Tuesday, February 7

Profit vs sustainability – does one exclude the other?

It is estimated that the world population will reach more than 9 billion by 2050 and the Food and Agriculture Organization (FAO) calculates that 60% more food will need to be produced to feed said population, a considerable increase that undoubtedly affects to the planet. Add to this the impact of climate change on crops and the need to reduce supply chain waste, and it’s not hard to see why the food and beverage industry is under increasing pressure to be sustainable.

Supply chain pressure and fluctuating customer demand and tastes coupled with tight margins mean that food and beverage companies must manage to do more with less. The industry is expected to increase its sustainability credentials, working hard to save money, and be profitable even in the face of the most disruptive market challenges.

This makes many wonder if it is really possible to be sustainable and profitable, with some stating that it is really impossible. Actually, it is no longer an option. Sustainability is no longer an alternative but a crucial part of how business is done today in the food and beverage industry. Companies must decrease their environmental impact along with food production for the growing population, and achieve healthy profitability.

Sustainability: a growing priority

Sustainability is not a new topic for the food and beverage industry, but recent years have put the topic on the priority list. Not only is a 60% increase in food production forecast and the related environmental impact must be considered, but the levels of waste are enormous with approximately one-third of the food produced in the world being discarded (estimated to be a third is lost in transit due to poor planning and poor refrigeration, waste during production must also be considered). Most consumers are considering sustainability when selecting the products they buy, and are increasingly evaluating companies based on their sustainability credentials.

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Regulatory pressure to be sustainable will increase more and more. Due to the nature of food and beverage supply chains, local and country-specific sustainability requirements are becoming global, and applicable across all borders if organizations wish to continue doing business in the international marketplace. Rising energy prices are leading more companies to prioritize energy efficiency, becoming more sustainable as part of efforts to cut costs. In short, the pressure to be more sustainable comes from various sectors.

Sustainability helps growth

When considering sustainability it is imperative to assess the business benefits that can be achieved by adopting a strategy that helps develop an investment plan for environmental initiatives.

Like other industries, there are more and more preferential financing options available to food and beverage companies that can prove their focus on environmental stewardship. In addition, unsustainable sources of raw material are becoming more expensive. Reducing waste certainly helps profitability, and some innovative companies are taking side products and turning them into additional sources of revenue.

Talent attraction is another benefit of being a sustainable company. Most people want to work for ethical companies that have a role in making the world a better place for all. In an industry where understaffing is becoming a threat to productivity, being able to offer a desired job should not be ignored.

Perhaps most important of all is the increase in consumer demand for sustainable products, meaning that sustainable companies are the ones that will have the most market share. And, more and more companies are not only looking to work with sustainable suppliers, but with those that can demonstrate that they do to reduce the environmental impact in addition to complying with current sustainability regulations.

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no longer an option

It is no longer “if” but “when” sustainable principles are adopted in the food and beverage sector, not only in terms of meeting current requirements or reducing costs, but companies must focus on long-term growth. To answer the original question, sustainability versus profitability should not be considered, especially in the food and beverage sector, but rather sustainability is equivalent to profitability.

Survey of sustainability risk

The need for greater sustainability does not change the fact that for some, adopting sustainability can seem like a difficult task that can potentially involve considerable investment. Actually, it doesn’t have to be that way, small environmental initiatives are already key to making a difference.

Individual companies must fully assess the risk of being unsustainable before embarking on any initiative. This requires data from everything along the supply chain. Access to key data enables organizations to fully assess the risk they face if they are not sustainable, with tangible evidence of why and how sustainability is the gateway to increased growth and profitability. It is the data that guarantees companies how to improve their carbon footprint, and beginning to identify which initiatives will have the greatest impact not only on sustainability but also on profitability.

Collaboration in the supply chain is key, collaboration is made easier with technology. The supply chains that form the backbone of the food and beverage industry are complex and multi-faceted, and spreadsheets and manual processes are no longer enough to know exactly how a business impacts the environment and how it can be minimized by maintaining profitability.

Transform data into visibility

Currently, a huge amount of data is handled and knowing what to do with it is what makes the difference. What is needed are solutions with sustainable functionality, technology that grows with the business and rapidly evolving standards that emerge during operations, says Infor. Using machine learning on a single source of supply chain information can achieve unknown results, informing the maximum impact of sustainability initiatives and how they improve profits.

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For example, greater forecast accuracy can reduce waste at all points in the supply chain, as well as save on the costs associated with over- and under-production. Increased optimization is another benefit for both the environment and profitability, along with the right visibility that enables innovations like better use of expiration dates and smart shelves, and enables businesses to provide all relevant information to customers. . All of this contributes to reducing the environmental impact of the food and beverage industry, improving customer satisfaction, and even exceeding customer expectations.

This visibility and collaboration is what achieves intelligent decision making that is vital for the industry and for ensuring the future of the planet while maintaining the profitability of the sector. Investing in sustainability initiatives represents the most effective strategy to achieve long-term profitability with the technology available to take advantage of the use of existing data, summarizes Infor. The correct visibility is the basis for sound decision making helping organizations achieve the most sustainable results within the parameters of each business achieving long-term security and growth

By José Rivero, Country Manager of Infor Mexico

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