Category Archives: Carbon GHG

Green CAPS and the Triple Bottom Line (of Sustainability)

In one of its final “critical issues report” from 2008, CAPS addressed the topic of Green Corporate Strategies and how green issues will increasingly influence the actions of consumers, politicians, and other societal stakeholders as we move further into the 21st century.

In addition to highlighting key issues in the establishment of green strategies, internal strategies, and external strategies, the report also addressed the Triple Bottom Line (TBL) framework and how one may use it to measure the green-ness of a given approach or strategy. Incorporating economic performance, environmental performance, and social performance, the TBL assesses a given initiative in terms of the “business case”, the extent to which environmental harm is minimized, and the extent to which the company fulfills its social obligation to be a good corporate citizen — as a truly sustainable initiative is one that succeeds on all three counts.

More specifically, an economically sound green strategy will address energy and water costs, waste disposal costs, maintenance costs, operational costs, and / or health costs; an environmentally sound green strategy will address emissions and pollution, greenhouse cases, natural resources, and / or waste disposal; and a socially sound green strategy will address the corporation’s planet stewardship, it’s recognition that it is a global citizen, and future generations.

The report also offers some suggestions on how to start:

  • Smart small, but do something.
  • Insure proposed strategies are aligned with overall corporate strategies and goals.
  • Incorporate green into your purchasing processes and RFXs.
  • Be proactive.
  • Make sure you’re not just greenwashing.
  • Form a cross-functional team to scale your efforts company wide.

This is probably the most useful contribution of the entire report, which doesn’t really say anything that hasn’t been said before. The biggest problem most companies have with green is where to start, so anything that provides advice on this issue is certainly worth a few minutes of your time.

Carbon: Hype, Reality, and Management

Supply Chain Consulting recently published a pair of white-papers on “Carbon, Hype & Reality” and “Mastering Proactive Carbon Management”, that provide a decent starting point for a company just starting down the path to addressing it’s carbon footprint and getting it under control.

In Hype & Reality, Supply Chain Consulting cuts through the hype to the simple facts of carbon management, which are:

  • Everyone can contribute to effective energy management
  • You can’t compete on green unless you are green
  • You can’t claim carbon emission improvements without benchmarks and auditable processes
  • If you’re not committed to carbon management, you’re not corporately responsible in today’s marketplace

It also summarizes the status of global green house gas regulations in the US, Australia, China, and the UK. Highlights include:

  • Australia
    Mandatory legislation that requires mandatory reporting of any company facility that emits more than 25,000 tons of carbon dioxide-equivalent annually. Companies that don’t register or that report inaccurate numbers will be fined as much as $220,000.
  • China
    China has set a target to reduce per unit GDP energy consumption by 4% annually by 2010 with an aim to raise this to 20% in the near future.
  • United Kingdom
    The UK Climate Change Bill became law in 2008 and brought the Carbon Reduction Commitment with it that makes base-line emission reporting mandatory in 2008 and 2009 and reductions mandatory starting in 2010.
  • United States
    President Obama plans to set ambitious reduction goals and some states, like California, have moved ahead on their own.

In Mastering Proactive Carbon Management, Supply Chain Consulting presents their 5-Step Model for achieving a green supply chain.

  1. Master the Basics
    Start by educating employees about the importance of carbon management and going green to build awareness and develop an internal focus on improving basic operations.
  2. Involve the Company
    Begin your carbon journey by completing a static carbon footprint analysis which will help you identify improvements that will reduce energy usage and lower carbon emissions.
  3. Map Your Processes
    Progress to automating your carbon management efforts that will allow you to capture a “live” footprint at any time that includes internal and external supply chain processes. This allows you to consider carbon impacts in your sourcing and production decisions and reduce emissions up-front.
  4. Footprint Your Products
    Take your processes to the next level so that you can allocate your carbon footprint by product line. This allows you to target your worst offenders first and identify which lines have the most reduction opportunities.
  5. Optimize Your Supply Chain
    Re-design your entire supply chain to create an eco-friendly network.

Out in Front: Jon Miller, Strategic Sourceror

As per my last post, Bob Ferrari was first out of the gate with his initial contribution to the Seven Grand Challenges to Spend and Supply Management. Hot on his tail-pipe were Jon Miller of Gemba Panta Rei with his Seven Grand Challenges and the Strategic Sourceror of the Strategic Sourceror with his introductory post on the topic.

The Strategic Sourceror, who’s keeping his final list a secret for now, started off his post by noting that the shift has already left the harbor is the perfect metaphor for the globalization of a peak functioning supply chain. International supplier integration has gone from innovation to a competitive necessity in what seems like the blink of an eye in a global marketplace where overseas shipment costs are rising by as much as 170% and some carriers are slowing speed by 20% to conserve fuel. But the effect of petro-economics is only one component of the international sourcing equation. Other challenges are rising fast and furious, and, as noted by Strategic Sourceror, these include:

  • Currency
    Certain currencies, like the US Dollar, have been up-and-down faster than a yo-yo in the hands of a master.
  • Quality
    How many more PR disasters and deaths have to happen before people wake up as to how important this issue is?
  • Redress
    All you have to do is leave the state and the laws that your supplier are subject to might be different than the laws you are subject to. This only magnifies as you leave the country – and continent.
  • Trade Barriers
    It’s not even as simple as the import and export documentary requirements anymore … you have burgeoning denied party lists to deal with now.
  • Political Instability
    Political instability exists in numerous Asian and Euro-zone countries – not just in the Middle East and Venezuela.

