Category Archives: Sustainability

Sustainability 2008: Quick to the Draw

Another day, and another set of posts on sustainability for you to dive into!

Randy Littleson wrote about sustainability and the impact on supply chain responsiveness over on the Kinaxis Response Management blog. Randy notes that there are substantial regulatory requirements out there today and that this creates substantial challenges for supply chain professionals, especially since requirements differ across geographies. This means that if demand increases in one market, you can’t necessarily divert product from another market to meet it. However, if you take a global view on sustainability and drive it consistently across geographies to the greatest extent possible, you can get ahead of the curve and gain an advantage in your supply chain.

Alan Buxton contributed to the sustainability argument on Where Next by point out that there are two sides to every story. By contrasting two stories on Tata from The Economist and Private Eye, he pointed out that while firms like Tata are particularly active in providing basic services, such as schools and healthcare, for local communities, the selection of the site they chose for their factory tells a different story. The 997-acre site produced three crops a year and provided a decent living to more than 20,000 people. But when Tata picked it for its new plant in 2006 … the chief minister of West Bengal … announced that the land was to be forcibly acquired. Then there’s the tribals of Bastar in Chhatisgarh, fighting to prevent their ancestral lands being torn up for a Tata iron ore mine; and relatives of 13 tribal people shot dead by police at Kalinganagar in Orissa in January 2006, a village earmarked for a Tata steel plant. Where does CSR stop and sustainability start? How do you trade one for the other? When are you actually doing more harm than good? All important questions. Maybe Eric Hiller of Cost Cents will do a post on the True Economic Cost of sustainability!

Christopher Sciacca put reduced packaging into a bigger supply chain perspective over on Who Said Supply Chains Are Boring?. Christopher points out that the packaging volume for the new MacBook Air laptop has been reduced by 50% over the precious MacBook. Not only does this reduce waste, but the smaller and lighter boxes allow more product to fit on the same plane or truck. This means less trucks on the road, which means less fuel consumption, which means less CO2 emissions. Given the number of units Apple is likely to sell, this is significant.

And the next guest post goes up tomorrow morning!

Promoting Sustainability Throughout Your Ecosystem

Today I’m welcoming Jason Rushin of Nextance [acquired by Versata Enterprises] who is focussing on the importance of sustainability throughout the ecosystem.

What is sustainability? As the doctor mentioned in the kickoff post for this series, there are many definitions. But, I like the UN’s view that it is the intersection of social, environmental, and economic concerns. To truly sustain your business, your surroundings, and yourself, you have to take all three of these aspects into consideration.

If moving to more energy-efficiency requires you to cut costs in other areas, like workforce reductions, is that truly sustainable? Does a decrease in carbon emissions offset an increase in unemployment? Or, in reverse, would an increase in carbon emissions be OK if it came with a decrease in unemployment? How you define sustainability – social, environmental, and economic factors – is very relevant to how you achieve sustainability. But, how far you extend your vision of sustainability means even more.

Are you truly working towards your definition of sustainability if you are doing so with an inward-only focus? Sure, that’s the best place to start, but to be truly sustainable, you need to promote that vision throughout your ecosystem of employees, suppliers, partners, and customers.

Internally, responsible business practices are becoming more and more important to maintaining a progressive, diverse workforce, and enhancing and growing a business. Look at Google and how they offer free shuttles to employees to cut down on commuters, $5,000 rebates to employees who purchase hybrid cars, and their “solar panel project”, designed to reduce their use of carbon-generated electricity. These items are all cultural components of Google’s business, and are reflected in the way that they treat their employees, customers, and partners. It permeates their workforce and it expands their vision of sustainability into everything those employees do in their jobs.

Looking externally, your first thought might be on the supplier side, forcing (or incenting) suppliers to invoke more sustainable practices. But, that can have the effect of just moving the “bad” part of the supply chain farther away from your business. Sure, it makes for a great sound bite to say that you and your tier one suppliers are on a sustainability kick. But, if that just means production of hazardous materials is moved from Pennsylvania to China, did you really accomplish anything?

A recent article on Dell touted their support of the “Carbon Disclosure Project”, which standardizes the measurement of carbon emissions. This not only makes it easier for suppliers to comply with requests for carbon emission rates, it allows a baseline measurement system to reduce (or just maintain) carbon emissions going forward. Even Wal-Mart has an ambitious “greening” program, and their first step was to identify metrics. To quote Peter Drucker, “What gets measured gets managed.”

The point here is again that you need to focus on your entire ecosystem as a whole. Working with suppliers to identify areas of concern and plans for improvement is the key. It is not sustainable to pass the carbon (or social or economic) buck down the supply chain.

