“Going Green” carries more clout these days as companies realize the blend of business with eco-friendly initiatives involves more than social responsibility. In today’s ecologically sensitive consumer environment, going green also makes good business sense. See below the rest of this post to see the full sustainable supply chain inforgraphic.
But companies are finding that going green requires more than a simple change in marketing or sloganeering. Meticulous consumers and a host of experts, analysts and pundits are combining to truthfully evaluate which companies are making serious efforts to go green — beyond their advertising claims.
One area in which businesses can make meaningful progress toward creating a sustainable supply chain. Traditionally, businesses seeking to optimize their supply chains have focused on moving product and reducing inefficiencies in the supply chain — not on all the other things that can be done to positively impact the environment.
However, as companies begin to evaluate and change their environmental thinking, they need to look closely at their supply chains as a source of eco-value. If properly planned and executed, “greening” the supply chain offers a win-win situation where companies can put a “W” in the both the operations and environment column.
Blend Business with Environmental Responsibility
Environmental responsibility, in large part, involves mitigating the risks already affecting businesses today such as global warming and climate change, shortages of natural resources (i.e. energy, water, forests, etc), and shifts in consumer preferences.
In the book “From Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value and Build Competitive Advantage,” the authors highlight how companies can move into the vanguard of the green movement, and it’s a great reference to have a mindset of the execution of your strategy to have a sustainable supply chain.
Some of the largest, most recognized brands have made the correlation between operations and the environment within their supply chains:
- Wal-Mart — In Canada, the company switched some of its shipping crates from cardboard to plastic, which allowed the crates to be used approximately 60 times instead of once. The company estimates it saved $4.5 million from the switch and reduced waste by 1,400 tons.
- Staples — The office superstore installed skylights in its distribution centers and now uses dual-speed drive motors on conveyor systems. The company has reduced per-square-foot electricity by 15 percent.
- REI — The outdoor gear retailer is taking steps to make it easier for its supply chain to more quickly and easily identify green products. The Outdoor Industry Association’s Eco-Working Group brings together more than 40 outdoor brands, supply chain partners and other stakeholders to create a framework to measure, report and improve the environmental impact of their products.
Apply Technology to the Problem
On a more granular level, the environmental risks already are and will continue to directly impact supply chains in the areas of product design, materials selection, sourcing, etc.; product movement; facilities management; customer retention; and supplier collaboration. In fact, there are so many different facets to building a greener supply chain that it’s often difficult to determine where to start.
Before investing heavily in redesigning products and facilities, there can be great benefits to starting within the four walls, applying the latest innovations in inventory, order, transportation and distribution management technologies as the foundation for green initiatives.
The following are examples of how real-world technology applications can combine traditional supply chain strategies with an eco-friendly approach to produce a type of two-fold benefit aimed at both the business bottom line and the health of the environment:
- Inventory Management — Companies can optimize order frequencies with replenishment optimization tools that examine the economics of various ordering cadences. For example, by moving to an every-other-day shipment schedule, a big-box retailer, traditionally receiving daily deliveries of inventory, has the potential to realize both fuel and labor savings while reducing emissions by as much as 40 percent.
- Order Management — With the right technology, companies can dynamically re-route inventory being received at transload facilities. Take an outdoor gear company receiving shipments in Long Beach, Calif., and sending products through a Houston distribution center before they’re delivered to a Salt Lake City store location — a total distance of 3,100 miles. By delivering those same products directly to Salt Lake City from Long Beach, this company has the opportunity to reduce lead times and delivery miles by 77 percent which, in turn, adds up to fuel savings and reduced CO2 emissions.
- Transportation Management — Through in-depth transportation procurement solutions, companies can now prioritize shippers and carriers with standardized environmental factors. Based on new EPA data that assigns carbon ratings to shippers and carriers, companies can potentially leverage that information to make transportation procurement decisions — adding “least environmental impact” into priority considerations, along with “least cost” and “best service.”
- Distribution Management — Companies can get smarter and greener about the way they pack goods. Through the latest innovations in distribution management technology, for example, an online retailer can optimize order packing via cubing algorithms which consider weight, volume, product dimensions, constraints, nesting, protection, etc. This retailer will more than likely reap the eco-benefits of reduced packaging requirements as well as a reduction of CO2 emissions by more effectively and efficiently packing products to maximize three-dimensional space within cases, pallets and trucks.
When evaluating each of these strategies, you’ll obviously need to carefully consider the impact to your operations. Remember, there is no “one-size-fits-all” when it comes to supply chain optimization or sustainability initiatives. Each of these strategies has eco-benefits, but they also have trade-offs from an operational perspective. Once you ensure the change provides a positive impact to both the environment as well as your bottom line, then you’ll achieve the desired win-win.
Take a Holistic Perspective on the Environment
As outlined above, functional areas within your supply chain exist that should warrant initial examination before beginning any sustainable supply chain program. You should, however, keep in mind that in order to truly lessen our businesses’ impact on the environment, ultimately we must take a broad, holistic perspective of our supply chain — it is not a siloed problem.
As a supply chain professional, you have to measure the affects of any environmentally sensitive or compliant changes both upstream and downstream to determine the overall impact from an eco-business perspective. While tactical efficiencies can be gained within an organization by making changes to supply chain operations, often these changes push inefficiencies upstream to trading partners or downstream to end customers.
Protecting and preserving the environment requires global collaboration and long-term solutions. However, don’t be deterred by the potentially complex and massive change involved with global collaboration. Companies can start now by taking a practical perspective on the technologies available to them that help increase efficiency. In many cases, that same technology can give supply chain professionals a green advantage at little to no extra cost.
In the end, it’s simply about what makes good business sense.
[INFOGRAPHIC] How to Create a Sustainable Supply Chain
This is a great infographic sent to us from Snap Parcel and we thought it was a great subject for us to all talk about!