companies.

The study, "Sustainability in Retail: Challenges - Strategies - Implementation," was carried out with the Chair of Logistics Management at the University of St. Gallen in Switzerland and reveals that sustainability has become an indispensable part of retailers' core business and competitive positioning.

According to the authors, Klaus Kriener and Christian Berg from SAP and Joerg Grimm from the University of St. Gallen, companies from various trading segments have four different strategic approaches they can apply to cope with the complexities of statutory regulations and society's high expectations. Software solutions that address sustainability reporting and carbon management can provide true sustainable value.

Depending on the business model and the trading segment, retailers can apply one of the following four strategies:

  1. Process and resource optimisation - Companies pursuing this strategy constantly trim their business processes to achieve efficient resource allocation. This approach aims at reducing to a minimum the negative social and ecological implications, and particularly the costs, of business operations.
  2. Process assurance - For companies pursuing this strategy, the focus is not on costs. These companies try to differentiate themselves from their competitors by meeting the highest sustainability standards. They do so by continuously improving their business processes while at the same time actively communicating their efforts.
  3. Sustainable product positioning - Here, companies do not innovate on the process but on product level. New sustainable products serve as a calling card for the market image of the company.
  4. Innovative cost optimisation - Product innovations such as an eco-design or environmentally friendly materials are implemented to minimise the economic and ecologic product costs in order to achieve cost leadership in highly competitive markets.

Business software can substantially support the implementation of all four strategic approaches, especially in the areas of carbon management and sustainability reporting,

SAP is one of those IT companies able to help  companies systematically manage sustainability key performance indicators (KPIs) across all business areas and report against standard criteria of the Global Reporting Initiative or the Dow Jones Sustainability Index.

SAP has also been involved in a sustainability debate in the US on policy v pragmatism



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