Granted, a large corporation has a high level of influence with suppliers, especially the Dells and Wal-Marts of the world. But, what about their customers? Obviously, given the proliferation of green ad content these days, consumers are responding to a “greener” message from their favorite brands.

Apple announced responsible business practices to increase the cachet of their brand and their products. Not that Apple needs any help increasing their coolness factor, but they are progressive enough to know that sustainability matters to their customers. A few years ago, the iPod came in a package nearly the size of a shoe box. Now, they are in a tiny box barely bigger than the iPods themselves — a reduction in packaging of 69%. Apple even made note of reductions in harmful chemicals in their just-released MacBook Air laptop. It may not increase sales, but it surely helps maintain their lead as the most desirable tech brand out there.

A green message is easy, but it is difficult to actually influence the actions on the customer side of your ecosystem. Do Apple’s actions actually get customers to change their behavior? A truly sustainable organization needs to be more proactive on the customer side.

Companies that simplify a sustainable process, like Hewlett-Packard with their ink and toner cartridge return programs, are promoting sustainability beyond their walls and into their customer’s homes and offices. HP makes it easy for their customers to recycle by giving them a pre-printed, postage-paid return label and easy-to-understand instructions right on the box. It’s just as easy to recycle the cartridge as it is to throw it away.

These are all great examples of how companies are successfully promoting sustainability – however it’s defined – throughout their ecosystems. Looking inward is the first step, but then turning that view around and helping your suppliers and customers to do the same is the only way to become truly sustainable.

Even on a personal level, each of us has our own ecosystem, and our every-day choices impact that ecosystem. For the most part, I have the naive belief that when it comes to sustainability, most people want to do the right thing. I guess that’s the ultimate definition of sustainability: everyone doing the right thing, whether in their homes or at their jobs.

Sustainability 2008: The Early Birds

In addition to Eric Strovink’s guest post this morning, a few bloggers have been quick out of the gate in their efforts to contribute to the first cross-blog series of 2008.

Dave Kuketz over on the Business Memory Blog was so inspired by the topic, that he couldn’t wait to get his entry up and posted it shortly after he received the invite two weeks ago. According to Dave, sustainability is about caring for the environment, about being green, about conservation, carbon credits and your carbon footprint, and the carbon footprint of your vendors; its about dangerous chemicals in toys or in consumer products, in our foods, in our skin care products; its about the humane care of animals; its about awarding business to those businesses who deserve it most because they follow the same principles you do; its about social corporate responsibility and making the world a better place. Furthermore, good clean data is the fuel that enables strategy and decision-making and analysis, good data enables change, (and) good data can … help companies strive toward their sustainability goals. Enter the age of e-Sustainability.

Brian Sommer of Services Safari was also quick to the draw with his post on a sustainability case study. According to Brian, sourcing of the capital equipment for the new facility [being constructed by his client] has also taken a green and sustainable approach and almost all of the equipment being installed has been from secondary markets … sparing landfills and junkyards from further (and unnecessary) debris. Furthermore, much of the discussion involving the feedstock for this facility centered around possible use of alternative technologies that would permit greater utilization of recycled materials. Brian also notes that many traditional sourcing techniques are not used frequently in the acquisition of alternative or recycled assets, and a special set of skills is required by these professionals. Thus, a sustainability mindset will require more than just training, but a new skill set as well.

Then, still not content that he had made a significant enough contribution to this very important cross-blog series, he followed it with a second post on sustainability vs. durability over on Services Safari. In it, he noted that while previous generations of cell phones were long-lasting with a high degree of interchangeable parts, today’s cell phones don’t hold a candle to their predecessors. They aren’t made to be durable or lasting, and, just like our laptops and desktop computers, failure and / or planned obsolescence is running at an ever increasing pace. The throwaway nature of today’s technology is clearly running counter to the concepts of sustainability and corporate social responsibility. Technology manufacturers need to do more when it comes to extending the lives of the products they sell and recycling technology that is no longer useable. As Brian points out, technology manufacturers should be focussed on creating products that can be easily upgraded (and, in this instance, Apple is doing a poor job with the iPhone and MacBook Air – the fact that you can’t even replace the battery is why, despite the fact that they are in many ways superior to competitor’s products, yours truly won’t buy them, even though he uses a MacBook Pro as his primary machine), that are durable, and that are supported for 10 years – not 10 months! (And, they should design for recycle from the outset!)

David Bush of e-Sourcing Forum jumped in with his warm-up post on carbon-neutral blogging where he noted that everyone these days seems to be jumping on the green bandwagon. He also brought up the question as to whether or not consumers would pay more for green products, which is important because consumers vote with their wallets, and if consumers don’t change their buying decisions, why should companies change their practices?

