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
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