Category Archives: CSR

Supply Management in the Decade Ahead: Same Old, Same Old — Only the Pendulum Swings Part II

Almost 20 years ago, back in 2007, I wrote a 2-part series on Supply Management in the Decade Ahead: The Eight Major forces (Part 1 and Part 2) where I discussed the various external forces that will impact a company’s supply chain, as verified by CAPS, AT Kearney, and their clients.

And just like you don’t need to read another state of procurement report for five years! because, except for the tech-du-jour, nothing has really changed in the past five, ten, and even twenty years; you don’t really need to do an extensive study or survey to realize that the core supply chain issues are more or less the same, it’s just where the pendulum happens to be in it’s swing on each major issue.

Today we discuss the last 4.

Customer & Channel Dynamics

The downstream supply chain will continue to change rapidly due to economics and government policies in some industries. In other industries, supply chain dynamics will be influenced by the poor financial condition of major trading partners in the chain. The impact of private equity firms will also be significant, who will continue to take public companies private, slash costs, raise prices, and change business relationships. (PE, which currently controls between 15% and 20% of the US economy, continues to get more powerful by the day … in fact, it won’t be long before they are twice as powerful as the stock markets, which only generate between 8% and 12% of the GDP per year. They may have a market capitalization equal to 2X to 2.5X of the US GDP, but we all know that’s meaningless because some of that results from foreign investment and an AI-triggered crash is coming.)

The only difference between conducting business today and conducting business in the years ahead with respect to channel dynamics is that these changes will continue to come at an accelerating pace and you will have to continue to adapt faster than you do today. That will require Human Intelligence (HI!) and Human Experience to accomplish. AI can make recommendations, but these are generated based on probabilities generated on unknown training data and can be useful or as useless as the AI telling you to eat one rock a day and strawberries with 2 “r”s. (And I’m not sure what those are, FYI.)

Increased Product Variety & Shorter Life Cycles

Variety will continue to mean more models, brands, and products tailored to different geographies and price points. Consumer tastes in emerging and newly developing economies will be new and different from traditional markets. Traditional lines of competition will continue to blur as companies try new products and markets.

While I was right that you don’t want to browse the web on the screen the size of a credit card, that only goes for developed economies (and in economies where the only devices most people have and the only internet they can afford is their phone, they are quite happy with that), it’s still a fact that you don’t want your fridge to tell your local grocery store that you consumed six litres of rocky road this week, and that you don’t want the ability to cut yourself seven times in a jagged fashion simultaneously while shaving. Amongst the big winners will be the companies that realize sometimes you just want a phone, a fridge, and a straight razor – and not all the garbage Gen AI-based hallucinators are trying to shove into these products today. And, oh yeah, there comes a point where it doesn’t matter how many fractions of an ounce less it is than the previous product, how many extra cubic inches you squeezed into the door, or how fast it vibrates (at least in the case of the razor).

People will want better (faster) and cheaper, but they will want it to meet the need better than last gen tech, not just different, and they don’t want to sacrifice what they have just to get something different. And while Weird Al lamented that his computer was obsolete before I opened the box, we’ve entered an age where most products are obsolete once the first unit is produced … which could be months before it gets into the hands of consumers.

Social Responsibilities

Companies in developed economies will continue to be held to high standards wherever they do business in the world. Companies will have to monitor working conditions in their supply chains all the way back to basic extractive and farming practices. Supply management will have to ensure that the supply base meets environment standards. Commitments to a diversified supply-base will become more important in developed economies, and in a significant sub-set of those now insist on DEI requirements (while one country now insists on no DEI).

However, we are still in the age of CSR: Corporate Social Responsibility. While it’s been proven again and again that consumers won’t pay more (than 1% to 2% above the lowest price) for CSR brands, if products and prices more or less equal, they will generally choose the responsible brand over the irresponsible one.

Environmental Responsibilities

Twenty years ago we said that continuing the social responsibility theme, customers, consumers, shareholders, non-govermental organizations, and governmental bodies will all increase their scrutiny of corporate environmental practices in all regions of the world and demand that companies take environmentally friendly actions. Companies will be forced to meet the environmental expectations of the general populace. Environmental issues will become brand-related issues and influence how companies are viewed in the marketplace. And with the exception of the United States, which is rolling back environment legislation faster than Walmart is rolling back prices, ESG laws have continued to be rolled out … and with the damage that “AI” data centers are doing, in most countries, expect another round of legislation to come later this decade or early next decade.

