How to take a holistic approach to supply chain resilience

Anke Ehlers: Resilience is the ability to anticipate, withstand and recover quickly from any adversities. On a personal or professional level, resilience requires flexibility and the capacity to always search for a solution and find the opportunities. Currently, it feels like the only thing certain in life is uncertainty.

When I look at the big picture, I can see that social, environmental, and economic resilience is not only about mitigating disruptions – it is the ability to thrive in the face of change. It requires flexibility and an unwavering dedication to approach every challenge as an opportunity for innovative collaboration. Resilience is the ability to not only bounce back from disruptions but to completely change the way we think about business cases and do things for the long-term benefit of all.

A good example is how economic resilience aims to better prepare companies to anticipate, withstand and manage any stress. Similarly, environmental and social resilience can be defined as the strength of an ecosystem or population to absorb shocks while retaining its structure, function and adaptability. 

The day-to-day reality for retailers is that we are all facing significant challenges of resilience driven by multiple overlapping factors. Whether it is a disruption to global supply chains, customers feeling the consequences of rising costs of energy and food, geographical conflicts and the long-term outcomes of the covid-19 pandemic, the list goes on. 

Adverse weather conditions are causing supply shortages in fresh produce, and the prices of commodities such as cocoa are hitting an all-time high. Simultaneously, Red Sea security issues and reduced cargo traffic in the drought-suffering Panama canal continue to cause disruptions, diminishing coffee stocks and causing late arrivals of perishable goods in the EU. 

We all face volatile environments; the more certainty and adaptability we can offer to our customers, partners, and suppliers, the better.

AE: When I started to work in sustainability more than 15 years ago, our targets were mainly about reputation and compliance. Then, it evolved to be more of a strategic effort. Now, it's about long-term business risk mitigation and business resilience. This is how sustainability turns into a long-term business case and gets attention in the boardroom. 

I'm a big advocate for the integration of resilient thinking across all aspects of the organisation and with our business partners. It's not just a strategy but a mindset that we must adopt. In essence, that's the ultimate integration of sustainability into business strategies and operations when people embrace long-term thinking and have a holistic view of how, for example, climate change impacts their sourcing strategies and cost-price developments. 

AE: Over the past 14 years, I have witnessed Aldi’s conscientious efforts to embed sustainability across all 11 markets. Our supply chains are broad and complex, spanning over 120 countries. This puts us in a unique position, as we find ourselves with both the responsibility and opportunity to minimise negative impacts and ensure a thriving future for all. 

The first step is that we have elevated the importance of sustainability from a business perspective and made it one of the key pillars of our global business strategy. This has allowed us to change the narrative internally and stressed the strategic relevance of sustainability to drive resilience into all parts of the business. 

On a practical level, this can be seen in how we build our stores based on eco concepts, use of digital watermarks for accurate sorting of waste, working with our procurement teams to rethink sourcing strategies, implement more responsible purchasing practices such as open book costing and paying living wages. We believe that these things make us and our supply chains more resilient. 

Retailers also must be future fit. As younger generations of customers increasingly demand more sustainable and affordable products, the trajectory for driving food system transformation is clear. For Aldi, it's not just about maintaining our cost leadership position; it's also about driving sustainability into the heart of our buying decisions and ensuring that growers and manufacturers are able to meet these expectations. 

If we don't have thriving growers and manufacturers, we will have empty shelves. This realisation is helping us to drive transformation and agree to funds and price premiums that make us more resilient.  

Additionally, the legislative landscape is changing faster than ever, and it is leading to a great deal of uncertainty for businesses. These are frequently complex topics that impact areas that we have not had to consider before. We now must ask ourselves questions such as, “Will our own brand labels break the future EU green claims directive?” or consider how a procurement team that sources globally should apply regional laws like the European Union’s deforestation regulation. Compliance is becoming the new bold, and it's showing business leaders that sustainability is no longer a “nice to have “; it's imperative for future success. 

AE: The Aldi business model is built on efficiency, simplicity and trusted partnerships. However, we know that we cannot create a sustainable world alone. Our objective is to make sustainability affordable as we can't boil the ocean. We are using risk assessments on climate, biodiversity and human rights impact as a basis to identify most relevant categories and supply chains. We then utilise marginal abatement cost curves to identify the best levers and interventions that have the highest impact on social, environmental and economic resilience. This is how we prioritise and orchestrate actions and funds. 

AE: In addition to our assessments and risk analyses, we conduct regular field trips to the origins of our products. These visits often include multiple stakeholders, from our international sustainability team to our global buying colleagues, and sometimes non-profit organisations, so we can take a more holistic view and learn from our partners. These actions help us to understand the true needs on the ground and seek innovative, practical solutions. From cocoa in Côte d'Ivoire to textiles in Pakistan, bananas in Ecuador or nuts in Brazil, we are constantly seeking innovative solutions that support more stable supply chains and food systems transformation.  

A great example of our efforts towards sustainable food systems transformation in 2024 is a trial with black solider flies that is being conducted in several stores in Austria. The food waste from fruits and vegetables are collected and fed to the flies, which then become new organic products suited for animal consumption or fertiliser.  

Aldi's approach to sourcing tropical bananas and pineapples is one example of our efforts to ensure cost transparency. We have integrated our buying and sustainability practices to go beyond certification. Our direct business partners and the producers are benefitting from long-term partnerships that allow them to increase their buying volume and gain planning stability. As a result, there are more investments in activities that benefit workers, upholding human rights and protecting the environment.

We have developed new sourcing approaches in other supply chains that promote optimisation and redistribute value creation from the global north to south. This has been the case with our African cashews project, where we mapped the cashew value chain to improve business practice and partnered with west African-based growers and manufacturers to make our cashew supply chain future-proof. 

IF: What changes would you like to see other leading brands and retailers commit to that can drive the necessary large-scale food systems transformation?  

AE: The change starts with an initial shift in mindset. I have come to learn that sustainability and long-term thinking is a culture that needs to be developed across the entire organisation. Whether it's at the business, governmental or non-profit level, we need leaders with a resilient mindset to think outside the box and drive positive change. Aldi can't do it all on its own - it's an all-hands-on-deck approach that will transform the food system. 

We believe the best way to protect the people and the environment is through joint, partnerships, multi-stakeholder initiatives and projects on the ground for different commodities. 

For example, we are part of the German Retailer Working Group on Living Income and Living Wage Bananas, the World Banana Forum and the UK Banana Retail Commitment on Living Wage. By joining forces, sharing responsibilities and aligning our approach with others, we aim to increase leverage to maximise our impact and ensure that farmers and workers in the banana sector have a decent standard of living.

Collectively, these actions will greatly benefit our supply chains, as we put a lot of time and effort into guiding our business partners towards more sustainable practices. 

Our sustainability strategy is a thread that runs through every aspect of our global business. It's important to recognise that sustainability is a task for all, and our goals can only be achieved through the collective actions of not just sustainability experts and the 200,000 Aldi employees but also through our relationships and shared commitments with other stakeholders. 

The shift towards a sustainable future demands people take individual and collective responsibility in the daily choices we make — and the same holds true at the industry level. I am filled with hope that through heightened group efforts, we can convert disruptions into opportunities that will pave the way for positive outcomes for nature, people and health.