Category Archives: Sustainability

Digging into Manufacturing Sustainability

In our article on Solving the Sustainability of the Supply Chain is Systematically Strenuous and Surprisingly Serpentine, we noted that while there are easy two-word answers for reconfiguring the global supply chain for greater supply chain assurance and more sustainability at the 30,000 foot level, when you dig into the details, it’s not so easy as you have dozens of facets to get right to truly optimize sustainability across:

  • Support
  • Sales
  • Logistics
  • Procurement
  • Manufacturing
  • Materials

Manufacturing sustainability is much more involved than just choosing sustainable materials and focussing on sustainable design. When you are manufacturing you have to think about all of the following:

  • Materials: are the materials renewable, reclaimable, recyclable, or compostable — if not, the materials are not sustainable
  • Design: is the design using as many sustainable materials as possible; minimizing the use of non-renewable materials in minimal supply; ensuring the product is designed so that non-renewable materials can be fully reclaimed / recycled; ensuring the product can be produced in a sustainable manner? etc.
  • Production: are the lines modern, minimizing energy and MRO material usage (fluids, parts that wear out, etc.), efficient, etc.
  • Waste: does the chosen production method minimize waste, i.e. if cutting, how much waste metal or wood, and can it be reused/reclaimed?
  • Energy all energy production and transmission has a Carbon cost, even solar, as there was an initial carbon production in producing the panels, thus, the production method should minimize energy utilization (especially if producing EVs … considering a battery pack can produce between 2.5 and 16 metric tonnes of carbon in its production, it’s critical all production be energy efficient)
  • Water for cooling and cleaning should be minimized as well, and, if directly reusable, reused, and then reclaimed for future reuse (through an energy efficient processing plant)
  • Workforce as there needs to be a sufficient workforce and training in place to make sure they are suitably skilled for, and efficient at, the job to minimize errors and the resulting waste that comes from every human error

Furthermore, how you think about many of these requirements differs for every type of product you are producing, and often requires extremely specialized expertise to address the design, materials, production process, and waste. Manufacturing sustainability is not easy, but if you can’t ensure your manufacturers are sustainable, then you definitely can’t claim to have sustainable Procurement.

Digging into Logistics Sustainability

In our article on Solving the Sustainability of the Supply Chain is Systematically Strenuous and Surprisingly Serpentine, we noted that while there are easy two-word answers for reconfiguring the global supply chain for greater supply chain assurance and more sustainability at the 30,000 foot level, when you dig into the details, it’s not so easy as you have dozens of facets to get right to truly optimize sustainability across:

  • Support
  • Sales
  • Logistics
  • Procurement
  • Manufacturing
  • Materials

Logistics sustainability is much more involved than just “green transportation” and using “zero emission“*1 electric vehicles, because there’s a lot more to logistics than the plane, train, boat, or truck. There’s also the:

  • Packaging – is the packaging reusable, reclaimable, recyclable, or compostable; minimal?
  • Warehousing – are the warehouse operations sustainable?
  • Routing – is the routing designed to minimize unnecessary distance, handling, and environmental impact?

Let’s dive into each of these:

Packaging involves ensuring that the following are sustainable:

  • Materials as the only trace of us millions of years in the future — after the “right to be stupid” crowd manages to vote in the greedy, power-hungry, self-nominated populist con-artist candidate in enough first world countries*2 — will likely be microplastics*3 and plastic molecules which, even after millions of years, will never fully dissolve (and which are already so omnipresent that microplastics are even in all of our bodies now)
  • Manufacturing as the packaging needs to be manufactured just like the product
  • Logistics as the packaging has to be shipped to the product manufacturer
  • Packaging as the packaging needs to be packaged to be shipped to the product manufacturer

Warehousing involves ensuring that the following are sustainable:

  • Heating & Cooling since most warehouses are built super cheap (thin metal structures) and, thus, require ridiculous amount of carbon-based energy production*4 to heat or cool
  • Operations since warehouses use forklifts and robotic automation — which are not necessarily green, energy efficient, and/or well designed
  • Workforce since there needs to be a sufficient workforce and there needs to be training in place to make sure they workforce is suitably skilled for the job

Routing involves ensuring that the following are sustainable:

  • Transportation Modes as most international shipments are multi-modal (and involve at least two different means of transportation, and usually three)
  • Cross-Docking as shipments will need to be unloaded from ships and trains at ports and yards and loaded onto trucks and unloaded from big trucks onto smaller trucks at local depots
  • Leg-Routings as ships can’t disrupt whale schools, dolphin pods, or fish colonies (which might also be needed for food); planes shouldn’t fly low through wildlife/bird reserves; trains shouldn’t pollute the forests they run through; etc.

