In honor of Earth Day I thought I’d take the opportunity to outline in my humble opinion why having a green supply chain is no longer a nice-to-have – it’s a necessity. Gone are the days when consumers would look the other way while companies rode roughshod over the environment in pursuit of a more profitable supply chain. Nowadays even governments (the good ones at least), are actively involved in making sure Mother Nature is protected, at least to some extent. Are you doing your part?
There is a growing need for sustainability integration into supply chain management and if you haven’t already started down the path to greener pastures you’re falling dangerously behind the trend, and it could be costing you more than you know.
According to a recent World Economic Forum report written in collaboration with Accenture, companies like UPS, SABMiller, DHL, Unilever and Nestle are among 25 multinational companies that have increased their revenue by up to 20% while cutting supply chain costs as much as 16% thanks to a focus on sustainability. Beyond Supply Chains: Empowering Value Chains outlines 31 best practices for businesses to follow in order to see similar results, in what they’ve termed “the triple supply chain advantage.” Basically, companies work to achieve profitability through measures that benefit society and the environment at the same time.
A few of the more interesting practices include collaborating with the competition and using innovative technologies to drive savings. Why would anyone want to collaborate with the competition? And how exactly does that lead to a green supply chain? Nestle is referenced as one company who has taken this approach and seen the gamble pay off. They’re collaborating with rival PepsiCo, combining parts of their supply chain for fresh and chilled products in the Belgian market. The report says the two have “bundled warehousing, packaging and outbound distribution and synchronized deliveries to retailers to get full truck loads.” As a result, transportation costs dropped 44%, carbon emissions were reduced by 55%, and retailer and customer satisfaction levels increased. Talk about a win-win scenario.
DHL has also made efforts toward a green supply chain with the implementation of an aerodynamic trailer, first deployed way back in 2006. The Teardrop™, developed jointly with Don-Bur, is more aerodynamic than traditional models, and delivers fuel and CO2 savings of up to 12%.
What I also found particularly surprising was the report’s reference to the fact that profitability went up at almost the same rate a company’s carbon footprint went down. Carbon gas reduction was between 13-22%, while revenue was uplifted 5-20%. Add to that the fact that brand value increased an average of 15-30% and I’m seriously starting to question why any business isn’t taking a good hard look at implementing a green supply chain.
Of course, I’m fully aware that’s a lot easier said than done. There are some pretty big hurdles that need to be overcome before a green supply chain become a reality, most notably the associated costs needed for implementation, ensuring compliance in global, non-transparent supply chains, and the difficulty in identifying and utilizing options that will actually drive value for the business, society and the environment. I won’t go into great detail here about how you can get your business on the path to a green supply chain, but check out a previous blog, Start small, stay focused and keep going, by my colleague John Westerveld for some great information.
Green supply chains help promote lean operations, earn the admiration and loyalty of customers and employees, and improve profitability. So get at it! It’s not going to be easy, but it will be worthwhile.