Tag Archives: supplychain

The Sky’s NOT Falling: New Supply Chain, Logistics Surveys Cite Positive Benefits of Sustainability, Challenges Ahead

13 Jan

Geesh.  You’d think by the Twitter chatter that erupted from this weeks article in the Environmental Leader that the sky was falling.  The headline “Supply Chain Chiefs: Sustainability Isn’t Key” caught readers’ attention, but perhaps the messaging was taken a bit too negatively.

The article was focused on two recent surveys by eyefortransport (EFT), a very knowledgeable and (in my view) a marquee market research entity focused on the transportation industry.  In the survey, chief supply chain officers were asked what key challenges they saw for 2011.  Well, a majority that responded did not view sustainability as a key challenge in 2010/2011.  According to the survey, “supply chain officers identified the “biggest business challenges driving their supply chain agenda” as variability and forecasting (42 percent), cost containment and reduction (39 percent), and supply chain visibility (35 percent). Sustainability strategies and practices only ranked 11th in the list of concerns, with just over 15 percent.”

A second EFT survey of logistics service users’ ranked sustainability only 15th in importance out of 24 challenges they face, behind such factors as the economy, cost control and fuel price fluctuations.  Meanwhile, the survey noted that respondents from third-party logistics services, “ranked sustainability sixth, with the economy, cost control and demand forecasting coming tops.”

The two surveys results yielded no real surprises. And where some may see this as a sort of “green Armageddon”, I only view this as a “teachable moment”.  One of the comments to the post rightly noted that “supply chain sustainability is a powerful means of supply chain streamlining, cost reduction and agility enhancement, and the topic can be used to improve communications and business relationships through the supply chain.”

Because the principal question posed was “what are the biggest challenges that supply chain managers’ face”, I’ll go out on a limb to say that “first mover” supply chain managers are already getting a handle around this issue and maybe the “concern” level is not as great as in the past. In fact, the survey results suggested that in the past couple of years, organizations are generally acting in a more proactive, sustainable manner. As the survey went on to indicate, well over 60 percent of those companies surveyed had implemented or were initiating sustainability focused efforts in 2010- ranking around 10th out of nearly 40 supply chain management project categories- that’s actually a pretty good number!   In the logistics survey, most respondents noted a far higher level of positive environmental performance in 2010 compared with 2009.

You see- it’s all about how you look at a situation- greening of the supply chain through sustainability is not looking too shabby in my book, compared to just a few years ago.

If I had to call foul on the two surveys, perhaps EFT erred in recognizing sustainability as its own category.   Perhaps that was by design, but given the embedded nature of sustainability, I could easily link sustainability with a number of other categories that did rank high on supply chain officers “concern” lists, namely: cost containment and transportation and logistics constraints; also lower ranked issues such as product lifecycle, government mandate compliance.  In reality, sustainability is an overarching business approach that cuts across many business silos.  Supply chains by nature are systems-based networks that require dynamic management of internal and external inputs and outputs throughout a products value chain.  Supply chain sustainability is a powerful tool to identify and manage supply chain inefficiencies, reduce waste and optimize business performance.

As I suggested in an earlier article, the supply chain enablers are those who lead through innovation and don’t procrastinate.  These organizations have vision– for the short term and long-term.  These are the organizations I spend time evaluating and from which I share success stories.  It’s still valuable though to understand why some businesses hesitate in acting on sustainability or supply chain greening.  If you are a supply chain officer or logistics manager that is not paying attention to sustainability focused innovators yet, I suggest you take a closer look at what your peers or competitors are doing.  These leaders are changing the way business gets done- and more sustainably I might add.

Clearly by the EFT survey, much more work remains in 2011 but I am confident that supply chain greening and sustainability is here to stay.  Read why on my last post “Five Reasons that Sustainability and Supply Chain “Greening” Will Stick in 2011”.

Advertisements

Comparing U.S. and U.K. Government Approaches to Green Procurement & Supply Chain Management- Which is Better?

