I recently came across a great research article written a couple of years ago and published in Elsevier Business Horizons. The article, entitled Best Value Supply Chains: A key competitive weapon for the 21st Century (co-author is no relation, but irony is cool nonetheless), emphasized how leading edge companies have adopted “best value strategic supply chain management” as a strategic approach to stay competitive and drive efficiency. The authors describe this type of approach as way for companies to “excel across speed, quality, cost, and flexibility, and …require coordination across at least four supply chain elements: strategic sourcing, logistics management, supply chain information systems, and relationship management.”
In one example, the authors refer to “firms such as Wal-Mart, Toyota, and Zara [that have] have used their supply chains as competitive weapons to gain advantages over peers. For example, Wal-Mart excels in terms of speed and cost by locating all domestic stores within one day’s drive of a warehouse while owning a trucking fleet. This creates distribution speed and economies of scale that competitors simply cannot match.” Exploring this approach by Walmart a bit deeper indicates several positive outcomes from an environmental perspective also. In the past two years Walmart has committed itself to reducing its carbon footprint by 20 million metric tons by the end of 2015. The most direct manner to do this is to control how it distributes its product. So fleet management and control, and strategic distribution placement equals lower fuel costs, miles driven and hence carbon emission reductions. However Walmart will also accomplish its reductions largely by working with its suppliers on their own greenhouse gas emissions. Looking a little deeper however, shows that Walmart also reported recently that its carbon emissions as a percentage of sales went down. While that is great news using ‘normalized’ performance indicators, the not so good news is that the company’s ‘absolute’ carbon footprint continued to grow as sales and stores were added. So this goes to show you that it is valuable to drive value through the supply chain, taking a strategic, whole systems approach to get a handle on your direct spend and indirect environmental costs. The only way to effectively do so is to look inside the operations of your own four walls, AND explore ways to influence the outside variables that can impact your operations.
The authors also cite three key attributes of a strategic supply chain management process that must be optimized: agility, adaptability (think Darwin?), and alignment (or the Three A’s). I agree in whole that in order to shape behavior and optimize sustainability goals within a supply chain, that its vital the companies seek to 1) set in place tools that increase flexibility and ability to rapidly respond to changes in customer behavior and preferences (agility) 2) reshape supply chains to new ways of thinking (adaptability) 2) align your organizational goals with those of your upstream and downstream suppliers, vendors and stakeholders through improved collaboration and relationship management (alignment). Each of these success attributes plays well in the sustainability arena and in managing an organizations triple bottom line.
As I have repeatedly stated in this space, the supply chain and logistics world is changing- expanding from a company vs. company solar system to a supply chain vs. supply chain universe. Reshaping and reforming your supply chain management practices to reflect changing business norms toward managing to the ‘triple bottom line’ makes for smart business.