End-to-end supply chain sustainability: Novozymes lives it every day!!

Novozymes is a major producer of biochemical enzymes, with headquarters in Copenhagen and major manufacturing sites all over the world, including Franklin County, not far from NC State University.   Its products (enzymes) are used in multiple industries, including beer brewing, leather, feedstocks, detergents, consumer products, and a multitude of products that most people know by brand.  The core strength of the company is to replace chemicals with biotechnology, improve efficiency, and grow the use of biofuels.  Its goals are to help customers derive new customer solutions, and it has worked with large companies such as P&G, Unilever, Colgate, and others.  The SCRC has worked with Novozymes on a number of projects, and a recent interview I had with some of their executives provided additional insight into best practices in the integration of sustainability principles into supply chain processes.

Sustainability is often viewed as a concept or an aspiration.  But at Novozymes, it is a fundamental part of the organization’s vision, which has several implications.  First, sustainability must be a daily practice, and reflect the company’s values, voices, standards, and functional strategies.  Second, it must be communicated externally, and goals must be used to measure against the current progress.  Third, incentives must be part of sustainability, including bonuses, salary, and stock options.

Novozymes has taken these steps to integrate sustainability into all parts of the organization.  The company set up a Sustainability Development Board, consisting of Sales, Marketing, Supply Chain, R&D, and others to ensure stakeholder engagement.   This SDB defines projects which are then driven into each department, who take sresponsibility for the outcomes.

A big enabler for sustainability is the company’s Environmental Managment System.  Novozymes assesses much of its supply chain, including assessing suppliers on quality, cost, sustainable efforts.  The company has a global compact focusing on the UN mandates for human rights.  One of the biggest opportunities within this industry for sustainability lies in the fact that its enzymes promote the use of biotechnology to render processes more efficient.  So a big part of the company’s values lie in collaborating with customers to drive innovative sustainable solutions.  But a second component of the sustainability magic that occurs at Novozymes is the productivity improvements the organization discovers through process innovation.  The ability of Novozymes’ scientists to continually improve the types of micro-organisms as they are produced from growth stage to fully mature continues to evolve.  As new enzymes that are more effective are discovered, their efficiency is often doubled.  This means output doubles, while the volume of inputs going into production is also reduced, thus driving sales with lower material usage.

There are other ways that Novozymes drives sustainability into its supply chain.  It has a “triple bottom line” approach to the environment, which enforces total cost reduction, stakeholder engagement, and real improvements to the environment/community.  Sustainability metrics are part of every assessment for every supplier, as well as every business case.  Suppliers go through in-depth audits on energy, pollution, safety issues, and labor conditions.  These are tough criteria, and the bar is set very high.  Their chief supply chain officer noted that “it is tough for suppliers to meet our minimum standards, but if they don’t they are simply not considered for business.  We will produce actions for them to comply with that can get them to qualify at some point in the future if they meet them.  But on issues such as child labor, ethical behavior, and other elements, we simply will refuse to talk to them!  We also emphasize their continuous improvement efforts on environmental performance, including how they assess THEIR suppliers.  And logistics is a big part of this too.  We ship tankers of chemicals around, and a leak is a massive deal, even if it is a couple of gallons.  We will spare no expense on cleanup on any leak.”

Novozymes is also one of the few companies I’ve seen that truly apply Life Cycle Assessments to their product lines, customers, and suppliers.  A team of analysts pursues various analytical models for all regions, evaluating leels of energy, water, and other elements.  The company sponsors the World Wildlife Fund, and has reduced its output of Co2 by more than 1 billion tons.  Its products also have impact on waste.  For example, packaged bread stays fresh for a longer period, up to 2-3 weeks rather than 2-3 days, which reduces wasted bread, enhances shelf-life, and allows for delays in transportation to groceries.  It also partners with major customers such as BASF, P&G, Walmart, Tesco, Marks and Spencer, Safety, Best Buy, and Nike to upgrade sustainable content in their products.  End to end sustainability isn’t just a flippant phrase at Novozymes;  it’s a way of doing business.