To meet environmental requirements, if you still don’t have across-functional team with executive leadership to monitor environmental concerns in the extended supply base, it’s time you get one. Carbon restrictions are going to come into effect in (more) countries, water restrictions will emerge, and other pollution control acts will also come into play. An organization will need to keep tabs on what’s being proposed, because, in many countries, proposed legislation eventually becomes reality (although it usually takes longer and gets watered down). It’s always cheaper to be in compliance before an Act comes into effect than scrambling later.

Tomorrow is International Women’s Day.

So prepare for a massive onslaught of posts by companies large and small, from far and wide, that will lavish heaps of praise on their female (identifying) employees and all the hard work they do … and then prepare to hear absolutely nothing about how great these female employees are for the next year!

Right now, there is a lot of pushback in the US against DEI, and rightfully so since the whole point of DEI — equal opportunity and equity in treatment of all individuals from an employment perspective (future, present, and past) — has been replaced with objective outcome measures that result in the first person who checks the right mix of race-religion-gender (identifying) boxes being hired, and not the first person who qualifies for the job, which not only results in poorer organizational performance but resentment and backlash when qualified candidates are discriminated against because they don’t check certain boxes (and this includes discrimination against more qualified female applicants who would be rejected in place of a disabled male Asian Zoroastrian because that checks 3 boxes on the DEI bingo card).

But there isn’t nearly as much pushback against virtue signalling for accepted causes, or, even worse, basic decency. And this is a shame, because
* you don’t recognize your female employees by publicly lavishing praise on them one day a year and then completely ignoring them the other 364 days,
* you don’t respect your female employees by paying them less than their male counterparts because “that’s just how it works”, and
* you definitely don’t honour your female employees by claiming they aren’t suitable for C-Suite positions because they want more family time or you expect them to take a career break to raise the next generation.

Instead
* you recognize your female employees by acknowleding them when they do something significant — no one wants lip service,
* you respect your female employees by paying them as much as you’d pay a man for the same job — especially when these female employees are probably more qualified, and
* you honour your female employees by recognizing that they are probably more capable of a C-Suite job than you are! (Remember, they regularly juggle work life and family management — which typically includes their work schedule, their partner’s schedule, and the schedules of 2 to 3 active kids — when you struggle to schedule your own meetings and make your tee time.)

In other words, if all you are going to do is annual virtue signalling, please don’t. It’s disrespectful and I personally can’t wait for the day the next #metoo movement in the corporate world calls out this hypocrisy.

Last year I penned a long post after IWD asking what you are doing TODAY to help women. Of course there were NO RESPONSES from any of the companies in our space who did multiple women’s day posts and ads, and in the next month where I scrolled LinkedIn feeds daily for at least 15 minutes looking to see if any of these same corporate feeds recognized a female employee, I came across three posts from three companies doing so — compared to the well over 100 posts from over 100 companies claiming to celebrate women on IWD.

I think our resident unwoke/uncancellable anti-virtue signalling crusader Jason Busch needs to take up this cause too! True equality for all! (And no lip service!)

Primary ProcureTech Concern: CSR/ESG/Sustainability

Today we start our coverage on the primary concerns of Procurement leaders, starting with CSR, ESG, and Sustainability. We will discuss the why, the impact potential, the major challenges and risks, and leave you with some final words of insight.

Why?

Corporate Social Responsibility is becoming paramount because many consumers are becoming conscious of their spending impact and spending power and don’t want to buy from companies that don’t take care of their workers, corporations that pollute the requirements, brands managed by executives who endorse fascist authoritarian regimes, and so on. Unless your corporation has a (local) monopoly, being a bad brand can be harmful to your bottom line. That’s the last thing any executive response, even a psychopathic sociopathic one (because a boycott inflicts major damage to the bank account).

Environmental and Social Governance is becoming top of mind because, in most first world countries, laws have been continually introduced to protect the environment over the last three decades. Moreover, you have to comply with those laws while simultaneously pretending not to give a rat’s ass about the environment in the United States which, as we pointed out in our post on how in the corporate world, sustainability/ESG is not a priority, is attempting to roll environmental regulation back to the Early Modern Era (i.e. pre-World War II), and any corporation not on board with that mission gets on the administration’s bad side.

Finally, sustainability is becoming important because many organizations are reliant on diminishing natural resources; crops are increasingly being wiped out by natural/climate disasters; and consistent, large, energy and water requirements necessitate sustainability to stay in business. Even if they don’t really care about CSR or ESG, they still need sustainability.

