Tag Archives: cscmp

Global Supply Chain Survey: Sustainability Efforts Can Move Balance Sheets from Red to Black (with a Little Green)

28 Oct

The eighth annual “Global Survey of Supply Chain Progress,” was released recently.  The poll was conducted by Computer Sciences Corporation (CSC), Supply Chain Management Review, The Eli Broad Graduate School of Management at Michigan State University, with assistance from The Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Europe Magazine.

This year’s survey gauged respondents present competencies and future plans in such areas as supply chain management policies and practices, supply chain continuity, and green and sustainability initiatives.  Understandably, with the down turn in the economy of the past couple of years, the results showed a mixed bag.  However, a key finding from the survey is that supply chain management (SCM) is now perceived by the vast majority of respondents as being of core business importance.  Leaders that implanted SCM practices that led to cost savings yield far greater results than the laggards…er, followers.  Nearly 77 percent of the respondents reported that SCM improvement and emphasis had increased over the past year, leading me and the surveyors to think that many companies may have been much worse off without SCM.

The Green Supply Chain Edge

Meanwhile, green supply chain initiatives indicated “lukewarm results” and once again, the most positive improvements reported resided mainly with the SCM leaders. A large number of respondents reported a modest but steady 3 to 4 percent annual savings, especially in areas of energy, transportation, and packaging.  Clearly, sustainability initiatives have a long ways to go before significant positive results are achieved. But as I see it, that small margin may just be the difference maker for many companies financial health.

The survey found that 49 percent saying they were currently implementing options and another 31 percent currently evaluating options.  When asked to judge performance from a sustainability perspective, the response was a typical bell shaped curve.  Nearly half of the respondents placed themselves squarely in the middle of the pack.

Kimberly-Clark Shows How Green Gets Done

Efficient supply chains are increasingly essential to maintaining prices and generating new revenue.  One example where efficiency has paid off handsomely, with additional environmental benefits is in the case of Kimberly-Clark- you know, the Kleenex folks (and so many other personal care products).   Kimberly-Clark is among those companies that successfully demonstrate that a focus on sustainable business practices goes hand-in-hand with cost reduction and efficiency.  Not only is the company designing and manufacturing products with a smaller environmental footprint, but they are getting smarter about how they transport their product.

According to i2 Technologies, a supply chain solutions provider, Kimberly-Clark is “ both reducing its environmental impact and running a lean and efficient supply chain, which in turn brings real benefit to its biggest customers, grocery retailers, and ultimately to consumers. Along with other initiatives designed to improve its impact on the environment, Kimberly-Clark has implemented i2 Transportation Management order fulfillment solutions in its European and North American operations that manage transportation pricing but have also reduced carbon dioxide (CO2) output. The company estimates that it’s saved over “£1 million, a reduction in mileage of 380,000 miles and a reduction in CO2 of as much as 540,000 kg”.

Perhaps Kimberly-Clarks CEO Tom Falk summed it all up: “”Because sustainability is a core value at Kimberly-Clark, we know that making better choices for the environment and society can many times mean making better choices for our business.”

The innovative example above and the recent CSC Global Survey demonstrate that small incremental gains can make a huge difference between being in the red or in the black on the balance sheets.

This post was originally published on my New Green Supply Chain Blog, which can be found at https://community.kinaxis.com/people/DRMeyer/blog

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“Ch-Ch-Ch-Ch-Changes”: 3rd Party Logistics CEOs Priming for a Sustainable Future, Retooling to Compete

3 Oct

Last week in San Diego (my second hometown), the Council of Supply Chain Management Professionals (CSCMP) held their Annual Global Conference.  Over 3,100 supply chain professionals from 41 countries attended sessions from over 20 tracks.

At the Conference, the 17th Annual Survey of Third-Party Logistics Providers was presented by survey author, Dr. Robert Lieb, Professor of Supply Chain Management at Northeastern University, and Joe Gallick, Senior Vice President of Sales for Penske Logistics. The findings analyzed responses from 31 third-party logistics company CEOs across North America, Europe and Asia-Pacific.  The study was pretty comprehensive in its findings but me being the sustainability focused guy that I am, poured through the document in search of green stats. And as expected they were there.

With 87 percent of the companies reported to be rebuilding their workforces in 2009, CEOs revealed that green practices are still a major priority in the 3PL market.  Further, more than 80 percent of the companies surveyed now have formal sustainability groups within their companies. Even in the wake of the recession, most of the companies surveyed these are still heavily committed to environmental sustainability issues.  Take note of these numbers according to the survey:

  1. Fourteen of the 31 companies began new green initiatives during the year.
  2. Eighteen of the companies expanded existing sustainability programs.
  3. Twenty-five of the companies now have formal sustainability groups within their companies.
  4. Twelve of the 31 CEOs believe that their sustainability capabilities differentiate them from their competitors.
  5. Ranking second and third respectively in North America were opportunities related to potential differentiation based upon the companies’ environmental sustainability capabilities and opportunities related to expansion of service offerings.

Also, 27 of the 31 CEOs noted that some of their manufacturing customers have begun to move toward “near-shoring” options during the past year.  This type of “reversal of fortune” for U.S. manufacturing has been driven by quality control issues, fuel costs for transoceanic shipping and (wishful thinking perhaps) a desire to stand by corporate commitment to curtail carbon emissions associated with reduced fuel usage.

Additionally the report cited several business practice trends, related to risk management/risk sharing; business continuity planning; performance based contracts; and enhanced vendor qualifications.  Each of these growth areas fit well into the sustainable sourcing, accountability and risk management picture that I have spoken about in this space as essential elements of a green supply chain.

While the survey results are impressive, there is clearly room for improvement in terms of implementing actual “boots on the ground” solutions.  There are increasing examples everyday where 3PLs have demonstrably improved operations efficiency while lowering fuel use, energy use, air emissions and indirectly related resource consumption and waste generation. But at the same time, these efforts must be able to strike a balance between cost and benefit that CEO’s can understand, appreciate and rally around.  The stat about CEO’s belief in how sustainability can differentiate their companies (only 38% are on board) tells me that much still needs to be done to make a business case for greening of supply chains.

In another recent reportthis past spring by the Economist Intelligence Unit (EIU) of the Economist Magazine,   supply chains are in a massive state of flux.  Individual supply chains “have shrunk at the margins and the network has become denser”, according to the report. The report concluded that many companies are forced to choose between having supply chains that are simple and compact, or those that are complex, redundant and dispersed.  Efficiency versus resiliency, in effect.   But the report found it possible to increase both efficiency and resilience.

The EIU report cited that a more efficient supply chain enhances two drivers of value: operating margin and asset efficiency.  What was notable to me was a note in the report that said “efficiency also has the beneficial side effect of shrinking the carbon footprint”.  The report cited companies like Coca-Cola, that are looking at ways to move to central distribution, cutting back on empty loads (bringing back post-consumer recycled cans  for instance) as ways to ‘own’ its supply chain and drive efficiency (without losing resiliency).

Issues such as supply chain resiliency and agility are two criteria that should be evaluated as 3PL’s move down the sustainability path and create a business case for operational changes.  I am fairly certain, based on the Penske sponsored 3PL report that CEO’s and other top managers will be asking the tough questions, so be prepared to come to the table with some compelling ideas and numbers to back it up.