“Don’t let perfection get in the way of better!” Supply Pilot’s James Butcher on green supply chains
We speak to CEO James Butcher about how supply chains in the consumer electronics industry can be improved and whether we can ever reach a fully sustainable system
Supply Pilot helps businesses become more successful and sustainable through supplier collaboration. IFA Newsroom speaks to the company’s CEO James Butcher who says the world’s supply chains are not green at present and offers his expert insight on how to improve this.
How green are global supply chains at the moment?
I’m going to say that, fundamentally, supply chains are not green. Globally, industry remains focused on a traditional linear economy – take, make, waste. And most companies still measure success based on consumption.
A recent report says that only 8.6% of the global economy is circular, so what that means is over 90% still rely on taking new virgin materials to make things in that traditional ‘take, make, waste’ linear economy, which is why we are consuming more every year than the planet can cope with.
Whether you’re in retail, consumer electronics, or pretty much any discrete manufacturing, 80 to 95% of your impact is in your supply chain – 95% of your natural capital is being consumed in that supply chain, and, more importantly, 99% of the complexities are in the supply chain.
There might be some exceptions, but that is the broad reality.
So how does Supply Pilot believe this be improved?
We need a root and branch change in the mindset. And we shouldn’t let perfection get in the way of better. For us at Supply Pilot, it’s about better supplier engagement, better supplier management – not based on reporting or punitive measures.
Sadly, legislation very much focused on reporting, rather than impact and making a change. It should be about going to suppliers and creating capability and educating them – creating space and freedom for them to propose new ideas rather than mandating. How can you win hearts and minds when you’re forcing compliance?
Can you give us some examples of what sustainable changes might look like?
If you take Google’s home electronics business, they looked at the components they were purchasing to make their smart speakers and they just decided to start ordering more of everything, so they’d have a bag of 5,000 screws rather than 2,000.
Or they would have a case of 280 cables rather than 100. These were just small changes which saved tonnes of packaging, as well as all the costs associated with shipping – financial and the carbon footprint.
I might be extrapolating, but I my guess is that when it was done, at some point in time, it was just based on what was convenient, rather than necessarily what was the most sustainable.
Another Pilot Supply example involves a consumer electronics company which started reusing packaging – so the boxes used to ship components were sent back to be used again and again. So, on average, a box was used five times. That equalled savings of about 200 metric tonnes of carbon dioxide, and it is a measure of just how much virgin material.
Finally, a big CE company in Ireland decided to rip up the manicured lawns outside their HQ and created a wildflower meadow. This was a win for everyone as the staff loved it and it got them thinking about sustainability, it was good for local wildlife and it paid for itself as they no longer had to pay to mow it.
Those really simple examples come from working with suppliers on a case-by-case basis, where we talk about supplier again, to talk to your suppliers about your strategy, your products and what you’re buying.
But importantly in the current climate front, they will save money as well. Overall there’s a big misnomer that sustainability has to cost more and sometimes it does. But there’s never been a faster return on investment for green energy at the moment. And the examples I just gave you are all about resource efficiency. Let’s use the limited materials we have and avoid waste.
What’s in it for the companies involved?
Well, there’s the money saving aspect but it could also boost profits. It might be a little bit controversial to say sustainability is competitive, but in some areas, it is. You can say to the customer ‘buy my product’ because I can demonstrate I’ve done XYZ in my supply chain and then it’s a win-win for everyone because we all sell more, the planet benefits and the consumer benefits by feeling great about their sustainable purchase.
And there will be certain places where collaboration is not just important, it’s essential to be more sustainable. And there’s others way to look at how I’ve made this change, isn’t it great? buy my products is more sustainable.
There’s also the challenge of finding enough resource for things like rare metals that go into all of our consumer electronics, into batteries, etc. In this case, resource recovery is essential, and if you’ve not thought about sustainability, you won’t have a business in 15 or 20 years’ time.
In fact, PwC did a report in April this year stating that 55% of GDP is at risk due to issues with climate supply chain and scarcity materials.
How much of this could be driven by the consumer? Do you think they are more aware and are looking for more sustainable options?
So, there are lots of statistics saying that people are seeking more sustainable options but the sad reality is that very few of those will actually pay for those more sustainable options, and it’s also down to companies’ behaviour which nearly always puts convenience over sustainability.