In other words, there’s a lot more to logistics sustainability than green transportation, which isn’t exactly green to begin with!

*“Green” vehicles aren’t anywhere close to zero emission when you consider all of the emissions created in the production of those electric vehicles and those battery packs! For example, as quoted on the MIT Climate Portal, building the 82 kWh lithium-ion battery found in a Tesla Model 3 creates between 2.5 and 16 metric tons of CO2 (exactly how much depends greatly on what energy source is used to do the heating). This intensive battery manufacturing means that building a new EV can produce around 80% more emissions than building a comparable gas-powered car. And then you have to consider all of the emissions produced by your energy provider to produce the electricity that recharges your battery pack every few hundred kilometers (or 0.6214 miles for you Americans). If your local power plant is still burning dirty coal, then you could be responsible for the creation of 950 grams of CO2 per kWH. So if you’re driving a new AWD Performance Tesla, you’re producing 77.9 kg of CO2 for every 567 km you drive. In comparison, if you’re driving a Toyota Yaris that gives you an average of 36 mpg, or 58 kpg, you’re burning 9.78 gallons and producing roughly 86.9 kg of CO2 for the same 567 km. In other words, you’re only about 10% more green on a per-tank basis driving that Tesla 3 if your local power provider burns dirty coal!

In other words, “green” transportation isn’t necessarily green if you don’t consider the energy product or the up-front production. If the battery production emits 16,000 kgs of CO2, all other vehicle production related emissions are equal, and you are using electricity produced from dirty coal to charge the battery, you don’t see the first drop of CO2 savings until you drive almost 1,780 tanks or 1,000,000 kms! And then you only see a 10% if, and only if, as stated above, the production of the remainder of the vehicle has about the same CO2 production as an average vehicle for its size.  (Which means, at the end of those warrantied 192,000 kms, that green Tesla won’t even be Carbon Neutral!  It won’t even be one fifth of the way!)

*2 greedy, power-hungry con-artists who will repeal all environmental laws, take away all our basic human rights, and even start wars that could not only end all wars but end us (assuming the AI they are using to replace us doesn’t end us first)

*3 after the last last satellite has plummeted back to earth (and burned up), the last skyscraper has crumbled, and the last pyramid has turned to dust, traces of certain microplastic molecules that do not occur naturally in nature will still be found in the soils and at the bottom of the ocean where there are no lifeforms to break them down

*4 even renewable energy such as solar, wind, and hydro has a carbon footprint as the panels need to be manufactured, the turbines need to be manufactured, and the dams need to be built and all that involves carbon production with today’s technology

Solving the Sustainability of the Supply Chain is Systematically Strenuous and Surprisingly Serpentine

There have been a lot of articles about the sustainability of supply (chains) lately, and some of them are quite good, but not a single one gives you the full picture. And if you were hoping this article was going to do that for you, then the doctor has bad news for you. That’s not an article, or even a book. It’s a trilogy. Of trilogies. And while the doctor has written that much on this blog by word count, it’s not going to happen today.

What is going to happen is that the doctor is going to give you a bit of an understanding of how broad, deep, and complex the problem really is and how it’s almost impossible for most people to solve, although not that hard to address with a reasonably high assurance of results. (And the answer, as regular readers will have surmised, does NOT involve any Artificial Idiocy, but it may involve complex processes and technologically advanced solutions.)

In order for the supply chain to be sustainable, every step of the supply chain has to be sustainable. Internally:

  • Procurement needs to be sustainable. The processes, technology, and talent required to keep the Procurement organization going need to be sustainable.

If you work down the chain:

  • Logistics needs to be sustainable. The methods used by the suppliers and distributors to pack, store, and ship the product to you need to be sustainable.
  • Manufacturing needs to be sustainable. The methods, energy sources, and water sources used to produce the goods have to be sustainable.
  • Materials need to be sustainable. This means that all of the materials used must be renewable, decomposable, or fully reclaimable in a sustainable manner.

And if you work up the chain:

  • Logistics needs to be sustainable. The methods used to pack, store, and ship the products to your customers need to be sustainable.
  • Sales needs to be sustainable. The processes, technology, and talent required to keep the Sales organization going need to be sustainable.
  • Support needs to sustainable. The processes, technology, talent, and materials used to support, repair, or reclaim the products (for recycling and material reclamation) at end of its lifecycle need to be sustainable.