And the next guest blog goes up tomorrow morning! Stay tuned!

Sustainable Savings

Today I’d like to welcome Eric Strovink of BIQ [acquired by Opera Solutions, rebranded ElectrifAI] who, in his contribution, reminds us not to overlook the importance of verifying we actually achieve the savings we negotiate, because that’s the foundation of a sustainable business. Even though this might not be the definition of sustainability that most of us have in mind, the fact of the matter remains that any business that is not financially stable can not contribute to sustainability from an environmental or social perspective, regardless of where it’s collective heart is. Thus, sometimes its important to be reminded of the basics.

P. J. O’Rourke’s Circumcision Principle states that you can take 10% off the top of anything. That seems to be true for sourcing many categories, true at least if you’ve never sourced the category before. However, it’s irritating to listen to (some) sourcing consultants’ confident claims about “10% savings,” when they clearly have no visibility into what may have been very competent internal initiatives that have already taken place.Can one keep taking 10% off the top, year after year? At some point, no matter how much fat was on the carcass originally, there’s nothing left; and even if there is, 10% of it can’t amount to a hill of beans. Conventional wisdom would seem to mandate that there’s a limit to the savings that can be achieved, and that there is diminishing value to sourcing over time.

Of course, this has not been the case historically — after all, if it were, sourcing consultants would be out of business. What happens in practice is that sourcing initiatives either fail to achieve their objectives, or they erode over time. For example, suppliers know that in order to win business they must compete in auctions and see their margins slashed to zero or even to negative numbers; but they are not foolish. They will find a way to restore those margins, either over time, or almost immediately, by raising prices that aren’t in the negotiated contract, or, in some cases, by ignoring the contract entirely. How many office supplies sourcing endeavors have returned zero actual savings? Answer: a lot of them. Of course, if suppliers are pushed to the wall, they may simply walk away; or worse, if they are a key supplier, go bankrupt and take you down with them.

Furthermore, some sourcing initiatives that appear to generate theoretical savings can’t be implemented in practice. If there’s a management change, and new management are unaware of (or dismissive of) the efforts of the previous regime (human nature means that they usually are), that same initiative is “discovered” all over again, fails once more, and it’s lather-rinse-repeat. Each new group of consultants or sourcing staff that’s brought in has its own ideas and agendas, but the underlying infrastructural problems that prevent the implementation of the initiatives remain.

Even when a sourcing initiative is implemented and a contract signed, there’s still no guarantee that savings have been achieved. As Jack Welch once asked an over-enthusiastic buyer who was claiming huge savings (I wish I could find the original quote, this is a paraphrase from memory): “How do you know you got the price?” Stammers ensued. Buying from an e-procurement system doesn’t mean you’re getting good prices, and negotiating a good contract doesn’t mean anyone’s paying attention to it. I saw a contingent labor invoice analysis a few months ago where not a single contractor — not one — was being billed within the price ranges negotiated.

Wendell Phillips said, “Eternal vigilance is the price of liberty” — and it’s the price of sustainable savings, as well. Economics mandate that suppliers will try for the highest prices possible, and that any means necessary to increase revenue probably be applied, despite all the fancy talk in this blog (and elsewhere) about “supplier collaboration.” Tariq Hassan has said, “Trust, but verify,” which is probably the most accurate summation I’ve seen of the attitude one should have.

Sustainability 2008: Some Classic Posts

Before the series gets into full swing, the doctor thought he’d point out a few classic posts that are worth a re-read if you haven’t read them lately:

Purchasing Certification Blog
 (now the Certitrek NLPA Blog)
Green Supply Chain & Dr. Seuss
Using Diverse Suppliers
Animal Friendly Purchasing in Action

Sourcing Innovation
JLP Responsible Sourcing Part XI: Environment
Sustainable Procurement Supply Management Style: Part I
Design for Recycle
Sustainability Should Be Soldered Into Your Platform

Strategic Sourcing Europe  [WayBackMachine]
Back to Basics: Green & Sustainable
Reporting on Sustainability

Supplychainer
Exploring the “True” Cost of Greening Supply Chain Management
What you should do to green your supply chain
Extending social responsibility to the whole value chain: supplier ethics audit

Supply Excellence [WayBackMachine]
Wal-Mart’s Next Move: Poster Child for Sustainable Supply Strategies
2007: The Year of Sustainable Supply Strategies
Sustainable Supply: There’s No Denying It
Still More Reasons Why Sustainability is Good for Business
Misfi(RED)
Sustainability: Think Inside the Box
Carbon Offsets: Common Business Practice of Short-Term Fix?

And, of course, Tim Albinson’s new blog, 2Sustain is dedicated to the issue of sustainability.