Supply Chain Managers Are Not Addressing Sustainability Issues

Despite the enthusiasm regarding sustainability expressed by the global business community, these organizations have been slow to address these issues when it comes to sustainable supply chain management, says a new study by the Business Performance Management (BPM) Forum and E2open that was conducted in the second quarter of this year.  Operations, logistics and supply chain executives also lack the understanding of how to go green and save green across complex, global, multi-tiered supply and distribution networks.  The study, titled “Acceleration of ECO-Operation: Achieving Success & Sustainability in the Supply Chain,” gained insights from more than 125 supply chain, operations, finance, and executive professionals around the world across multiple industries.  It set out to measure and quantify how companies are managing the complexities of supply chain demands, distribution costs and environmental concerns. The study has major implications for supply chain, finance, operations, logistics, and procurement professionals and underscores the need for better ECO-Operation, sustainability measurement, and operations insight into multi-tiered supply chain networks.

The results reveal the priorities, progress and pitfalls that supply chain and finance executives are facing in the midst of more complex and competitive product development, production and delivery environments. The study looks at progress in achieving “ECO-Operation,” or optimal visibility, collaboration, and sustainability throughout the multiple layers of supply and demand chain networks. It revealed that these global corporations, who move trillions of dollars in manufactured goods, components and commodities around the globe, are struggling to achieve gains in reducing their carbon footprints.

Visibility and Accountability Remain Problematic

Ninety percent of supply chain and operations professionals surveyed say their management subscribes to enhanced trading partner visibility, flexibility and sustainability across the entire supply and demand chain, yet nearly two-thirds have marginal or no visibility across all tiers and levels of their value chain. Even more concerning is the fact that 78 percent of companies rate the level of synergy and accountability in their global trading network as suboptimal.  The Business Performance Management Forum is looking towards a Greenscape Score, which calls for sustainable transparency and verification from all suppliers, regardless of size.

Several Factors Are Preventing The Achievement of Bottom Line Benefits

Lack of leadership, visibility and standardized sustainability metrics are holding companies back from achieving bottom line benefits and  42 percent of companies surveyed have yet to even consider carbon footprint or greenhouse gas emissions across their entire extended supply chain.  A surprising 76 percent of respondents say their customers have not requested information on carbon and emissions containment, but two-thirds expect customers to demand this in the next year.  Only 20 percent of respondents utilized the advantages provided by a centralized eHub.   In spite of that, some of the companies like Cisco, Dell, Seagate and Xerox reported success with using an integrated global control platform.

Better ECO-Operation Programs and Practices are Yielding Several Benefits

The top benefits achieved through better ECO-Operation programs include more environmental responsibility, better sustainability compliance, more efficient product manufacturing and better customer responsiveness.   More than half of respondents say that their competitors use sustainability or ECO-Operation practices for competitive advantage.  An overwhelming 85 percent of respondents say they are actively involved in new programs that drive operational efficiency, corporate social responsibility (CSR) and cost-savings across supply and demand  chains.

“Today’s economic, social and regulatory dynamics are putting real pressures on global companies to be both lean and green in their product sourcing, logistics, distribution and operational practices,” said Donovan Neale-May, executive director of the BPM Forum. “Unifying and controlling complex, globally-distributed value networks in turbulent, unpredictable times requires real-time operational insights down to the product level, accurate sourcing and sell-through intelligence, and relentless dedication to eliminating waste in all areas of the go-to-market process.”

The report also examines detailed perspectives from more than 20 corporate and faculty leadership committee members, along with commentary and content covering best practices and viable solutions in helping companies come to grips with how to begin to insert efficient and environmental practices into strategic supply chain strategies and solutions.

“The Acceleration of ECO-Operation initiatives provide comprehensive confirmation supporting our observation that companies with hundreds or thousands of global suppliers need to do a much better job at seeing and measuring the levels of environmental compliance and efficiencies down to the second and third-tier level of supplier,” said Rich Becks, senior vice president at E2open. “Supply chain executives understand the benefits of better managing collaboration and sustainability in the value chain — now they just have to make it happen.”

