May 17, 2020

Seven food manufacturers sign up for AgWater Challenge

Jerry Lynch
Chief Sustainability Officer at General Mills
AgWater Challenge
Roberta Barbieri
Lucy Dixon
3 min
Diageo, General Mills, Hain Celestial, Hormel Foods, Kellogg, PepsiCo, and WhiteWave Foods will tackle the issue of water sustainability in their supply chains
Seven major companies have signed up for the AgWater Challenge, an initiative created by Ceres and the World Wildlife Fund (WWF) to encourage companies...

Seven major companies have signed up for the AgWater Challenge, an initiative created by Ceres and the World Wildlife Fund (WWF) to encourage companies to reduce water use in their global supply chains.

The companies – Diageo, General Mills, Hain Celestial, Hormel Foods, Kellogg, PepsiCo, and WhiteWave Foods – all submitted detailed sustainable sourcing and water stewardship plans and, in a year’s time, progress reports on their commitments will be issued.

Brooke Barton, Senior Director of the Water and Food Program at Ceres, said: “Major food brands can be a powerful and constructive force for scaling water stewardship, especially at the farm level where the biggest footprint is by far. These brands recognise the material financial impact that water risks pose to their business, from supply disruptions, to higher operating costs, to growth constraints. More than ever, companies are responding to these supply risks through farmer incentives, local partnerships and bottom line reductions.”

Commitments by Challenge participants include:

  • PepsiCo will work with its agricultural suppliers to improve the water efficiency of its direct agricultural supply chain by 15 percent by 2025 (compared to 2015) in high water risk sourcing areas, including India and Mexico.
  • Hain Celestial is setting a new sustainable sourcing goal for key agricultural inputs, including a commitment to strengthen water and fertilizer management practices of farmers in its ingredient and protein supply chains;
  • Hormel Foods will develop a comprehensive water stewardship policy, setting water management expectations that go beyond regulatory compliance for its major suppliers, contract animal growers and feed suppliers – a meat industry first.  Hormel Foods will also support and engage with growers in high water risk regions by gathering water-related data from contract growers and growers that supply animal feed - and establishing time-bound goals aimed at improving water quality in high water risk regions; and
  • WhiteWave Foods will develop a time-bound road map for agricultural water stewardship over the next 24 months that addresses shared water challenges facing their key commodities (dairy, soy, almond and produce in particular) in areas of greatest water risk, including California. They will also support and scale projects that restore freshwater systems in areas material to supply chains and engage in policy advocacy to strengthen water management in high risk priority sourcing regions.

Roberta Barbieri, Vice President, Global Environmental and Water Solutions, PepsiCo, commented: “We are proud of our decades-long water stewardship efforts as part of our sustainable business agenda called Performance with Purpose. Expanding our water goals to include PepsiCo’s agricultural supply chain is a key part of our Positive Water Impact strategy, designed to enable long-term sustainable water security for our food and beverage business and others who depend on water availability.”

In addition to new commitments, the AgWater Challenge recognises companies with far-reaching, ongoing commitments. Diageo, General Mills, and Kellogg were recognized as AgWater Stewards for showing action across all five categories of the groups’ AgWater Challenge checklist – from water risk assessments and setting reduction goals, to reducing water risk in agricultural supply chains and supporting producers in addressing these issues.

Jerry Lynch, Chief Sustainability Officer at General Mills, said: “The footprint of our extended value chain goes well beyond our offices and facilities. A very large portion of that footprint is in agriculture. The challenges facing our company and our planet are more pressing than ever, so we have to build resiliency in our supply chains to ensure that we can continue to serve the world by making food people love. Our ambition through the AgWater Challenge and all of our water initiatives is to lead by example and we hope to encourage others to do the same.”

In 2017, Ceres will evaluate the companies’ adherence to their commitments through the release its second “Feeding Ourselves Thirsty” report, which benchmarks global food and beverage companies on their water management practices. All of the AgWater Stewards will be benchmarked in the report, along with several dozen additional companies.

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Jun 11, 2021

NTT DATA Services, Remodelling Supply Chains for Resilience

NTTDATA
supplychain
Supplychainriskmanagement
Procurement
6 min
Joey Dean, Managing Director of healthcare consulting at NTT DATA Services, shares remodelling strategies for more resilient supply chains

Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.

The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.

A Multi-Vendor Sourcing Approach

“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.

“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.

But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?

“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.

Wielding Big Tech for Better Outcomes

So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry

“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality. 

“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”

Evolving Procurement Models 

From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view. 

“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.

“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”

“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”

But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?

“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.

The Challenges

These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.

On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.

Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”

He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”

As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”

 

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