Impact Potential

Let’s face it.

  • We’re in an age where boycotts can cost Billions — and that’s exactly what could happen if your brand is perceived to be particularly heinous with respect to human rights in the supply chain, egregious with respect to its environmental damage, spine-chilling with respect to its sustainability, or reprehensible with respect to its far-right organizational ties.
  • Violating one of the many regulations, especially in the EU, can be quite costly. There can be massive fines, seizure and destruction of goods, and if you attempt to import hazardous or banned substances, even criminal charges.
  • Not minimizing energy, fresh water, or non-renewable material requirements can greatly increase costs and decrease supply assurance — neither is good for profit.

Major Challenges/Risks

Regulations: There are dozens of major regulations in Europe alone that you need to be aware of. Violating any single one of them can be disastrous, as per our regulatory compliance risk post.

Investment Requirements: Sustainable, affordable, clean energy and water often requires a lot of up front investment if there are no renewable energy plants or water desalination plants in the area. It also costs a lot of money to upgrade designs to use less non-renewable materials or alternative requirements, especially if there are a lot of redesign and testing iteration cycles that will need to be undertaken.

Supply Assurance: while you attempt to transition to a more socially responsible and environmentally aware organization. This is a top barrier for a reason!

Final Words

Whether or not you believe in climate change is irrelevant. Natural disasters have increased five fold over the last five decades, a pace that has not been equalled in recorded history. We’re running out of fresh water and struggling to produce enough energy, especially in the age of AI where a single model requires a multi-billion dollar centre to support it! Even without natural disasters, some regions struggle to produce enough food. Thus, sustainability is a major concern because the sustainability of the business is at stake.

Sustainability in 2025 and Beyond, Part 6: Sustainability Strategies, Part III Demand

In our first installment we noted that while sustainability may have fallen out of favour in the current American political and regulatory environment to the point that we had to counter the Chief Sustainability Officer graphics going around earlier this year with a Chief Sustainability Officer: USA Edition, sustainability, at its core is becoming more and more important to corporate survival. In our second installment, we described how sustainability concerns permeate every department of the organization, and failing to adhere to them is not only unsustainable in the environmental sense, but also in the business sense. In our third instalment we dove into the stakeholder engagement that is required for true sustainability success.

Then, in our (forth) installment, we started outlining the key areas of focus to identify the key projects that will increase both environmental AND business sustainability, starting with energy. We followed this up in our fifth installment with (fresh)water reduction. In today’s, sixth, post we continue with key project identification in the areas of demand.

Non-Renewable Resource Reduction

Unlike the first two posts, where we could pinpoint specific situations where you had a lot of opportunity for sustainability improvements that would lead to significant cost reductions (which is the ultimate key to business sustainability), this depends on what you are buying, what options are at your disposal, and how much opportunity you have for substitution and/or re-design.

Let’s take a few examples to try and explain this:

  • Packaging: you can use new packaging made from freshly cut trees, or you can use packaging with a high concentration of recycled material
  • Fuel/Plastics: you can use petroleum-based fuel and plastics or you can use biofuel/bioplastics
  • Electronics: you can use rare earth magnets with ferrite magnites or continue your research into iron-nitride and magnesium-based alloys for permanent magnets and focus on developing alternatives to lithium batteries such as sodium-ion, zinc, or solid-state batteries

There’s no magic formula for identifying which non-renewable resource-based products can be replaced with products that are based mostly, or solely, on renewable resources beyond examining every product you are purchasing for alternatives. Fortunately, that’s not as hard as it was twenty years ago with modern technology that has extensive built-in catalogs, pre-defined SKU similarity groupings, and custom-designed AI for identifying similar products that could be potential replacements that can recommend potentially more sustainable alternatives for consideration on every product selection.

One-Time/Short-Term Use Demand Reduction

As with non-renewable resource reduction, it’s not easy to identify one-time use demands that can be eliminated without careful consideration of why the demand is there and what the alternative is. However, all one-time use products should be evaluated for reduction and elimination opportunities.

