P&G — Where Revenue, Savings and Sustainability Go Hand-in-Hand (Part 2)

In the first post in this series highlighting how P&G is not only improving its overall CSR profile but also driving savings and revenue by embracing sustainability at all levels in its supply chain -- from retail displays to supplier management -- I provided one example of how the CPG giant is engaging its suppliers in this area. In today's column, we'll continue the analysis, highlighting other examples of how P&G is working with supply chain partners across its CSR initiatives. Perhaps it's easiest to look at their model from a top down approach. In this regard, P&G's policy to working with suppliers starts with the company's own leadership and that of their suppliers. In this regard, "P&G's new supplier sustainability board includes members from over 20 leading global suppliers and is charged with guiding the development of supplier related Sustainability activities and goals," according to the firm's annual Sustainability Report. But what are some examples of how P&G is translating high-level policy and planning to action?

Consider the case of how P&G has changed the formulation of its Ariel Excel Gel to "deliver savings in water, energy, transportation [and] packaging". Moreover, it is delivering this "Formulation to clean in cooler temperatures, saving energy" costs for consumers. Or consider how the've reduced packaging by working with their own packaging engineering and supplier teams to change packaging specifications for a range of products including the Braun shaver, Braun BodycruZer, Braun Handblenders, Braun Hairstyler, Pantene hair products and Ariel product lines. Moreover, in the case of some products, P&G is working with suppliers to change design specifications. Consider the case of Olay Total Effects, a product where P&G has been able to drive margin improvement and enhanced its CSR profile by redesigning a pump to reduce plastic.

P&G's Ariel washing machine gel, which I touched on briefly in my initial post on P&G's activities, is an ideal example of a product that saves both P&G and consumers money by going green (not to mention driving up P&G's margins and potentially its revenue as well). Consider how with this product, P&G has eliminated the need of washing machines to heat water to a high temperature to maximize cleaning capability (according to P&G, 70% of total energy consumption historically has happened during the product's use). But by changing traditional formulations, P&G has not only created a product that works as well at a lower temperature. They've also created a product that "makes it possible to handle the same number of loads in a highly concentrated format, leading to a dramatic reduction in packaging". And as we all know, as overall packaging sizes shrink, margins tend to increase. And consumers -- at least the "we bleed green types" -- feel better about their purchases. A recipe for improved margins, increased revenues and good PR? You bet.

Stay tuned for a final post in this series examining how P&G is investing in supplier diversity programs as a core component of its sustainability and CSR programs.

Jason Busch

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