21 Nov

Two news items caught my eye this week, not only for what they were attempting to achieve but for the (possibly?) vastly different approaches being taken.  Two governments- one the U.S, the other the U.K.  Both governments have been progressively stepping up efforts to engage federal contractors and vendors to support government green spending efforts, but by different approaches.  First let’s start stateside.

Last week’s GreenGov conference in Chicago generated a lot of buzz.  One notable outcome was the creation by the White House Council on Environmental Quality and US General Services Administration-led effort called the GreenGov Supply Chain Partnership and Small Business Pilot.  The primary goal of this voluntary collaboration between the federal government and its suppliers to enhance the federal governments compliance with Executive Order 13514 by creating frameworks for a greener, more efficient supply chain.  One primary goal of EO 13514 “to establish an integrated strategy towards sustainability in the Federal Government and to make reduction of greenhouse gas emissions (GHG) a priority for Federal agencies.”  The EO goes beyond just focusing on reduction of greenhouse gas emissions though, encouraging suppliers and vendors to take a proactive approach to environmental management (even going so far as encouraging voluntary certification to standards such as ISO 14001)

According to Council on Environmental Quality Chair Nancy Sutley, “The Federal Government purchases $500 billion in goods and services annually, so you could say the Federal supply chain represents an enormous opportunity to support a clean energy economy.  Through our new GreenGov Supply Chain Partnership, Federal suppliers can agree to voluntarily measure, reduce, and report their greenhouse gas emissions to help GSA design an incentive-based approach to developing contracting advantages for companies that share our sustainability goals.  We’ve already partnered with 60 small businesses for a pilot program that will explore the benefits and challenges of measuring greenhouse gas emissions for small business participants.”

Participating companies will share their experiences to help GSA develop a phased, incentive-based approach to developing contracting advantages to companies that track and disclose their greenhouse gas emissions.  Small Business Pilot Program participants will receive technical assistance through GSA to measure, report and reduce their greenhouse gas emissions as a part of the effort. More information on the GreenGov program is available at www.whitehouse.gov/greengov.

Meanwhile, “across the pond” (I love saying that), the British government recently made a similar announcement, but the tactics are quite different.  In October, the Department for Environment, Food and Rural Affairs (DEFRA) published its “Action Plan for Driving Sustainable Operations and Procurement Across Government”. In this document they state that  “The Government is committed to becoming the ‘greenest ever’ and will lead by example in its operations and procurement”. This  is a sweeping program to green government (very much like the US. plan,  but going well beyond greenhouse gas emissions reduction).  In planning to achieve these goals, DEFRA has established “Government Buying Standards”.  The Suppliers guide provides detailed standards and best approaches to sell goods and services to DEFRA .  Other agencies in the British government have developed similar standards as well.  In  each case, robust approaches haven been developed to engage suppliers,  educate them on environmentally and socially responsible practices.  But thanks to information provided to me on a chance Twitter encounter with fellow Twitterer @garethkane,  many U.K. agencies are now scoring suppliers and giving them points (as  much as a 10% edge) for enhanced green practices as part of the tender  process.

Whereas the U.S. GSA approach on the surface appears collaborative and designed to create a robust procurement process, the downside in my view is that progress will be slow (I view this as the “carrot” approach).    The U.K. approach is more of the “stick”.  In both cases, transparency and collaboration are keys to success.  But I cautiously view the GSA approach as somewhat unnecessary and it does little more than slow down the inevitable.  As GSA says, it wants “design an incentive-based approach to developing contracting advantages”- OK, then do it, just like the British government did.  And while I like the small business “pilot”, is it really necessary to make efforts “voluntary” for larger businesses?

Perhaps the U.K has been at this a while longer, though I doubt it.  Greening of the U.S. government has been in slow motion (almost glacial) progress since President Clinton signed Executive Order 13123 in 1999.  What are your thoughts?  Are you in favor of the carrot or the stick?  As I recently said, private industry needs to stop procrastinating on green supply chain management or risk losing customers.  Why delay the inevitable so you can get it just right.  Perhaps my message to the GSA and U.S. policy makers is to also stop procrastinating and (as they say in Texas) “git ‘er done”.

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