Tag Archives: deloitte

Strategic Sourcing & Procurement: Great Starting Points to a Green Supply Chain

26 Aug

Reports surfaced this week about a Deloitte survey of a relatively small group of 50 executives taken from late 2009 to early 2010. However, the survey covered five industry sectors: automotive, consumer products, process and industrial, technology, and telecommunications.

While there was disagreement in some industry’s over what constituted a ‘green job’, there was widespread agreement in a number of areas.  Almost all surveyed indicated that sustainability priorities were at least partially aligned with their companies’ priorities. A total of 65 percent discussed priorities related to improving the environmental sustainability of their companies’ products.

Also, according to the survey, there were several areas of ‘greatest opportunity’ for becoming more sustainable while enhancing business profitability:

– 46 percent cited opportunities related to manufacturing process and operations

– 31 percent brand enhancements and perception

– 21 percent supply chain

The survey indicated a clear recognition (and a growing one) that ‘sustainability’ as a business enhancement plays an importance role in the future of business.  In its summary, Deloitte cited four key success factors that can aid a company’s ability to leverage sustainability, increase business value and emphasize supply chain management:

– Aligning sustainability strategy with business  strategy.

– Integrating sustainability into operations and processes across the value chain.

– Structuring non-traditional collaborations and extending existing collaborations.

– Setting up a governance structure that is supported by the right infrastructure.

On the supply chain point, the survey recommended as I have several times in this space the importance of driving sustainability upstream (vendors) and downstream (customers) in the product/service value chain through collaboration.  Efforts taken throughout the value chain broadens the reach of sustainability initiatives and makes it less isolated.

Implications to Supply Chain Management

So if you’re a supply chain pro (as I assume that if you’re here, that’s the case), you may be asking “Where do I get started down this green path’?”  The aspects of supply chain management that can benefit from a sustainability focus, are well, all of them:  product design, planning/ forecasting, manufacturing, order management, transportation, distribution, service management and reverse logistics. However, if you wish to start somewhere and get some huge bang for your buck, start with sourcing and procurement.

When you think of sustainable sourcing, consider it as a process of purchasing goods and services that takes into account the triple bottom line  or TBL (People, Planet, Profit) aspects of a product and its use. Sustainable sourcing considers how products are made, where and from whom they (and their components) come from, how they are transported, and how they are ultimately disposed of. Companies excelling at sustainable sourcing strive to ensure that their products and components meet or exceed environmental and social expectations.

To meet this need, many organizations are revamping their spend analysis tools to layer in a sustainability component (looking at the Total Cost of Ownership (TCO), or full range of costs- from an environmental and social perspective as well as financial). Simply put, TCO is:

Total Acquisition Cost- Total Lifecycle Cost = Total Cost of Ownership

In future postings, I will delve more deeply into TCO related methods to supplement spend analysis in the procurement process.  In the meantime, rest assured that more companies that are seeking to manage the life cycle environmental impact of their products.  They’re finding sustainable procurement to be a valuable tool to quantify and compare a product or component’s lifetime environmental and social impact while positioning the company for smart growth in a rebounding economy.

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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Shades of Green…Getting the Most from Your Sustainability Initiatives

13 Apr

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Are you “dark green” or are you “light green”…or are you a trendy “blue thinker” (having abandoned the “green” mantra as not deep enough)?  Well, two articles caught my eye this morning, both located on a very trustworthy e-zine, the Environmental Leader.  The first discussed how corporate marketers expect their companies to increase environmental sustainability initiatives over the next two to three years.

(http://www.environmentalleader.com/2009/04/10/survey-corporate-marketers-foresee-greater-investments-in-sustainability)

The second article was by Deloitte’s Peter Capozucca, who cited a 2008 study by the Economist Intelligence Unit, that stated that companies that embrace sustainability have achieved the highest share price growth over the past three years whereas companies with the worst performance focused less on sustainability (http://www.environmentalleader.com/2009/04/10/avoiding-pitfalls-on-the-sustainability-path-to-shareholder-value/)

What struck me in these two wildly divergent articles (and which seems to be a perennial challenge among both public and private organizations) is the principal motivation is behind companies drive to implement sustainable business practices.   Is the motivation driven by market barriers, new regulations, risk management thresholds, competition, globalization of goods and services, supply chain, cost containment, profit, or more altruistic reasons?   According to the Fleishmann-Hillard led marketing study:

“…three-quarters believe that corporate reputation, corporate culture and technological advancements will be the drivers for sustainability. The Obama administration’s policies also will drive the adoption of corporate sustainability programs, according to 63 percent of respondents. “

Whatever the reason it is clear, as I am discovering here in the Northwest, that sustainability and all that it offers organizations is becoming more prevalent in today’s society.  One size does not fit all when it comes to defining sustainability.  To truly be effective, an initiative must create positive change in fundamental organizational behavior, both within, upstream and downstream of the organizational walls.  This change must provide long term, measurable and meaningful value.

And despite the fact that the economic slowdown has dampened the speed at which organizations are implementing sustainable practices, organizations are finally “getting it”. A few key pointers as you head down the sustainability path:

  • Know your driver
  • Develop a compelling, clear vision of sustainability
  • Identify critical sustainability issues
  • Select areas of focus- look outside the “four walls”
  • Develop and adopt goals and measurable performance indicators
  • Reflect sustainability throughout all phases of organizational development, planning and implementation processes and decisions
  • Build a network of internal sustainability champions
  • Strengthen relationships with key external sustainability partners

Don’t wait to unlock organizational value. Position yourselves now so that you can emerge as a leader within your business sector through:

  • Optimizing the linkage between sustainability, environmental and business objectives;
  • Creating a performance measurement system that demonstrates bottom line results;
  • Identifying marketplace trends that reward innovation toward sustainability; and
  • Building assurance systems for compliance and credible stakeholder engagement.