by Elizabeth Abrams
“Going green” these days almost seems passé. Once the term became part of pop culture, consumers were thrust into stores full of products hand picked by retailers for their recycled packaging, soy inks and eco-friendly labels. Almost overnight, shoppers were inundated with the idea of “going green,” as the number of products advertising green claims grew 79 percent between 2007 and 2008, according to TerraChoice Environmental Marketing. As a result, shoppers have become sophisticated; more than 50 percent of consumers seek out green products, but 77 percent of U.S. shoppers consider it unacceptable to pay more than a 10 percent premium for them, according to the October 2008 BCG Global Green Consumer Survey, “Capturing the Green Advantage for Consumer Companies.”
What does this mean? Simply put, it is no longer enough to promote organic certification on the container or reduce the amount of packaging per unit. Suppliers, and especially those who manufacture natural products, must implement new tactics that both “green” their goods and keep pricing at least at parity with other synthetic options.
How do you do it? Look at your supply chain, one of the biggest contributors to a product’s shelf price at nearly 30 percent to 50 percent. By combining the need to go green with the need to keep costs down, business costs, and therefore products, become truly sustainable.
Transportation and Warehousing
Do frequent parcel shipments of bottles of multivitamins and a pallet or two of organic herbal extracts to major retailers every few months sound familiar? If so, consider finding a third-party transportation provider. Their established relationships with hundreds of carriers and portfolio of customers allow them to offer lower rates and a better range of services.
Logistics account for about 6.9 percent of company sales, with 38 percent of that cost coming from transportation, according to the Grocery Manufacturers Association. With this in mind, look for these key elements in a transportation provider: domestic and international shipping relationships that provide a single point of contact throughout the process; an online visibility platform that allows customers to track an order’s progress; and automated consolidation of less-than-truckload shipments headed to the same destination. All three features come standard in premier third-party providers.
For larger suppliers, it’s also key to reduce warehousing challenges. Trimming systemic supply chain waste is on the mind of every supplier, and is translating itself into some innovative logistics solutions, such as consolidation programs.
Retailer-driven consolidation programs combine various products headed to the same retailer on a single purchase order, shortening delivery times and reducing costs and damages. Companies such as CaseStack, Hanson Logistics and Millard collaborate with each link on the supply chain to ensure efficiency. The technology-driven program allows retailers to speak directly with the logistics provider, requesting numerous vendors’ goods at the same time. These programs are sustainable by design; they combine less-than-truckload orders into full truckload shipments and subsequently cut carbon emissions.
Dan Sanker, CEO of CaseStack, explained, “There’s no reason why lowering logistics costs should equate to lowering service levels or distribution. Customers who join our consolidation program see reduced costs by 20 to 60 percent. Their transit times are cut in half, on-time deliveries go up at least 20 percent, and the amount of greenhouse gas emitted is much lower, giving them a higher sustainability rating.”
With all the money saved, suppliers can pump more resources into what truly increases business—sales and marketing. One customer in CaseStack’s consolidation program, Advanced Beauty Systems (ABS), a Dallas-based beauty supplier, has seen its costs drop enough since joining the program to keep prices down; the lower shelf price allowed them to increase distribution.