That’s a lot of sustainability that is required up and down the chain. It’s much more than just identifying a “sustainable” supplier who hits ESG targets, favouring renewable materials, or using virtual work (from home) solutions to reduce the travel and office carbon footprint. And attacking it requires a lot more than just attacking the 5 Cap Gemini supply chain transformation levers of Evolution, Orchestration, Data, Technology, and Talent or the 6 McKinsey next-normal strategy focus areas of Agility, Quality, Sustainability, Resilience, Service, and Cost and Capital because buzz-words are not solutions and you can’t decipher all of these dilemmas at the 30,000 foot view.

In other words, while there are easy two-word answers for reconfiguring the global supply chain for greater supply chain assurance and more sustainability at the 30,000 foot level, when you dig into the details, it’s not so easy as you have dozens of facets to get right to truly optimize sustainability across the supply chain.

In future posts we will dig into a few of these areas as addressing them is a lot more complex than you might think!

Kodiak Hub: A Supplier Relationship Management for Sustainability

Kodiak Hub is a relatively new Swedish solution for Supplier Relationship Management. Founded in 2015, it primarily served the Nordics for its first few years but began its expansion into the DACH and UK Regions during COVID (and even serves the NA market, although they don’t plan to tackle the NA market until the coming year).

A visit to its site might lead you to believe it’s a category management platform, billing itself as the starting point in a journey towards smart strategic sourcing, but that’s not quite what it is, or at least not where it’s found its niche and its true capability shines.

It’s true capability shines in sustainability, responsibility, risk assessments, and performance evaluations of suppliers, and their products, where those suppliers are creating (custom) (build-to-order) (manufactured) products where regulations need to be adhered to, carbon/GHG needs to be reported, and the organization needs to ensure they are acquiring a sustainable product (or service) as well as a sustainable supplier.

It’s primary platform is organized into three sections: Insights, Impact, and Intelligence along with a home dashboard that visually shows you the regions of all of your global suppliers and allows you to hover over those regions to see the number of suppliers, the regional economic rating, and the Country safe(SOURCE)TM Rating.

The safe(SOURCE)TM Rating is one of the truly unique capabilities of Kodiak Hub and one of the capabilities that positions it as a strong Sustainable Supplier Relationship Management platform. Using indices and public data sources, it is able to create a regional risk assessment profile that allows an organization to quickly spot geopolitical, environmental, and sustainability risks even before sending out an assessment to a supplier, and to create a generic risk profile when specific information is (not) yet available. When this is combined with local economic indicators (to spot risks of [significant] currency fluctuations, increased bankruptcy, etc.) as well as the ability to pull in credit scores (from credit agencies) (with appropriate data feed subscriptions), it provides an organization relatively deep insight into what expectations it should have for a supplier even before analyzing its policies, practices, and external assessments.

The supplier profiles or scorecards that Kodiak Hub can maintain are quite extensive, allowing an organization to maintain all the compliance, performance, risk, and sustainability data it needs on suppliers, products, and services to power its supplier management, sourcing, and procurement. It supports all standard company profile data, including supplier type and spend totals, detailed (customizable) assessment data, detailed on-site audit data (which will override the existing data as necessary), (third-party) risk/ESG/CSR data/rankings/metrics, externally computed KPIs, and related company, product, and service linkages. It can also store any and all documents of relevance or interest (insurance, certification, specifications, contracts, etc.).

Insight is the entry point to the platform’s supplier, product, and services summary screens that capture, and allow a user to query, all of the data associated with a supplier, product, or service.

Impact allows you to create and dive into (data-driven) supplier assessments, (onsite) supplier audits, KPI-based evaluations, and identified actions (in progress).

Assessments are unlimited and can be on the supplier in general, specific products or services, and even restricted to specific category management or sourcing projects. They can cover quality, health and safety, compliance & governance, human rights, environmental, business, product, information security, and other areas of relevance to the organization and use pre-built (template) questionnaires, customized variants, or custom questionnaires.

Right now, even though they can be assigned a “type”, actions are essentially requests to the suppliers with an integrated messaging trail for asynchronous communication that allows suppliers to ask questions, buyers to provide answers, and action states to be recorded (pending approval, in progress, completed, etc.). Future versions of the platform will contain specific types to ensure necessary information is captured, processes and workflows are followed, interim checks and approvals are in place, and so on.

