Overproduction and waste are exacerbating supply chain problems and hitting 3.6% of annual business profits as nearly 8% of stock perishes or is discarded, Avery Dennison Corporation report shows.
This significant loss includes 4.3% of stock that spoils in the supply chain before it even reaches the shelf with a further 3.4% discarded due to overproduction – this loss amounts to $163.1 billion worth of inventory.
The data has been published in a new global report released today (November 10) by Avery Dennison, a global Fortune 500 materials science and digital identification solutions company.
The report – the Missing Billions: The Real Cost of Supply Chain Waste – assesses the state of global supply chains and the issue of waste across the US, UK, France, China and Japan.
The current supply chain disruption is leading to a waste crisis making the case for sustainable practices even more urgent and necessary.
The data analysed 318 global firms and found that while companies are aware of the problem, they are not investing the budget required to fix it, Avery Dennison says.
Respondents to the study says that on average 28.9% of their organisation’s sustainability impact comes from the supply chain; however, just 4.4% of technology budgets on average are specifically dedicated to supply chain sustainability improvement.
Over nine in ten businesses surveyed stated they are under pressure to become more sustainable with 60% claiming it is a “high” priority. Respondents cited challenges to achieving supply chain resilience including “integrating disparate systems” and “insufficient coordination among internal stakeholders”.
61% of organisations have already deployed solutions to track unique items but this will rise to over 95% as a further 34.6% “plan to” as companies seek to improve supply chain visibility and traceability.
The report highlights mixed signals about consumer shopping habits. Unsurprisingly, cost is a high priority for consumers; however, the report, which surveyed 7,500 consumers globally, ranks quality equally alongside cost as the number one concern at 22%.
UK consumers are the most cost-conscious with 28% listing it as the top priority followed closely by France and Japan, both at 25%. China is a significant outlier with just 6% of shoppers surveyed stating cost as their number one concern.
The data also reveals some concerning trends around sustainability with just 16% of shoppers putting sustainability in their top three “deciding factors” and only 12% prioritising the ethical sourcing of their products.
There is a huge opportunity for organisations to accelerate digital transformation that will help to create longer-term systemic change.
Initiatives by businesses to achieve greater transparency can have benefits for consumers too. Over two in five surveyed (43%) agree that when buying clothing, “transparency about a product’s journey to the consumer is important to me” and “being more transparent about materials/ingredients used” was ranked as the top driver for making more sustainable decisions when buying food and beauty products – stated by 37% and 35% of shoppers respectively.
Senior vice president and general manager at Avery Dennison Smartrac, Francisco Melo, said: “The current supply chain disruption is leading to a waste crisis making the case for sustainable practices even more urgent and necessary.
“There is a huge opportunity for organisations to accelerate digital transformation that will help to create longer-term systemic change. The moral and economic case is clear and the study shows the desire from organisations to embrace technological advancements for the benefit of business and the planet.”
