When it comes to being “green” the retail industry’s mood and temperament are driven by the fact that sustainability begins with customers who want eco-friendly products at affordable prices. The most reliable way to create sustainable products is by incorporating “green” in each stage of the product’s development.
But in today’s business landscape it’s not enough to be green—it’s important to be “clean” as well. For organizations to achieve this goal in both operations and marketing, it is imperative to find the right balance between social, economic and environmental pursuits. Sustainability today has become an indispensable part of the industry’s core business practices and competitive positioning.
The perception shift
One retail giant leading the sustainability brigade is Walmart, who adopted their “Sustainability 360” approach in which they engaged their associates, suppliers and communities to produce and deliver sustainable products. In another scenario, the Outdoor Industry Association designed Eco Index, an environmental assessment tool to boost sustainability practices. Through this tool, companies can benchmark and measure their environmental footprint throughout the supply chain, which helps them make informed sourcing and product lifecycle decisions and identify areas for improvement.
Concerns related to the environment are apparent in the eco-conscious marketplace. Products championing sustainable consumption are becoming extremely popular in the market. Their message of protecting the environment for future generations is reaching the consumers. Over the years, a majority of consumers have realized that their purchasing behavior has a direct impact on the environment they live in and are therefore thinking about the issues that affect the environment while making purchasing decisions. As evident from the below survey, around 54 percent of consumers have sustainability in their mind when shopping.
Additionally, consumers are paying attention to the information provided by the brands on product packaging regarding the environmental friendliness of their product. Consumers feel that they are doing their part to protect the environment by buying sustainable products.
The growing number of individuals who are willing to pay more for eco-friendly products proves that an increasing number of consumers favor sustainable products. Today, consumers are more aware and forward-looking in their buying behavior.
In developed countries, as the economic engine evolved from being production-led to consumption-driven, suppliers and retailers had to find a niche for themselves to grow both in size and numbers. In this scenario, sustainable products present enormous opportunities to the retailers, along with the challenges that ensue. There are opportunities in having a competitive advantage over others and there are challenges in producing sustainable products at affordable prices. Moreover, softlines, hardlines and footwear manufacturers and private-label retailers have to comply with stiff regulatory compliance and changing customer preferences.
To ensure truly clean and sustainable goods and not just a “greenwashed” product, every stage of product development needs to be sustainably planned and monitored. And there are a number of critical actions that manufacturers need to take to ensure sustainability throughout the product lifecycle.
The role of PLM
Product Lifecycle Management (PLM) can play a vital role in driving the sustainability benchmarks in Request for Application (RFA) environments. By design, PLM provides an excellent platform to collaborate important information related to the materials used, packaging and compliance that can be integrated in product development. PLM can also be effectively used to monitor and improve the green governing factors in the product development phase, especially those that directly impact our environment. The industry is looking at PLM to integrate green practices in the product development phase by making the information available for taking the greener decisions. PLM can help drive sustainability in the various stages of product development.
The planning module in PLM provides an ideal platform to map an assortment for the collection. The planners can specify the number of green styles and Stock-Keeping Units (SKU) in the plan that will set a direction for the designers to create a collection accordingly. The marketing team can use the line plan to craft their marketing strategy, highlighting green products in the upcoming season. Management can then look at what percentage of the line is meeting the green targets and take corrective actions in time.
Product sustainability expanded the horizon of design from a narrow upstream activity to a broader process encapsulating wider considerations of the 4Rs (Reduce, Reuse, Recycle and Renew), many of which lie outside the expertise of traditional designers and product managers. PLM helps in transitioning away from the conventional model of designing products—which doesn’t understand the upstream and downstream implications—to a more integrated approach that draws together cross-functional teams to provide inputs in the product design and development.
Conventionally, designers create products that meet the needs of consumers irrespective of their social and environmental implications. The challenge is to develop a framework which promotes creation of these products with sustainability in mind. PLM helps to create these frameworks in the following ways:
- Sustainable design requires a more collaborative approach comprised of tasks and inputs distributed across the organization. PLM’s focus on People, Process and Product Data (3P) is ideal for encouraging a sustainability mindset in the organization.
- Sustainability requires infrastructure linking to allow people to identifying and cooperate with each other’s sustainability programs. PLM enables a transparent flow of information across the supply chain, ensuring that sustainability initiatives promoted by one group are supported by others.
- Since PLM covers the product lifecycle from concept to production, it provides a valid platform to figure out where in the lifecycle of the product sustainability issues have occurred.
- PLM creates accountability mechanisms to ensure that identified people are accountable for the sustainability outcomes of the product.
Material development and testing
Materials used in any product form the most important consideration: to realize the sustainability goals of the organization. PLM helps by defining the right composition of material used in the product; the environmental impact during the manufacturing process; and the impact of the product at the end of its lifecycle. Here are some of the ways in which PLM can help increase the use of greener materials:
- Information on the environmental footprint of the materials used should be made available to designers. PLM captures this information through the definition of key attributes on every material used in the product. The simple act of increasing the natural component in the fabric goes a long way in creating sustainable products in the apparel and footwear industry.
- The Bill-of-Materials (BOM) in PLM consolidates all materials that are used in the product with information on their usage, content and their environmental impact (as defined by attributes on the material). The BOM plays an important role in calculating the sustainability index of the product.
- Analytical and reporting capabilities of the PLM can be used to trigger an alert if material content exceeds the accepted levels defined by the compliance and regulatory bodies.
Packaging has often been called a “silent salesman.” Being the first level of interaction with a consumer, it plays an immense role in the majority of buying decisions. With increasing awareness among consumers about the economic, social and environmental impact caused by product packaging, sustainable packaging has become a key consideration while shopping.
New compliance regulations have also been enforced by the European Union and the U.S. to restrict the use of toxic materials in packaging. As a result, there is a shift towards making eco-friendly packaging part of initial design phase, and companies are relying more and more on PLM solutions to make this happen.
PLM can be an ideal tool to specify the right packaging specification in tandem with the specified compliances. A packaging sustainability scorecard—similar to the material and supplier sustainability scorecard—can be developed to determine which packaging has the lowest environmental impact.
In a supply chain context, companies are not only held responsible for their own actions but also for the actions of their suppliers. The stakes are too high when it comes to non-ethical and non-compliance issues as they can ruin a company’s brand image and lead to huge financial losses.
The PLM functionality can be used to design a system that captures and evaluates suppliers’ performance on the basis of certain key actions such as energy and water use, waste disposal or greenhouse gas emissions. Companies can create their own set of measures or use the existing measures and scorecards created in the industry to their advantage.
Though the declaration of compliance and sustainability indices are important, companies should not limit and rely on these documents only. A robust evaluation process of suppliers is key to improving the overall brand equity. The PLM reporting functionality can be effectively utilized to pull supplier performance data to create a scorecard and ranking, which will help companies improve transparency in working towards sustainability enhancement.
Rajnish Kumar is Global Practice Leader at ITC Infotech, Bangalore, India, an IT services and business solutions company involved in consumer packaged goods & retail; manufacturing & engineering services; and other industries.