Accenture released results of a research study focused on sustainability and supply chain strategy. This survey concludes that leading-edge companies recognize not only recognize the business imperative of incorporating sustainability activities in both product and supply chain practices, but make extra strides in linking the objectives of sustainability with cost effectiveness, customer service, and other objectives. The emphasis of the designated leading-edge companies is focused on pragmatic strategies vs. those that are unproven or bring higher risk.
This survey polled 245 cross-industry logistics, warehousing and transportation executives to identify the fulfillment capabilities that were most highly correlated with superior performance in both customer service and cost responsiveness. A number of questions surveyed supply chain sustainability and carbon footprint management. This study segmented the companies surveyed into three categories: masters, average performers and laggards. Masters were those organizations who achieved top-quartile performance on both cost effectiveness and customer service.
The study conclusions indicate that masters are:
- Designing products with sustainability in mind
- Actively managing their supply chain carbon footprint
- Choosing processes and systems that offer the best return
- Benefitting from an integrated view of sustainability across the supply chain
Masters are also twice as likely to model and actively manage their carbon footprint across all areas of their businesses. In addition to overall reduction in energy consumption, other pragmatic mitigation strategies cited by masters include introduction of energy-efficient lighting, material recycling, and proactive preventative maintenance.
Yet, this Accenture survey reveals that among the overall surveyed population, 37 percent of supply chain executives have no awareness of the level of supply chain emissions in their supply chain network, and only one in ten companies actively manage their supply chain carbon footprint. Obviously, there is a need for progress.
In a Supply Chain Matters posting in April of last year, I noted that green supply chain strategy makes sense from an overall business perspective, but data indicated that the vast majority of companies were in early stages of strategy development. European based companies had more momentum because of the financial and legislative environmental policies directed at carbon and waste reduction. This latest Accenture study seems to reinforce these observations.
Implementing an end-to-end green supply chain is an immensely complex problem and will require multi-year initiatives as well as technology-enabled analytical analysis and tracking tools. But that is no excuse to not to get started. The Obama administration is now strongly hinting that the U.S. needs to adopt stronger sustainability policies, including a potential carbon cap and trade policy similar to other countries.
Leading-edge companies are establishing their sustainability strategies, and are making progress with integrated and complimentary pragmatic approaches, even in the midst of severe economic recession. If as Accenture indicates, only one in ten companies actually take the time to measure their supply chain carbon footprint, than that would imply that that should be a first step in your own company’s supply chain sustainability strategy.
Do you agree? What about your company’s strategies in this area?
Interesting topic. I believe it is important to consider supply chain models when discussing this issue. For example, the consumer electronics industry is dominated by Asian contract manufacturers with most of the supply chain execution beyond their shipping dock being outsourced leaving the branding firms to exercise a phenomenal amount of work to extract the data necessary for end to end supply chain environmental impact analysis. This model also does not enable the branding OEM’s to directly control the renewable energy investment within the outsourced brick and mortar and transportation logistics ecosystem. While these issues makes the case for impact analysis complexity, they do not imply an excuse for lack of due diligence. We use industry standard tools like the Wal-Mart Sustainable Packaging Modeling Software and Sustainable Packaging Coalition Comparative Packaging Assessment Software to assess footprint and incorporate sustainable solutions into all the bulk and retail packaging design before the first product moves from the Asian factory and use powerful supply chain simulation and optimization software to model the brick and mortar and transportation ecosystem to not only optimize cost, mass and frequency but also the full suite of Green House Gasses (Nitrogen Oxide, Sulfer Dioxide, Methane, Nitrous Oxide and Carbon Dioxide). In fact, we strive to replace “Carbon Footprinting” from the dialogue and replace it with “GHG Footprinting” as we believe this is the next generation impact analysis.
It would be easy to say that this type of analysis is effortless but we pride ourselves on being at the front of this movement and those of us who are must concede that the data is wanting. For example, using the EPA E-Grid database you can assess the GHG footprint of a MWh anywhere in the US based on the portfolio of grid base derivative whether it be Coal, Oil, Gas, Nuclear, Hyrdo, BioMass, Wind, Solar, Geothermal, etc. and you can pull equivalent GHG footprint for surface and air based transportation rather easily from a variety of sources. But, getting this information from other regions such as Latin America or Asia is extremely difficult and traditionally amounts to a host of assumptions. The same LCA data is difficult for packaging as you may be able to benchmark a corrugate or thermoform piece made in the Netherlands or Texas but other regions don’t have any data available to the general public and if you don’t know where the timber or petroleum based polymer originates before conversion you miss crucial GHG data. The same can be said for offsetting the footprint once it is derived to close the loop. Comparing and contrasting the various organizations out there selling offset credits is dizzying in itself when you consider whether that firm is for profit or non profit, whether the investment portfolio is transparent and the level of project mix control (like your 401K). We believe the impact analysis endeavor is worthwhile and expend a lot of time and resources to enable our clients to put the puzzle pieces together. We know we are in the clear minority of enterprises taking it to the next level (beyond travel and administrative facility foot-printing) but still find it hard to categorize ourselves as “Masters” as per the Accenture report. We have a long way to go before the global data catches up to the fast paced and ever expanding supply chain footprint of today’s large multi-national firms.