Given these challenges, I’m anxious to see what the Strategic Sourceror’s seven grand challenges shape up to be!

Jon Miller decided to jump right in with his seven grand challenges, which, and this should come as no surprise given Gemba Panta Rei’s focus, had a distinctively lean orientation, with a smattering of green. Getting right to the point, Jon’s seven challenges were:

  • Putting Safety First
    It’s not just about price.
  • Getting Serious About Zeppelins
    Are they the 200 mph method of travel and transport of the future?
  • Waiting For It
    Do we really need new laptops and cell phones in 2-3 days from the day we make the decision?
  • Eating Fruits in Season
    Eat local when you can.
  • Paying to Waste
    Overpacking is costly as well as wasteful. Why do we do it?
  • Spacing Out
    Do we really need warehouses in space?
  • Beaming It Over
    The internet changes anything.

 

It’s quite an interesting list, and I highly recommend that you check out Jon’s post for the details, and rationale, behind his decisions.

the doctor’s Seven Grand Challenges for Supply & Spend Management

Seven deadly sins
Seven ways to win
Seven holy paths to hell
And your trip begins

Seven downward slopes
Seven bloodied hopes
Seven are your burning fires
Seven your desires….
  Adrian Smith / Bruce Dickinson

In my last post, which announced the cross-blog series that this post is officially kicking off, I reviewed the seven grand challenges for IT over the next twenty-five years, as laid out by Gartner back in the spring. Although they ranged from the ridiculous to the sublime, and contained a fair amount of overlap when closely analyzed, it’s a worthwhile exercise to undertake every now and again, because in order to develop a useful solution, you need to identify what is needed and the path you should be on.

This inspired me to propose a set of “seven grand challenges” for supply and spend management, in the hopes that it would get you, dear reader, to think about what is important, what problems should be solved, and where we should go. Considering how important supply management is in these troubled times, I hope that all of my fellow bloggers chime in with their ideas on what’s good, what’s bad, and, what’s downright ugly in supply chain today — because the first step in solving a problem is properly identifying it.

So, without further ado, to kick off this cross-blog series, here are the doctor‘s proposals for the seven grand supply and spend management challenges:

  • Optimization
    There are a number of challenges here. The first challenge is getting people to use solutions that are already out there. There are currently a number of offerings that address strategic sourcing decision optimization, distribution network optimization, and freight optimization quite well, and that, when properly applied, can save the average company up to 12% above and beyond the best solution obtained with auctions. The second challenge is integrating the different problems (sourcing optimization, freight optimization, network optimization, etc.) into a common framework that allows the tradeoff effects of each decision to be adequately modeled and understood in the big picture. The third problem is addressing the emerging non-quantitative regulatory and compliance requirements such as RoHS, WEEE, and GHG emission limits in a consistent and value-oriented manner within the optimization model.
  • Supplier Enablement
    This is something we still don’t have a good handle on. Beyond “supplier enablement is the provision of technology based solutions that enable the supplier to be more productive and better serve the buyer”, there isn’t yet a general consensus of what this technology needs to be, as most companies have not yet embraced B2B 3.0. I’ve argued before that, today, it’s a combination of catalogs, networks, e-Document exchange and management, and supplier portal technology, and I still think that is a good start, but enablement should go beyond enabling the exchange of information, it should improve the supplier’s operations overall.
  • Integration of the Physical, Information, & Financial Chains
    For most companies, these are three different chains. Some companies that have embraced RFID, GPS, and e-document management have taken the first steps to integrating the physical and information flows, but the technology is still emerging, the integration isn’t smooth without extensive integration and customization between a number of different solutions (and only Fortune 500 companies can even afford to consider this), and we have only started to look at the financial supply chain and how to best integrate it with the information supply chain. I think it will be a while before solutions that truly support a holistic view will emerge, especially considering that even the gorillas in the space don’t have end-to-end sourcing and procurement.
  • Solution Globalization
    Let’s face it … supply chains today are truly global, but the solutions are not. Most “internationalized” solutions are only available in a smattering of languages, most “internationalized” solutions are not plugged into real-time currency exchange feeds — and few developers have thought about the need to maintain/display multiple conversions (including the rate at the time of purchase, the projected rate, the current rate, etc.), and most “internationalized” solutions don’t help you understand how to do business with the country of interest.
  • GHG Tracking and Reduction
    Most enlightened countries have woken up to the fact that, even though we don’t know precisely how damaging each ton of GHG and / or carbon we emit is, we do know that it’s damaging and that we have to reduce our emissions. The first step is to get a baseline of the emissions produced by your operations, but for many companies, this is a multi-year effort. Better product and service solutions are needed. Also, although there are multiple proposals on the table to reduce emissions, there are few total value management models out there to help us select the right ones.
  • Risk Prevention
    Not only is risk not going away, but it’s getting worse by the year. Supply chains are getting more complex by the year, and the likelihood of something going wrong is steadily increasing. Solutions that can help a company identify risks, in real time, and identify possible mitigations and actions required to implement them, are desperately needed.
  • Opportunity Analysis
    Costs are skyrocketing, but consumer discretionary spending is stagnant at best. They key to a successful supply chain is cost reduction and avoidance, and this requires continual opportunity analysis. I envision this starting with modern spend analysis, but it needs to go beyond true spend analysis to continual innovation, since the greatest cost reductions will come from true revolutions, and not just the shrewd identification of category-based overspending. I envision that this will start with the integration of PLM with Life Cycle Analysis and Next Generation Analytics and then morph into something that none of us can envision today.

