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  • Writer's pictureZsofia NAGY

StartUps and SMEs: start doing total cost and environmental impact calculation!



I've been supporting and trialling a lot of sustainable and circular products from startups and SMEs during the last 3-5 years, which means I've ordered a lot of new products to test them out.

Little do these companies know, that I'm also testing their supply chains as a professional. :)

As much as I am a huge fan of innovative and circular products and managed to replace around 80% of my needs with them already, I could not help but notice similarities in lack of international logistics and manufacturing knowledge and/or lack of care in this matter, which can have a negative total impact on the environment and the customer service experience in the end.

My observations so far:

  • Takes too long to even process an order (3-5 days) at start, then long days at different points (manufacturing site, then shipment consolidation centres etc.)

  • Websites have zero valuable information on where they actually produce and ship from (lack of transparency) - I always have to look it up separately - lot of digging!

  • As I suspected many ship from China, which would not be a problem as long as it is clear and they don't try to sell the products as if it was from US or Europe (manufacturing/shipping)

  • Shipments take (pre-COVID) around 20 days on average (normal from China), since COVID it went up to 40 days on average (this, I won't hold against anyone though). The reason why it takes so long is the enormous amount of time spent: in transits (between manufacturer and shipping centre, then another shipping centre, then at borders between CHN/HKN/Singapore etc, then another shipping centre...), in between different logistics service providers & handovers (goes through at least 3-4 of them each time, if not more), lot of ambiguity in the handling process itself.

I am a huge fan of sharing economy and related digitised solutions and very much appreciate the possibility that I can sort of track my shipments on parcelsapp.com, no matter where it comes from or where it ships to and who is handling it. They provide an outstanding transparency compared to what we had before (still can be improved, but many of the issues on the site actually come from the issues in the background processes themselves!).

BUT...and here comes the catch: these services should also be utilised by these startups and SMEs to improve their processes and ask for help from logistics experts.

Why?

What these companies lack are:

  1. transparency into total environmental impact of their whole supply chain

  2. control over their actual costs as they pass it on to the customer - I don't have a problem with paying for the whole shipment as long as I can choose where it is shipped from and how much it really costs, also environmentally! If you make your customers pay for shipping, allow them to make these choices (can impact the product cost as well, I know and I'm still interested!!)

  3. feedback loop into the service providers' work and how they should improve these (the majority of the root cause here is that when it comes to this part of the business case, the sole aim usually is minimizing cost/impact for the startup or SME...wrong, but sadly it is the case in the investment world)

  4. real value provided as part of a circular economy principles as the shipment details actually reveal that the total environmental impact is way larger than it should be to be really sustainable or circular in the first place

So what can be done?

  1. have an expert on board early in the process of designing the product/service who can help set up a circular supply chain with the right principles (total cost calculation methods, total environmental impact & circularity principles need to be applied correctly to get to the right business case) - this isn't about money, you can get experts pro bono or also for referrals, it is your choice to have a super expensive consultancy or an SME, who shares your values!

  2. when you have this plan, check if it is still worthy to manage from your point of view and pitch it accordingly to investors

  3. dedicate time to choose your suppliers rigorously including manufacturing sites (even if your product is made by a CMO/CMDO setup), it will pay off on the longer-term

As the picture shows: I'm watching and so do others. We would like to see more conscious companies, not matter the size.

I can help as a professional. Let me know when you made up your mind.

In the meantime, I'm watching how long it takes to get the latest trial product I ordered and where it goes around the Globe unnecessarily.

Good day everyone!


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