How sustainable principles can make you competitive
For smaller companies, winning business from the mid-market is challenging at the best of times. But a conscious strategy to employ sustainable practices is a vital step in gaining that all-important competitive advantage in a suppliers’ market. The future of your business – as well as the planet – may depend on it. Here, we examine some key pointers you can employ to make a difference.
A company’s green credentials can say a lot about their ultimate mission. Having a commitment to mitigating the worst effects of climate change by using smart strategies to reduce, reuse and recycle, can say so much more about your brand in 2021 than by following a competitive pricing strategy alone.
The tender process for contracts with mid-market businesses increasingly expects to see bidders demonstrating a highly structured sustainability policy running through the core of the enterprise before they will even be considered. It’s something not lost on Mumbai-based SME All Time Plastics Pvt Ltd, and Serai, an HBSC-backed business-to-business trading platform for the apparel industry.
Create your story - and tell it
So, what is driving the push for sustainability that is now expected by the mid-market? Lindsey Hermes, Head of Enterprise Solutions at Serai, is clear that the two biggest factors are “regulation and storytelling” – both of which create challenges, but also opportunities, for the supply chains feeding larger companies.
“There are many different geopolitical shifts happening and regulations being formed around those changes,” she explains. “As those regulations change, and are being communicated, the multinationals are really working as fast as they can to keep up with that. That means their supply chains need to respond quickly as well – and they're not always enabled to do so. A clothing manufacturer, for example, operates at the intensive, high-volume end of the supply chain – but if it is going to remain a trusted supplier when sustainability rules around working practices are updated, it has to be able to pivot its approach with flexibility and speed.
“There's also the storytelling end of the spectrum,” says Lindsey. “That's where brands these days want to be able to tell you a story about that garment you're wearing, right down to what material is in the button. This might also include the water programmes that they run in India, or gender diversity programmes in Vietnam. And they can't do that if they don't have the information that they need.” The lesson here is to view the business holistically and ensure your principles reflect everything you do – not just on the production line.
That said, Lindsey adds, small to medium-sized businesses will need to be able to record, measure and disclose this high-quality sustainability data if they want to be a top-tier supplier to multinationals. This type of detail also has the eye of ethically minded consumers, and banks when considering finance.
Even simple innovations can reduce costs
Kailesh Shah, Managing Director of All Time Plastics, knows this from experience. The company has had to deal with the deeply negative perceptions of plastics in recent times, with a view to redressing the balance in their approach to sustainability and creating their own story.
“When we looked at opportunities,” he explains, “we concluded that we could reduce costs. In one case we thought we would need to tell the customer that the price was going to rise because of the difficulty in getting polycarbonate polymer. We then discovered that automobile manufacturers can sell polycarbonate scrap at a very reasonable cost – so we actually lowered the price by 15%, while our processing became much easier.”
According to Kailesh, many aspects of the process are also overlooked or ‘out-of-sight’ in the drive for sustainability: “What are the natural resources which we use? How much oil are we consuming? How much water are we consuming in our production facilities? There are so many other things that are invisible to the customer.”
So, what is the benchmark that larger firms are looking for in sustainable suppliers? “You need to have an offering that’s trustworthy and credible, as well as be digitally-enabled,” says Lindsey. “Ensure also that what you offer is measurable. The more data you have, the more attractive you will be to them.”
Use the soft power of sustainability as your ‘visa’ to new growth routes
Despite the hard data that is vital in proving a company’s sustainability commitment, it’s the soft sell advantage that adds value and potency to a brand. Kailesh recounts how he has managed to secure business off the back of sustainable credentials when he knew that they were not the cheapest offer on the market.
“And those soft factors, though they don't give you a huge margin, they help you stand out because you have been able to demonstrate a certain activity, or you're able to convince the buyer that if we change the design or colour slightly, we would have a more sustainable and a better product.
“When we started our journey, we had only a few retailers who were talking of sustainability and when we asked for changes, they were very reluctant. But now their purchase teams understand the demand for change.”
And this demand for change will only get louder. Lindsey says that, “in the future, it's all about how to make things in the supply chain much more transparent – that visibility of who is in my supply chain. That's where everybody needs to start. It's going to get a lot more streamlined, a lot more open, and a lot more data driven, thanks to technology.”
Kailesh agrees: “I think that journey is very important for SMEs to focus on. It’s going to be a requirement in future, like a visa.
“My advice is: do it for the planet, do it so your children and your family are going to live better. If you look at it like that, you automatically start thinking in a different way.”