Intelligence is its integrated analytics platform that allows a procurement professional to analyze suppliers across campaigns, projects, KPIs, assessments, categories, products, capabilities, etc. Relationship managers and buyers can create custom dashboards and reports, and customize the pre-built dashboards as needed.

The UX is very clean, modern, broken into logical segments, and very easy to use. It’s intuitive where to go to get the information you need and how to update new information when it comes in. This reviewer finds it so intuitive that he believes you can jump in and be productive with it without any training whatsoever.

So if you’re looking for a great supplier relationship management platform to manage your sustainability efforts and assess your supplier risks, we recommend you include Kodiak Hub in your shortlist.

Sustainability Begins in SRM

We recently broke records in global temperature. RECORDS IN GLOBAL TEMPERATURE! If sustainability isn’t on your mind now, then obviously you don’t have a mind that is working because not only does it mean the planet is in very dire straits*, but

  • the acceleration of natural disasters is going to intensify beyond anything that was predicted (and a five-fold increase was recently predicted)
  • natural resources (and food) are going to get scarcer faster as fires destroy our usable lumber and crops
  • hurricanes are going to drench and destroy coastal cropland, possibly long-term
  • rapidly melting polar ice caps are going to raise sea level, drown our richest coastal farmlands, and damage our coastal (shipping) infrastructure
  • rapidly heating equatorial zones are going to dry out our freshwater lakes and canals (like the Panama canal we rely on for shipping)

… and that’s just the tip of the rapidly melting iceberg. (There’ll soon be no more “dildo” icebergs for Dildo, and that won’t be a good thing. Canadians rarely get angry, and when they do, that’s bad. the doctor, who is about as Canadian as it gets, has never seen a Newfoundlander angry, and when that day comes, he’d rather not be one province away … so please make sure that day never comes!)

Unless we lower

  • fossil fuel energy production and utilization
  • clean water utilization
  • waste byproducts
  • dependence on non-renewable resources that are getting more expensive, and environmentally damaging, to mine

environmental and societal damage is going to only intensify. We need to be sustainable. But sustainability has to start at the source — and the consumer is NOT the source (it’s the sink, and anyone who’s studied networks will tell you that by the time you reach the consumer, the product has been produced, the service has been rendered, and there’s nothing consumers can do to undo the damage that has been done … sure we can do our best to consume less and waste less, but the damage starts at the mine or the farm and propagates through the supply chain).

As a result, sustainability starts with the source supplier, and must be maintained throughout the entire supply chain.

And at the end of the day, for a Fortune 500 / Global 3000, it doesn’t matter if a CEO gives up the corporate jet — it matters only if they instruct their company to be sustainable in all aspects of operations and force their supply base to do the same.

Why? The aviation industry as a whole contributes 2.5% of worldwide CO2 pollution. 2.5% overall! So how much do you think one private jet contributes? Not enough to really matter. (On average, it’s like removing the emissions of 400 cars, and while that sounds significant, once you realize there’s over 300 million registered vehicles in North America that contribute to about 30% of GHG produced, it’s barely a drop in the CO2 bucket [giving it up for show while your factories pollute unhindered is not the solution]; and FYI, most of that vehicular CO2 production is NOT our private automobiles, its commercial transportation [as we have catalytic converters, there’s no laws that can be enforced mandating equivalent technology on ships in international waters].)

In comparison, a coal burning energy plant will generate about 2.26 pounds of CO2 per kWH, or about 7 Billion pounds of CO2 annually (which is over 3 Million Metric Tonnes) in an average 500 megawatt coal power plant. (In comparison, a private jet burning an average of 5,000 pounds of jet fuel per year at 7 pounds of carbon dioxide will produce only 35,000 pounds of CO2 a year. This is still a lot, but a supply chain that consumes the equivalent output in electricity in its manufacturing and shipping operations as that produced by a coal burning 500 megawatt power plant will produce 200,000 times the CO2. TWO HUNDRED THOUSAND TIMES. So don’t get distracted by the little things in your quest for improving your carbon footprint, which will soon be mandated in more and more countries globally. Your CEO should give up the jet, especially when he can still fly in those first class cabins no one else can afford, but that’s just the start of what your organization needs to do.)

And the only way to monitor and manage your supply base, require and track reporting from, and ensure improvements are made, is with SRM. It’s not just supplier development anymore, it’s supplier sustainability.

* and not the good kind of Dire Straits, the bad, bad, kind