How Nestle Maintained a "Robust" Supply Chain in 2020 and Prepared Itself for the Future
(Source: Food Business News)
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Supply chains are growing in complexity in almost every industry, and there's no indication that things are going to get simpler anytime soon—at least, not based on market forces.
But many organizations are innovating in the space to make their supply chains more resilient. Not only are they deploying new technologies to enhance supply chain visibility and automation, but they're also working toward a better tomorrow by embracing ethical sourcing and sustainable supply chain initiatives.
One company that has consistently innovated in this area is Nestle. The Swiss multinational food and drink conglomerate may be most well-known for its chocolate and candy products, but the company is responsible for over 2,000 brands and has a footprint in 186 countries. As the largest food manufacturer in the world, Nestle is an integral part of the global food supply, and the company has gone to great lengths to ensure its supply chains are resilient, flexible, more sustainable, and more technology-enabled than most.
Here's how Nestle is breaking the mold in the supply chain space.
Embracing Blockchain
Blockchain is often praised for its supply chain potential, but up until now, many organizations haven't implemented a successful use case of the technology, much less one that spreads from their organization to the bulk of their supplier relationships. Potentially, the technology could greatly enable faster, more transparent, and more cost-effective delivery of products. It can also help companies reduce risk and improve how they coordinate with suppliers.
But according to Tech Wire Asia, Nestle is "investing significant resources into innovations that make tracking a product's journey as simple, easy, and standardized as flipping a bag of chips and checking its ingredients."
As a founding member of the IBM Food Trust—a SaaS solution that gives users immediate access to food supply chain data— Nestle is deploying blockchain across the supply chain to create a complete history of their products and ingredients, from source to store shelf. In a collaboration with blockchain platform OpenSC, Nestle became the first major food and beverage company to pilot open blockchain technology.
Open blockchain technology may be key to achieving widespread visibility across the food supply chain in the future. Most companies only have limited visibility into their supply chains because some of their partners can't implement proprietary blockchain technology. With an open-source model, organizations large and small could participate, sharing data points securely across a vast blockchain network to create a traceable system that is unmatched by other technologies.
Sustainability Goals
Last year, Nestle also accelerated its sustainable packaging initiative, investing $2 billion. The company set a goal to reduce its use of "virgin" plastics by one-third by 2025, according to SupplyChain Digital.
The investment is part of the conglomerate's push to invest in a more sustainable future. According to the Nestle websites, its other sustainability initiatives include achieving water efficiency goals, creating programs for better water stewardship, and improving access to water access and sanitation through conservation.
A Commitment to Responsible Sourcing
Finally, Nestle is working with its suppliers to create a more sustainable and ethical future. Many organizations are pursuing responsible and sustainable sourcing to improve their image, but several are also realizing significant business value as a result.
Not long ago, Nestle announced that it would disclose its list of suppliers, as well as other data, for its priority commodities. The purpose of the disclosure was to be more transparent with consumers: "Consumers want to know what is in their food and where it comes from. Therefore, transparency in our supply chains is essential, and we will continue to lead in this area."
It was the first disclosure of this type in the industry.
Nestle has also made a commitment to responsible sourcing, and its blockchain capability will be key to demonstrating that commitment. Traceability has enabled the company to confirm that 73% of its total spend for its most important ingredients qualifies as "responsibly sourced," which means the spending aligns with a long list of guidelines established by the company's Responsible Sourcing Standard.
Among its other initiatives, the company is monitoring over 86,000 children who are at risk of child labor and has helped more than 40,000 children access education. The company has established a "forest-positive" approach to sourcing ingredients and plans to move toward 100% deforestation-free ingredients by 2022.
Hear From Nestle at the Next ProcureCon Supply Chain Virtual Event
Nestle has demonstrated a sincere knack for supply chain innovation, both through its technology deployments and its commitments to sustainability, responsibility, transparency, and human rights.
If you'd like to learn more about how Nestle has succeeded in its supply chain initiatives, you don't want to miss Christophe Villain, Nestle's global head of procurement excellence, who will be speaking at the next ProcureCon Supply Chain Virtual Event. The event is happening online from June 29th to June 30th.
Sign up for free and reserve your spot today.