Detailed commentary from the corporate leadership committee revealed the following common themes:

1. Sustainability is becoming an increasingly important consideration to supply chain management executives;
2.  Most companies are still struggling with obtaining verifiable consistent data to measure value chain effectiveness and environmental
responsibility;
3.  Consumer awareness and increased regulation will put added demands on companies to drive green initiatives and efficiencies in the supply    chain.

Download the new ECO-Operation report.

Recommended Resources

Lean SCM Professional On-line Certification Program Lean SCM Professional On-line Certification Program
This On-line Certification Program has been developed in association with the American Institute of Industrial Engineers, the Irish Institute of Industrial Engineers, and the Canadian Professional Logistics Institute.
The Program consists of 9 on-line lessons that provide participants with a comprehensive overview of Lean Thinking and its application. It also outlines and demonstrates the essential lean tools and practices that can be applied to your business in order to achieve significant savings to your bottom line. It can be undertaken by individuals through on-line distance learning study.


© 2009, Tracey de Morsella. All rights reserved. Do not republish.

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Author: Tracey de Morsella (323 Articles)

Tracey de Morsella started her career working as an editor for US Technology Magazine. She used that experience to launch Delaware Valley Network, a publication for professionals in the Greater Philadelphia area. Years later, she used the contacts and resources she acquired to work in executive search specializing in technical and diversity recruitment. She has conducted recruitment training seminars for Wachovia Bank, the Department of Interior and the US Postal Service. During this time, she also created a diversity portal called The Multicultural Advantage and published the Diversity Recruitment Advertising Toolkit, a directory of recruiting resources for human resources professionals. Her career and recruitment articles have appeared in numerous publications and web portals including Woman Engineer Magazine, Monster.com, About.com Job Search Channel, Workplace Diversity Magazine, Society for Human Resource Management web site, NSBE Engineering Magazine, HR.com, and Human Resource Consultants Association Newsletter. Her work with technology professionals drew her to pursuing training and work in web development, which led to a stint at Merrill Lynch as an Intranet Manager. In March, she decided to combine her technical and career management expertise with her passion for the environment, and with her husband, launched The Green Economy Post, a blog providing green career information and covering the impact of the environment, sustainable building, cleantech and renewable energy on the US economy. Her sustainability articles have appeared on Industrial Maintenance & Plant Operation, Chem.Info,FastCompany and CleanTechies.

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  • http://www.xsnrg.co.uk/ Dave Evans Founder and Managing Director of XS NRG

    One thing I’ve noticed is that most companies gain ISO accreditations for marketing purposes, just to tick a box on a supllier questionnairre or to include in a tender. Also, the management systems are often to be designed by consultants/ex-auditors or junior back office staff, who have no experience of actually running a business. So they implement a system that gets the accreditation but doesn’t fit the needs of the business so doesn’t get used, doesn’t have much credibility with users. who see it as a barrier to getting the job done instead of the essential operating DNA of the business. Hence everyone cynically runs round before the audit, “making themselves compliant”etc. I thought maybe there was something about the standards that also contributed to this so recently did a Lead Auditor course for both 9001 and 14001 to find out. However I think the standards are excellent, there is no requirement that a business shouldn’t address anyway. It strikes me that a big mistake is to implement an EHS system without first ensuring that key employees understand why it’s important and what it can contribute, e.g. position the business to cope in a low/no/expensive carbon economy. The one day CIEH Environmental Awareness course is a superb vehicle for achieving this. If anyone is interested in checking it out, the syllabus is available on the download section of my website,
    http://www.xsnrg.co.uk/downloads

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  • http://econetblog.com/ Rich Becks

    The study reveals Sustainability has not yet reached critical mass for most process owners within the supply chain. While it is an important “brand innoculation” concern for many CEO’s and CMO’s it is currently not on the radar of most Operations execs. They are still fighting their way through “rightsizing” and cost cutting resulting from the financial crises. Meanwhile sustainability risk is accumulating throughout the supply chain and will rear its ugly head once the economy turns around. Supply chains are optimized around low cost labor not energy or CO2 intensiveness.

    .-= Rich Becks´s last blog ..Supply Chain’s “Pre-Existing Condition” =-.