21: Materials Sourcing and Efficiency

Material sourcing and efficiency are considered as an important aspect of businesses as organisations rely on raw materials, supply chain, and production. It is a vital component for industries such as manufacturing, FMCG, oil and gas etc. Organisations should have the long term vision to minimize environmental and social impact in a way that resources are managed efficiently.
Efficiency focuses on the internal process of supply chain and production, where resources are used in the best possible way that meets the demand without compromising on quality and cost efficiency.
This ensures the industry's capacity to source materials consistently and captures the social & environmental factors that influences availability and pricing of resources. These variables can have an effect on business risks like reputational risks, supply disruptions, and material shortages.

An effective material sourcing ensures a resilient supply chain that helps to identify the risk, understand significance of risks and how it can be prevented to protect the business. Companies can manage the risks by bringing more visibility to the supply chain, engaging with suppliers and other stakeholders, effective end of life management of product, change in product design and manufacturing.

Acquiring materials with low emissions intensity would ensure a sustainable sourcing. For example, switching towards low-emissions materials, designing circular products so that the material can be reused or recycled for developing a new product as well as reduce the demand for virgin materials. Energy- efficiency in organisations and its production units can be improved by shifting towards renewable electricity, fuel and other alternative sources of energy.
Example: In the automobile industry, the automakers are investing in zero-carbon steel plants for supplementing green steel.Decarbonization of the supply chain is another area where the organisation can focus on to reduce emissions. Maintaining an efficient source of emission data to track and trace emissions throughout the supply chain will help to attain immediate emissions reductions

Importance of efficient material sourcing

• Improved production efficiency
• Mitigating of risk
• Lower cost of capital
• Resilient supply chain
• Low risk supply chain management
• Reduction in carbon emissions

Industry best practices

The techniques that can be adopted by the companies for efficient material sourcing are as follows:

Adopting cradle to cradle design:

For a long term, industries have been producing in cradle to grave process. Procuring resources, processing them to core products and at the end of their life they are discarded where they end up in landfill. Developing creative solutions that promote cradle to cradle design would help the organization to promote circularity and reduce the dependency on virgin materials. This can bring a positive impact on society, environment and economy. Also, the Waste is reused as a resource for new productsand thereby elimninates the waste promoting efficient waste management.
Example: Coal ashes are used for manufacturing cement, producing biodiesel from agricultural industries from plant and animal waste etc.
Implementing cradle to cradle design methods can ensure business flexibility and durability.

Improve Production Efficiency:

The production efficiency of the organization depends upon the raw material used, nature of the business and its operation systems. Efficient use of resources with minimal waste production can enhance productivity of the business.
Example: identifying and selecting the right source, investing in renewable and other alternative energy, efficient water consumption at enterprise etc.
Implementing systematic process control that measures the consumption of resources, determining and monitoring process parameters at all production stages, Considering the environmental impact and contributing to human’s well-being can lead to sustainable production.

Decrease total raw material consumption:

Implementing resource saving measures will help the industries to reduce consumption of raw materials and achieve other economic benefits. Few methods to decrease raw material consumption is:

• Replacing raw materials with secondary products or waste materials derived from other industries. For example- processed waste paper can be used to produce many items such as shopping bags, kitchen and toilet papers, notebook, cardboard packaging etc.
• Recycling and reusing will avoid losses of raw material and energy. For example, recycled metals processed into cans, can be used for the automobile industry, and can be reused to make tools, electric gadgets and jewelry.
• Modification of existing products. For example, many old buildings are being converted into green buildings, designed with many sustainable features.
• Researching and investing in new technology processes for optimum utilization and efficient management of resources.

Implementing these techniques and practices will help the organisation to:

1. Reduce use of raw materials and consumption of energy
2. Cost efficiency
3. Producing quality products
4. Increase in manufacturing quality
5. Reducing environmental impact
6. Improving organisation’s reputation

Case Study

Unilever

Unilever is a multinational FMCG company that produces a wide range of consumer products such as food products, beauty, and personal care products, beverages, home care products, vitamins, minerals, and supplements.

In 2010, under waste and packaging, their objective was to halve the waste associated with the disposal of products by 2020. ^[1]

To attain this objective the company employed a number of measures to lower its material consumption and waste production.

• Improve product design and packaging to reduce material use by reducing use of virgin plastic, redesigning the packages by ensuring all packages are reusable and recyclable. The company redesigned the deodorant cans by reducing 25% of aluminum and similarly used 15% less plastic for shampoo bottles^[2]. The total footprint per consumer (potential environmental impacts coming from household consumption) use has reduced by 34% since 2010 ^[3].
• Improve manufacturing processes, such as implementing closed loop manufacturing processes. By 2015, Uniliever achieved zero non-hazardous waste to landfill across the global factory network.

In 2020 their main focus was on to reduce weight of the package by:

• Lightweighting materials
• Optimising material design
• Eliminating unnecessary packaging

By 2025, all the plastic packages will be designed to be 100% recyclable and reusable.^[4]

Ultimately, Unilever was able to achieve its objective of halving its environmental effect while doubling its growth because of its emphasis on material efficiency. Also, the business was able to draw in environmentally concerned customers by lowering material use and waste output along with increase its sustainability performance.