Sustainability is no longer only a back-of-mind topic for retail companies, according to a joint study conducted by SAP AG (NYSE: SAP) and the Chair of Logistics Management at the University of St. Gallen in Switzerland. The study, titled “Sustainability in Retail: Challenges – Strategies – Implementation”, reveals that sustainability has become an indispensable part of retailers’ core business and competitive positioning.
According to the authors Klaus Kriener and Christian Berg from SAP and Joerg Grimm from the University of St. Gallen, companies from various trading segments have four different strategic approaches they can apply to cope with the complexities of statutory regulations and society’s high expectations. Software solutions that address sustainability reporting and carbon management can provide true sustainable value.
Depending on the business model and the trading segment, retailers can apply one of the following four strategies:
- Process and Resource Optimization – Companies pursuing this strategy constantly trim their business processes to achieve efficient resource allocation. This approach aims at reducing to a minimum the negative social and ecological implications, and particularly the costs, of business operations.
- Process Assurance – For companies pursuing this strategy, the focus is not on costs. These companies try to differentiate themselves from their competitors by meeting the highest sustainability standards. They do so by continuously improving their business processes while at the same time actively communicating their efforts.
- Sustainable Product Positioning – Here, companies do not innovate on the process but on product level. New sustainable products serve as a calling card for the market image of the company.
- Innovative Cost Optimization – Product innovations such as an eco-design or environmentally friendly materials are implemented to minimize the economic and ecologic product costs in order to achieve cost leadership in highly competitive markets.
Business software can substantially support the implementation of all four strategic approaches, especially in the areas of carbon management and sustainability reporting. The SAP® BusinessObjects™ Sustainability Performance Management application, for instance, can help a corporation to systematically manage sustainability key performance indicators (KPIs) across all business areas. With the application, companies can report against standard criteria of the Global Reporting Initiative (GRI) or the Dow Jones Sustainability Index.
Dedicated software solutions can also deliver value in the areas of environment, health and safety management, operations and energy management, supply chain management, product life-cycle management and recycling. The authors of the study recommend that retail companies pursuing sustainability strategies examine the potential of business software to underpin their efforts.
Source: SAP.
