Posts Tagged ‘green supply chain’

Kinaxis has just published its latest white paper:  “PROVIDING CARBON FOOTPRINT VISIBILITY AND PLANNING CAPABILITIES ACROSS THE SUPPLY CHAIN : WHY YOU NEED TO DO IT, AND WHAT YOU NEED TO DO IT”

Carbon is challenging business in many ways and companies will continue to be pressured to better  manage their carbon emissions.  Companies that get ahead of the curve will be rewarded by  investors and consumers alike.  Companies that lag the curve run the risk of losing investor  confidence, consumer trust, and falling behind in product development.

It is estimated that between 40 and 60 percent of manufacturers’ carbon emissions reside in their supply chains. As such, new supply chain visibility and planning tools need to be adopted in order to be able to consider carbon emissions as an additional factor in the decision making process.

This paper provides a brief exploration of the current carbon landscape and will outline the attributes of an ideal supply chain carbon management application.

I just finished reading a paper on Supplier Collaboration, where the key message is that collaboration with suppliers needs to be far beyond tactical exchange of data. It defends a more mature and trusting relationship with key suppliers, where there is sharing of business strategies, joint work on investigation of risks, threats, and opportunities and where partners develop and link plans and targets.

As economies in low cost regions improve, labor costs will increase and work may have to shift elsewhere. Whether the latest trend will lead companies to continue outsourcing their operations to foreign countries or bring them back home, these decisions seem to be cyclical (almost like in fashion, these trends come and go). The truth of the matter is that independent of where your suppliers (and customers) are, no company is self-sufficient, but rather they depend on a complex chain of value added operations that need to be well synchronized to optimize the flow of products and services.

With the recent discussions involving global warming and the need for ‘green’ operations, we’ve been forced to learn and think more about total systemic cost. With that, there is more interest about what happens in the operation before or after ours in the chain. I think that the new way of doing business to satisfy green requirements will help approximate companies and enhance relationships.

This is because in order to improve efficiencies and supply chain coordination, companies will have to start seeing themselves as part of a complex chain of value added activities, and spend time studying the appropriate management of complicated networks of companies and markets. The fact is that leading companies don’t act as standalone firms.

Flexibility and agility don’t come solely from well designed and implemented supply chains – as the paper mentions, they are highly influenced by the quality of the collaboration process. The technology to collaborate and manage information and transactions is available. What needs improvement is the ‘soft’ side of the relationship: built based on trust and integrity so that companies can follow those leading enterprises which strive to ‘define mutually beneficial strategy and cross-enterprise processes’.

I came across this article in cio.com. It outlines Wal-Mart’s plans to implement a “major sustainability initiative” across its supply base. Their goal is to” co-develop a worldwide sustainable product index that will establish a “single source of data” to allow Wal-Mart and (eventually) consumers to evaluate the sustainability of Wal-Mart’s suppliers’ products.” This initiative will be broken into three major phases;

1. The 100 000 strong Wal-Mart supply base will need to answer a survey on practices in energy and climate, material efficiency, natural resources and people and community
2. Wal-Mart will partner with universities, suppliers, retailers and government agencies to “develop a global database of information on the lifecycle of products – from raw materials to disposal”
3. The company will then translate the information it’s gathered into a simple rating for consumers about the sustainability of products on Wal-Mart’s shelves.

The upshot of this is that Wal-Mart believes that its customers will want to be able to choose the more sustainable option when shopping for goods. Like price, quality and reputation, sustainability is becoming a buying consideration.

Wal-Mart has been implementing environmental initiatives internally as well. I’ve seen an example of some of Wal-Mart’s environmental efforts in my local store. We’ve recently been updated to a Wal-Mart Supercenter, complete with grocery store. The freezer aisles only light up the freezer displays when somebody walks by. It’s a bit unnerving, but I’m sure over the course of a day it saves significant energy. Other examples are recycling bins with every garbage bin, sales of re-usable bags and low water flow faucets in the washrooms. If you go onto the Wal-Mart (Canada) website, you’ll find a report on their environmental and corporate responsibility efforts.

The cynical amongst us, might look at Wal-Mart’s efforts and put it down to a marketing gimmick. It may be, but I don’t think so. In fact, it doesn’t matter what their motivation is. The reality is that Wal-Mart’s changes both inside their company and through the new rating system their rolling out, are an indicator of a change that is going to impact all of us. Customers, our governments, and our communities are demanding that we reduce our impact on the environment. Companies are going to need to look at their practices, processes and designs in order to reduce the environmental impact of your operations. The interesting thing is, reducing environmental impact often is simply a matter of reducing waste. The magic of this is that in reducing waste and making the company more sustainable, we actually end up reducing costs.

If Wal-Mart’s initiatives are successful, you can imagine that other retailers will be stepping up their efforts to match Wal-Mart’s. The impact of this environmental focus won’t stop with the brand owners. Suppliers and contract manufacturers to those brand owners will be asked to reduce their environmental footprint. Given that this is coming, companies really have two choices. 1) Wait until one of your customers forces the issue and try to catch up or 2) Be a leader and start looking now at your processes to see where waste and poor environmental practices can be eliminated. Those companies that are environmental leaders will have the competitive advantage in the future.

What are your plans to reduce your company’s environmental impact? What tools do you use to measure and improve your sustainability practices? Comment back and let us know.