Now, I realize that these are pretty much the same problems we have been facing for the last five to ten years, but I suspect that it will be quite a while before they are solved due to the overwhelming complexity of today’s supply chains.

When the series is done, I’ll compile the “master list” of challenges and, if any of my fellow bloggers can convince me there are bigger challenges out there, revise my list.

Understanding Your Carbon Footprint

I know this post is going to draw the heretics out of the woodwork, but after Jim Tompkins, one of the best presenters at this year’s 41st Annual Supply Chain & Logistics Canada Conference on Creating a Resilient Supply Chain was Ron Dembro’s (CEO of Zerofootprint) presentation on Measuring corporate footprint, offsetting, and what you can do to combat climate change.

Although I agree that offsetting should be a last resort, and question just how effective some of the initiatives out there are (and what percentage of the donation actually goes to renewable energy projects versus administrative expenses and executives’ pockets), I see how it could be an effective tool to get industry to control their emissions. Plus, I was impressed with the fact that the speaker admitted that offsetting should be the last resort – not the first.

The presentation also had some good statistics and points-of-fact that highlighted the fact that Gore’s “inconvenient truth” is really an “inconvenient half-truth” and that although we should be willing to take responsibility for our actions, as individuals, there’s only so much we can do to offset the carbon and Greenhouse Gasses being pumped into the atmosphere as a result of our material world focus. When 40% of total GHG emissions are a result of energy consumption to heat, light, and cool buildings (and the water they consume), and the vast majority of that is for commercial buildings (and poorly designed warehouses in particular), when two coal-burning factories in china pump out more emissions into the atmosphere than could be saved if every house in North America switched to fluorescent bulbs, and when private transportation (i.e. our vehicles) account for less than 3% of emissions, how much do you think we’re really going to accomplish by “flicking off”? (That doesn’t mean we shouldn’t do our part, because responsibility in the home will lead to responsibility in the work place – and 1/3 of gas consumption in vehicles is due to idling, but it does mean that the whacko environmentalists should either educate themselves and get their facts straight or go home.)

What we need to do is design our buildings, our manufacturing plants, and our energy producing factories more efficiently. According to a recent study, 48% of total energy consumption and associated GHG emissions can be eliminated just through better design – which is even more positive than the McKinsey findings I recently quoted. And I have to agree. Think of your average bare-bones box-design metal warehouse and the amount of energy that goes into heating it in the winter or cooling it in the summer because the hot, or cold, air leaks out of it almost as fast as it’s pumped in. Then think about the number of poorly insulated and designed office buildings on the grid (with an entire wall of windows facing the east and air conditioning on 24/7 even though they’re mostly empty at least 12/7) that consume oodles of energy from a grid that burns coal when it could be capturing sun, wind, or wave power instead. All of a sudden oil, gas, and even coal (as long as the plants have appropriate filters and the coal is clean) becomes a lot less of a problem because we need less of it, get more bang for every gallon of it, and the resulting carbon emissions and GHGs would be at 1985-1990 levels, which we know the planet can handle reasonably well (as it did then), as long as we don’t keep cutting down forests on a massive scale without replanting (as many countries are still apt to do).

He was also kind enough to point out that even though Canada is the 4th largest offender in emissions (after Australia, the US, and the United Arab Emirates), that we can’t do anything about 25% of our emissions – because they are as a result of the tar pits, a natural phenomenon (and, as a result, if we want to be more environmentally conscious, we really have our work cut out for us). However, that doesn’t excuse us because we do lead in waste per capita (with the US #2 and Australia #3 – but not for long, as they are introducing innovative waste processing), and there’s no excuse for that. (I hope the rest of the country takes BC’s lead and introduces carbon taxes. I know it sounds like it’s not going to do much if its accompanied by tax breaks in other tax categories, but once industry sees how much it is paying in carbon tax, it will see the tax saving opportunities associated with reducing carbon, and will actively work towards reducing energy consumption – as that will deliver a significant return both in terms of lower energy costs AND reduced taxes.)