This post was originally published on my New Green Supply Chain Blog, which can be found at https://community.kinaxis.com/people/DRMeyer/blog
In the new ‘green’ economy, disclosure and transparency is king. In fact, consumer demand, especially in the retail sector is driving a new “business as usual”, where green indexes that display the environmental footprint of a product are rapidly becoming commonplace. Sourcing sustainable materials can mean, therefore, putting added pressure on suppliers to share sensitive information and help create green products—or risk being cut out of the supply chain altogether. So was the conclusion in a recent article on how many consumer products manufacturers are literally “going the distance” to source sustainable ingredients (http://bit.ly/a1a1Bw). From specialty products like Dr. Bronner’s Magical Soap to larger products manufacturers like Unilever and Method, manufacturers are revisting the design process to source less resource intensive, more environmentally benign ways to manufacture their products. Not only is this good for the environment, but clearly better for companies bottom lines.
A classic case of disclosure in the supply chain came recently with Herman Miller, the popular furniture manufacturer. Years ago the company embarked on the sustainability path, because they clearly saw a business advantage but felt it was the “right thing to do.” The company launched its ‘Perfect Vision’ campaign in 2003, which included green goals such as no landfill waste, no hazardous waste, no air or water emissions from manufacturing, and the use of 100% green energy, all by the year 2020. Simply put, the company couldn’t reach those goals without engaging over 200 materials and components suppliers in managing their own environmental footprints global supply chain.
The company chose to take a holistic approach to design, raw materials, production methods, packaging, shipping, recycling, and even marketing–across the entire value chain. They reached down four full tiers in their supply chain, crafting hundreds of non-disclosure agreements to understand the true environmental footprints of each and every component of their products. They knew that to be a truly sustainable company, they had to green its entire supply chain. This obviously has not happened overnight, but Herman Miller has stayed the course. They embraced transparency and openness but did so with their value chain in a collaborative, win-win manner. To date nearly half of the 200 plus suppliers are in alignment to meet Millers waste reduction goals with 10 more years to cross the finish line. It’s clear to me that most companies are not lagging behind to meet these goals and are stepping up to stay ahead and to stay competitive.
Successful supply chains are based on mutually beneficial relationships between suppliers and customers, so it is important to extend the scope of sustainability value creation by sharing intelligence and know-how about environmental and emerging regulatory issues and emerging technologies, so that suppliers and customers can collaboratively strengthen each other’s performance. Doing so aids in distributing cost of ownership, enhancing product differentiation, and ensuring customer loyalty.
Collaboration and transparency then creates a sort of “reciprocal value creation” in the supply chain, where both suppliers and customers are better equipped and enabled to recognize and quantify each others value contributions to a successful, green supply chain.