How will sustainable manufacturing be achieved in 2030?
In October, Selfridges announced it was creating a sustainable fashion edit made up of 3,000 items from 100 brands. Its aim is to help consumers make eco-choices, helped by the extension of its ‘Buying Better’ labelling scheme, which highlights the environmental impact of purchases. The campaign is supported by research that says 75% of consumers think retailers aren’t doing enough to educate them on making sustainable choices.
In the world of groceries, Sainsbury’s has announced it will halve its plastic use by 2025. But in order to achieve its goal it has said it will need consumers to change their behaviour, and it will need the support of suppliers.
It’s clear then that CEO activism to meet the consumer eco-conscience is growing, yet it would seem both need the help of the other to make a significant lasting change. As these two examples show, sustainable retail and manufacturing isn’t easy – Selfridges can’t claim its full range to be eco, and Sainsbury’s highlights that success can only come from supply-chain collaboration.
Devising sustainable strategies isn’t easy. And while there are things we can do immediately to help people make different decisions, we also need to do something very radical to make a lasting, positive impact.
There are therefore macro indicators we need to look at to help us develop long-term strategies. So, what are they?
Protectionism and entitlement
Aside from eco-concerns, there are two other significant driving forces. Firstly, like it or loathe it, protectionism is becoming more prevalent and will shape how and where things are produced. Secondly, the notion of consumer entitlement, particularly among the Gen Z and Millennial generations, is strengthening; I should get products made just for me and have a say in how and where they are made. This combines into a powerful set of values and demands companies must meet.
We are therefore heading into a world where people will expect manufacturers to be more ethical and less wasteful. We won’t make something in the hope someone will buy it. We will only make something if someone wants it. Operational models will therefore have to change.
This is where technology can help. Virtual Reality (VR) could really come into its own in the next few years. With clever applications of the technology, consumers will be able to experience a product well before any resource is committed to its manufacturer.
This supports another consumer trend that’s growing fast - the notion of hyper personalisation. We’ll expect to buy products with our exacting requirements in mind, not a product made for thousands of people who are similar to us.
It will start with things you put in or on your body, for instance, cosmetics, clothing, food and pharmaceuticals.
For example, we’ll see more brands offer to make jeans to a person’s precise measurements, if they commit to the brand for five years. It ensures a customer base and is a vehicle for reducing waste.
It’s also a great way for smaller ambitious brands to break into a market and take the risk out of manufacturing items. It gives their fans something exclusive, and ultimately results in loyalty to the brand.
To a certain extent, we already see this approach with some breweries that make small batches of beer that they then test in the pub they’ve constructed on site, and then go on to make larger quantities when they know there is the demand. We’re also seeing a more local model emerge in this industry, where the small batch brew is made at the back of the pub, so it gets to the tap in quick time.
That brings me to buying local. Knowing where my product came from and the provenance of source parts/ingredients will become critical to consumers in the future. As a result, we’ll see companies source parts closer to home. This will become more prevalent as import and export becomes more complex and costly due to taxation, and as protectionism strengthens.
This is where technology can help again. For example, we’ll be using 3D printers to create the pieces we would otherwise import. It will also help brands innovate and test new ideas before committing major investment in the procurement of parts.
But there’s no denying that a model of local sourcing is going to be costly in Britain. While we might be able to use 3D printing to produce the parts at low cost, we won’t be able to guarantee the same low-cost skills or affordable property.
It’s this overhead that will spur on a new generation of co-operative working between brands. We’re likely to see the creation of central manufacturing hubs that are co-owned and shared by large and small brands that want to meet ethical, sustainable demand without the heavy outlay.
This drive to save money and meet sustainable goals will also force through SMART technology in warehouses. Automation of the production line, headsets to communicate with someone anywhere in the warehouse, IoT sensors to record productivity, software to manage inventory tightly, and business intelligence tools that provide insight into what’s happening every second of the day, will all become prevalent.
Without them, business owners won’t be able to satisfy customer demand, work with suppliers to make improvements or anticipate changing trends. Having the right information to hand will help the board take the right strategic decisions and set the right policies, and in turn improve efficiency and brand value.
Winning the eco brand war
The imperatives of protecting our planet are juxtaposed with capitalism and consumerism. It’s clear that the balance is shifting and the brands that read the consumer signs well, and shape their brand values around solving new eco and personalised wants, will win.
Canoo Awards Manufacturing Contract to VDL Nedcar
Canoo, a trailblazing company in the electric vehicle (EVs) manufacturing industry, has officially announced owned and contract manufacturing plans that will ensure the company manages to deliver on its promise to consumers of production and delivery of vehicles in Q4, 2022.
During the company’s first Investor Relations Day, Chairman & CEO of Canoo, Tony Aquila, named VDL Nedcar as its contract manufacturing partner. VDL Nedcar, which I’m sure many of you will already have heard of, is the only independent Vehicle Contract Manufacturer in the Netherlands and has enjoyed fifty years of growth under owners, including Mitsubishi Motors and Volvo cars. According to the report, Nedcar will manufacture the Lifestyle Vehicle for the United States and European Union markets, while Canoo builds a US-based mega micro-factory.
"We conducted an exhaustive search, invested significant amounts of time and resources that span the globe, in our search for our Phase 1 contract manufacturer. VDL Nedcar is the right partner," said Tony Aquila, Investor, Chairman and CEO of Canoo, Inc. "They are the top trusted European manufacturer building high-quality products for leading OEMs, and they significantly outcompeted the other contenders. VDL is also independently owned by the van der Leegte family of entrepreneurs - which aligns with our commitment to support businesses that form the backbone of communities. This strategic partnership will enable us to deliver vehicles to market while we build our Phase 2 factory in Oklahoma. It also strongly positions us for geographic expansion in Europe and builds a lasting relationship with VDL Groep of companies. Our investment will help us scale quickly and fulfil our mission to bring affordable, purpose-built EVs to Everyone."
Canoo and VDL have already gotten to work on vehicle manufacturability and production planning so that Canoo can successfully lay the groundwork for its upcoming US manufacturing operations expansion, which will be completed in Oklahoma in 2022. The Nedcar facility currently expected to produce around 1000 units for both the US and European markets in 2022, with an additional 15000 targeted for the following year.
"Canoo's bold approach to designing and building electric vehicles makes them an ideal partner as we work together to shape the future of mobility," said John van Soerland, CEO of VDL Nedcar. "This partnership advances our strategic vision to provide a contract manufacturing solution and expand our expertise in the EV arena."
Currently, Canoo is entering its GAMMA phase of development and is on track to start production soon. The company intends and expects to launch its Lifestyle Vehicle in Q4 2022, closely followed by the Multi-Purpose Delivery Vehicle and Pickup Truck.
Watch this space.