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Procter & Gamble: A Sustainable Supply Chain Case Study

P&G's efforts to make their supply chain sustainable

17Jan

Founded in 1837, Procter and Gamble are now the world's leading manufacturer of consumer goods, announcing another successful year in their annual report, with net sales reaching $65.1 billion. As expected for a conglomerate of their size, they have an enormously complex supply chain, with GT Nexus reporting that in 2015 they had over 70,000 suppliers worldwide.

P&G have managed to remain industry leaders for nearly two centuries by constantly re-evaluating and innovating. Back in 2015, they effectively overhauled their supply chain, saving $1.2 billion on costs by redesigning their distribution network. They achieved this with vastly improved visibility throughout the supply chain and partnering closely with suppliers – even bringing suppliers in-house and locating their own staff at supplier sites in order to increase efficiency.

'The role of efficient and effective supply chains has never been more important,' Ana Elena Marziano, Vice President of Global Purchases at P&G, said during her keynote at the University of Tennessee Supply Chain Forum in 2015. 'We fully recognize this and we know we cannot do this in isolation. We need to integrate and synchronize our operations, suppliers, and our customers.'

More recently, P&G's efforts to have the most efficient and effective supply chain possible have taken big strides towards sustainability. On their website, they state that they aim to have 'zero manufacturing waste to landfill' - a bold and difficult target. But this goal has already begun to take shape as, in October 2017, P&G announced that in 2018 one of it's most recognizable brands, Fairy washing-up liquid, would be packaged in bottles made completely from post-consumer recycled (PCR) plastic and repurposed ocean plastic. The 320,000 bottles are set to go on sale as part of P&G's goal to double the amount of recycled material used in packaging their products by 2020.

They have also modified the distinctive Head & Shoulders shampoo bottles, another best-performing brand, to contain up to 25% PCR beach plastic.

Speaking to Edie.net, P&G’s vice president of global sustainability Virginie Helias stated 'we've chosen iconic brands that are used frequently for this initiative. Fairy is the number one brand in the world for its purpose, and our brands have iconic appearance, colors, and shapes. By using PCR plastic, we’ve changed those appearances, which is not something we do lightly. The value of what we're doing is to engage people into a dialogue and action and that they can be part of a solution. Today they are concerned, but they don't know where to start, we’re making it easy to do little things that will make a difference.'

This is a sensible business strategy in a world where consumers are demanding sustainability and transparency from their brands. A 2015 study by Nielson found that 66% of respondents would pay more for a product or a service if the company was committed to positive social and environmental change. But P&G are conscious their efforts towards sustainability aren't viewed as a transparent, greenwashed selling-point. In order to demonstrate their serious commitment to sustainability, they have revamped their entire supply chain. These new steps see them working with non-profits in areas of South East Asia to aid the collection process. P&G have also expanded their supply chain to form a partnership with recycling experts TerraCycle to work towards the most viable solutions for the collected plastics. This research means that P&G have been able to use PCR plastics in a way that doesn't negatively affect the packaging - there is only a slight change to the coloring and transparency of the material - while ensuring the product can be recycled again after use.

These sustainable efforts are worth it in their own right. According to the Ellen MacArthur Foundation (EMF) 95% of the value of plastic packaging material - worth $80-120bn annually - is lost to the economy and if current consumption trends continue, there could be more plastic than fish in the ocean (by weight) by 2050.

Speaking to Sustainable Brands, Helia discusses how the supply-chain can be the area of businesses that could benefit the most from sustainable steps. 'Why? Because resource efficiency, eco-efficiency is my business, clearly. It directly leads to bottom-line improvements, be it zero waste to landfill or energy conservation. They were doing that before the word sustainability existed'

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