How to save the world by reducing your inventory

Company Salute

The facts of the environmental crisis are tough to read. But one of the irrefutable facts is that businesses make a significant contribution.

In fact, as much as 90% of a businesses’ environmental impact is a direct result of supply chain activity.

And that’s not just huge Oil companies.

Even small to medium sized businesses, just like yours, contribute to half of UK business-driven greenhouse gas emissions. To put it simply, helping the environment should be on everyone’s agenda. And it’s possible for every single one of us.

So what are other businesses doing and what we can we learn from them?

Well Ikea recently launched sustainable living shops to make environmentally friendly products more accessible & affordable to customers.

You could argue shipping everything in flat pack helps too, but that very much depends on your perspective and how long you’ve spent fighting a wardrobe.

Amazon’s launched 206 renewable energy projects making it the most significant corporate buyer of renewable energy sources in Europe. And sure, they’ve had quite the impact on the world of consumerism, so maybe have a lot to answer for.

But ex-CEO Bezos also recently pledged $2Bn “for nature”. Although why he had to fly into space to realise this was a worthy cause is beyond me. You’d think naming your business after one of nature’s greatest triumphs might have meant keeping an eye on it.

Apparently not, but still. Good he’s making the right noises now.

And I know what you’re thinking… “I haven’t got $2Bn spare to give to nature”

Well sure. But it’s not just “big-ticket projects” that make a difference. Even seemingly small initiatives can make a huge impact on the world around us.

Re-Inventory the wheel

If you can forgive the terribly punny subheading, imagine just for a second what would happen if you reduced your inventory by just 10%.

The environmental impact from your business alone might not set the world alight, but every business in the country doing so? Probably would. Or perhaps in this case prevent it.

But how can you achieve a 10% reduction in inventory, without impacting sales?

Well, even the leanest of businesses have a certain amount of ‘fat’. And there are lots of ways this excess can be trimmed to become more shapely.

For example…

• Establishing better stocking policies
• Improving forecast accuracy
• Optimising service levels & safety stock levels

The list could go on. But in essence attaining a 10% reduction is very achievable. It just comes down to effective supply chain decision making.

And that’s made all the easier with the right business partners. For example many of the companies we work with achieve 20, 30 or even a 40% reduction in inventory after engaging our services

And that’s not an intentional plug. Just a stat to prove it’s more than possible.

But how does a 10% reduction benefit the environment?

Well firstly it can reduce CO2 Emissions dramatically.

The process of reducing inventory levels means tighter measures on the stock you have, and deeper analysis on the stock you really need.

This also means you have closer control on how much you need to order. And of course that may well result in placing fewer orders.

Which means fewer containers, ships and trucks and therefore less CO2 in the world as a result.

But you can also minimise energy consumption.

As you know, holding inventory isn’t cheap. Especially at the moment. And it’s not just the warehouse space, it’s electricity & heating. It’s not like you can just switch the lights off. What would health & safety say? 

I jest of course, but think about the amount of energy being expended for this process. Cutting inventory levels by 10% could not only diminish your energy bills but also help the planet.

Cut landfill waste

How much do you send to landfill? And would it be a fair statement to say some of that could be limited by cutting stock 10%?

Amazon, despite their best recent intentions incinerate millions of products.

Now OK, that might make commercial sense. But imagine if they didn’t just stock every product known to man, and instead had a better idea of consumer intentions so those emissions weren’t produced in the first place.

By optimising ordering decisions, optimising assortments & aligning supply more accurately with real demand, you can save thousands of tonnes of stock ending up going to landfill or heading to the incinerator.

Boost satisfaction and improve your brand

The move towards sustainability isn’t just good for the planet, it makes great commercial and branding sense.

Yes your bottom line might be better off, but there’s also a major competitive advantage in branding your business to the increasingly environmentally minded consumer.

For example, did you know, 30% of consumers now prefer to buy from brands that have ethical values? 

Can you afford to ignore the fact 28% of consumers have stopped buying completely from businesses they have ethical concerns about?

Nothing worth having comes easy, and nothing easy’s worth having

There are so many reasons why reducing your inventory is beneficial it seems obtuse you’d have to sell it to anyone.

But to make it truly work for you as a business is impossible without buy-in from everyone.

But imagine if you did. And then imagine what the world would be like if this was the norm. You could be a trendsetter.

Just using it as a marketing angle alone would set a precedent. Others would follow and customers too.

So why not make this a business-wide priority? Why not put it on the agenda for your next meeting?

Whether you send them this article, or simply detail the benefits to relay, you need a supply chain team that’s willing to challenge the current way of working.

You need engagement from Operations to make the most of the efficiency gains on the front line.

But more importantly, the world needs you to make the first move.