Natural Products Insider

SEP-OCT 2017

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128 INSIDER September/October 2017 SupplySide West Consumers increasingly seek to be informed about the foods they eat. This quest has led to the growth of "real food" made of ingredients the consumer recognizes and understands. Eschewing artifi cial ingredients or complex synthetic additives, these consumers look to food companies to be transparent about what is in their food and its source, seeking to fi nd brands they trust. "Consumers' relationship with food is fundamentally changing," said Laura Renaud, associate manager of corporate communications for Hershey, during an interview with Food Business News. "They want to know and recognize the ingredients in their products, but beyond that, they also want to know how we're sourcing our ingredients, so sustainability efforts are very important as well." Tackling this demand through the supply chain comes with challenges including the lack of a simple defi nition for conveying requirements up the value chain. This makes it diffi cult to align expectations and requirements. How a company engages its suppliers is critical to its success in driving clean label projects across the business. Benefi ts of Supplier Engagement Supply chains comprise more than 80 percent of most companies' environmental impacts. Efforts to drive clean label outcomes are critical to managing effective sustainability programs. Further, engaging the supply chain has a ripple effect. For example, Walmart is actively working with is supply chain on clean label, environmental and social issues. In Pure Strategies' market research, suppliers identifi ed Walmart as the leading retailer infl uencing investment in sustainability. Each company that engages with its supply chain can have a similar cascading impact. Beyond achieving clean label goals and managing sustainability in the value chain, there is business value to be gained in working with suppliers. Pure Strategies research showed 40 percent of companies surveyed in 2016 achieved more than $1 million from supply chain cost savings and risk reduction in one year using supplier sustainability programs. Research by CDP found fi rms with the greatest supply chain engagement had 67 percent higher return on equity and 50 percent lower volatility of earnings. Anheuser-Busch InBev noted, "Our company's programs are delivering effi ciencies from the farm through to logistics, reducing risk and improving resilience for the farmer and our company." With a signifi cant payoff from investing in sustainable supply chain engagement, how can companies successfully join with supply chain partners to drive clean label programs and address sustainability issues across the supply chain? What tools and strategies are most effective? How can companies expand their reach and ensure they are driving meaningful outcomes? The 3 C's of Supplier Engagement Companies seeking to work with their suppliers on clean label solutions should employ the three C's of supplier engage- ment to achieve their goals: communica- tion, collaboration and capacity building. Communication with suppliers in a critical step in the process, so establishing a working defi nition for clean label is an important fi rst step on the journey. This means understanding how the customer and end consumer defi nes it—whether it is no artifi cial fl avors or colors, eliminating undesirables such as gluten, high-fructose corn syrup (HFCS) or saturated fats, incorporating healthy ingredients such as acai berry, or sourcing sustainably. Providing suppliers with clear priorities is important. Many companies start with a list of banned ingredients. Many fi rms also fi nd collaboration a critical component of their success working with suppliers. This can include the development of joint goals with suppliers and shared projects. Ingredient companies and food businesses are increasing collaboration as both respond to the clean label trend and approach innovation in new ways. Ingredient suppliers must add value and embrace a new role to understand the needs of brand owners and manufacturers. Brand owners and manufacturers must be willing to invest in value-added ingredients and work with suppliers to integrate them into their offerings. Stacey Fowler, senior vice president of product innovation and new venture development for Schwan Food, noted collaboration with ingredient suppliers has been key for her company. "We try to have strategic relationships, as we think about knowledge and the application of ingredients. We make sure we are working with high-quality suppliers who are advanced and have solutions for us. Sometimes they are not 1:1 and then we have to work the equation through the test and design process," Fowler said. Capacity building is often the last link in the chain, particularly when it comes to small suppliers of specialized ingredients. Brands and ingredient suppliers may need to provide technical assistance and tools to Engaging Suppliers on the Clean Label Journey by Tim Greiner Learn more about the keys to supplier engagement for clean label formulation from Tim Greiner during the "Clean Label Strategies and Formulation Considerations" Workshop, underwritten by Cargill, Synergy Flavors and Tate & Lyle, on Tuesday, Sept. 26 at 1:30 p.m. at SupplySide West in Las Vegas. supplysideshow.com Scan Here Clean Label Supplier Engagement at SupplySide West

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