For example, you should analyze:

  • print catalogs, newsletters, (free) magazines and flyers: yes, there is still a generation that likes them, but that generation is shrinking fast as even that generation is hooked on the internet, which allows for faster, quicker, paper free delivery; if you have a small percentage of the customer base that wants paper, at least let them self-select into a subscription and then only print (on demand) what you need to; the per unit price may be a few cents more, but if you’re only printing 1/10th of the volume, big savings in cost and resources
  • printer paper similarly, how much do you really need to print — if your team needs reports on the go, consider supplying everyone with a large tablet (with a display optimized for reading) in addition to their laptop
  • plastic cutlery and cups in the break room use real ceramic and stainless steel

Basically, look at anything that has a short life-span and see if you can reduce or substitute the demand with something with a longer lifespan that will lead to savings in the long term.

Equipment Reduction

Basically, how much equipment are you buying vs. how much equipment do you need? Consider the following:

  • end-user electronics focus on selecting phones and tablets with long shelf-lives and extended warranties, and laptops that can be upgraded to extend their shelf-life
  • IT servers and storage how many do you need to support your secure internal operations vs. how much demand can you shift to the cloud for on-demand computation
  • fleet do you need as much as you have? is it hybrid/electric with a longer lifespan than traditional diesel?

Again, as per the past two situations, every organization is different, and it will take careful review of alternatives to determine where sustainability will bring savings and where it won’t. But, as per our section on non-renewable resources, modern technology can do a great job identifying when there are more sustainable cost-saving options to consider.

However, as with energy and water utilization, at the end of the day, there are many opportunities in a business to be truly sustainable …. and by that, we mean choose environmentally friendly options that save the business a considerable amount of money, especially in the mid-and-long term. That’s what sustainability is truly about.

Sustainability in 2025 and Beyond, Part 5: Sustainability Strategies, Part II (Fresh)Water

In our first installment we noted that while sustainability may have fallen out of favour in the current American political and regulatory environment to the point that we had to counter the Chief Sustainability Officer graphics going around earlier this year with a Chief Sustainability Officer: USA Edition, sustainability, at its core is becoming more and more important to corporate survival. In our second installment, we described how sustainability concerns permeate every department of the organization, and failing to adhere to them is not only unsustainable in the environmental sense, but also in the business sense. In our third instalment we dove into the stakeholder engagement that is required for true sustainability success.

Then, in our last (forth) installment, we started outlining the key areas of focus to identify the key projects that will increase both environmental AND business sustainability, starting with energy. In today’s, fifth, post we continue with key project identification in the areas of (fresh)water and resources.

(Fresh)Water Reduction

Water shortages and scarcity is becoming all too common. More than 50% of the USA — the richest country in the world which, theoretically, could have the best infrastructure — has suffered droughts and water scarcity issues, with scarcity often getting so bad in parts of California that even the US President says they need to open a very large faucet (which doesn’t exist, but it is needed).

It’s so bad in California that they had to serve Nestlé a cease-and-desist order to stop it from taking millions of gallons of water it wasn’t entitled to. (Source: The Guardian). Thus, unless you want your taps to run dry (either due to lack of water availability or the local government agency literally turning your taps off), you need to minimize your water usage.

The major uses of water in most businesses, depending on the business type, are:

  • Restrooms/Showers Old fashioned, high water usage toilets and urinals, and high-flow shower heads (instead of low-flow, high pressure) combined with poor maintenance with constant, unaddressed, slow leaks waste a considerable amount of water. Reductions of up to 50% water usage with proper equipment selection and installation are possible. (Proper selection is key, not all low-flow models actually meet the MaP test measure they advertise, and a high scoring model is key, because you don’t save water if you have to flush two or three times.)
  • Water Cooling This is especially critical in power plants (which can consume millions of gallons of water daily) and IT data centers (which can also consume hundreds of thousands of gallons of water daily). Because contaminates like minerals, scale, and bacteria build up over time and evaporation occurs, water cannot be reused indefinitely, but with proper treatment and filtering and cooling systems (passing through high efficiency refrigerated zones), the amount of freshwater required can be greatly reduced, especially if there is a renewable energy source to power the refrigerant based cooling in the closed-loop system (and extremely good high-efficiency reverse osmosis systems). With today’s technology, except for regular top-up to deal with evaporation, it is possible to recycle water for years, whereas a decade or two ago the systems might have needed to be flushed every few months.
  • Irrigation Many office buildings or facilities also include land with greenery that needs to be maintained, usually with fresh water, which, in peak heat periods, can consume thousands of gallons of water a day — if the facility installs a small wastewater filtration and management system, as well as an underground irrigation system, a lot of the wastewater that goes through its building sinks and showers can be automatically pumped through the irrigation system, minimizing the need for freshwater for irrigation

We’ll continue with the other areas in our next installment.