For example, wireless chargers – I don’t have to put my phone in. I can just put it on this thing on the table and it’ll charge wirelessly. But they can be as much as 50% less efficient.
Personally, I always think wireless chargers should just be made illegal because it’s just laziness. That might not go down well at a consumer electronics conference, but it’s the truth.
It would be great if one of the big brands came out and said “we’re not selling wireless chargers anymore because they’re wasteful and instead we’re focusing on sustainability” and they would probably find they have greater brand loyalty by taking that stand.
More mobile phone brands could also offer money for trading in their phones. This currently works well for many brands, but it could go further.
Then brands can start to build their own circular supply chains – getting back the materials and ownership of some of the assets that go into new products.
What impact do consumer electronics and home appliances have on the sustainability of supply chains?
By their nature, consumer electronics have the biggest impact as they’re often in our hands, so manufacturers in this space have a huge opportunity to modify behaviour that changes what we buy. That will then modify supply chains in turn.
For example, manufacturers could ban inefficient wireless chargers and standardise chargers across all phones. And then, instead of simply including a new cable by default, they could ask if you want, or need, a new one, as I for one have 10s of cables at home. This would be a crucial change in mindset and all you’ve done as a brand is ask me a question.
Another example is with washing machines. Why does my washing machine default to a 40-degree wash rather than 30-degrees? That would save money and it’s better for the environment.
The market is too focused on convenience – on delivering sometimes within the hour – and there’s never going to be anything sustainable about that.
So, I think the biggest impact is the positive impact they can have – how they can change our behaviour. There is a great opportunity for education and a great opportunity to change behaviour.
How much of the issues are down to built-in obsolescence?
The new legislation [Right to Repair] around repairability should help with this and start to impact on CE companies producing technology for technology’s sake. Also, we need to be designing products with that resource recovery and repairability in mind. Currently it isn’t.
For example, old Dualit toasters could be repaired – you could change the element if it broke – but with new, cheap ones, that isn’t possible as you’re meant to throw it away and buy a new one.
But I think the good news is a lot of these things play together, so people will pay more for a better appliance or device that can be repaired and that will last longer.
In terms of resource recovery, a good example is in cars. It used to be fairly easy to strip out all the metals, but as cars have become more technologically advanced, cables become much finer and the cost of recovering that copper starts to becomes quite prohibitive. Therefore, it all just gets melted down with the rest of the car. You lose the copper; you also contaminate the aluminium on the circle.
It seems a little bit counterintuitive, but actually if somebody was to put bigger copper wires in and put that initial cost in the start-up, it’s actually now worth getting the copper out at the end of the new kind of material.
Do you think there is any chance that we could have a completely sustainable supply chain? And how do we get there?
I think that definition of sustainability will change. For me, sustainable living is basically living within the constraints of the planet in an equitable and fair world.
We need to be using replenishable materials. We need to get to a point where we are living within our planetary boundaries. And at the moment we’re exceeding five of nine planetary boundaries. But, we can get there, and we are seeing all sorts of moves in the right direction. Supply Pilot exists to help companies move further in the right direction.
We need to make sure that we are circular enough. So not just recycling. A lot of people think that if you take our traditional linear economy, and just turn it back on itself, that’s good enough. It isn’t enough.
We require a shift in mindset and we have to change business models around levels of consumption.
It’s just a different language and we talk about kickstart assessments which enables brands to look across all pillars of their business – so green chemistry, materials concern, packaging, social carbon – and ask “where are my suppliers?”
Success will be about the little wins. So, imagine if I am an electronics manufacturer and I’ve got 5000 suppliers. If you at the top of the chain want to educate your suppliers and encourage them to be more sustainable you could get to a point where you have 5000 companies, or potentially 25,000 people who have been educated to think differently about biodiversity from someone they listen to.
They would just need to commit to one thing – a wildflower meadow, or some beehives. No matter how big or small it is, it’s worth it.
You can also ask questions like, “what’s the impact of our paper packaging?” and, “what are we doing when we build a factory? Do we put a big wire fence around the building or a big hedge to encourage wildlife?”
It’s logical game theory, as many would call it. If you don’t get everything, get everybody to get a little bit better. Then they go in the right direction.
So, big brands can educate suppliers as to the importance of biodiversity but in a context-appropriate way. If you do that, and that’s all you do, all those little wins will add up to a big win.
For more IFA news, click here