Category Archives: CSR

Sustainability Requires More Than High Level Planning Guidelines

A recent article in Supply & Demand Chain Executive on how “CEOs pursue business opportunities where corporate and societal priorities converge”, summarized a recent Accenture study that noted how many CEOs are looking for sustainable profitability and ways to create value in line with societal goals.

The article, which noted that the Accenture study found that

  • 70% of CEOs realize that Sustainable Value Creation strategies must be evaluated using different criteria than traditional opportunities due to the longer time horizon required to generate returns and
  • 91% of CEOs face difficulties in identifying societal issues that link to competitive advantage and in measuring the societal and business performance of ‘sustainable’ initiatives

is promising in that it indicates that CEOs are now open to strategies that create value in a sustainable manner, but disappointing in that the five implementation imperatives to help companies create sustainable value that it summarizes are reduced to the point that they are nothing more than fluff that will result in the creation of bad strategy in your average organization.

Consider the following pieces of advice:

  1. Recognize the Opportunity
    This is obvious. If the organization does not understand that it should be sustainable and conscious of societal desires, it’s not going to even go down the sustainable path.
  2. Recalibrate Your Radar
    If the organization doesn’t change the way it thinks, then it’s not going to seriously consider sustainable strategies. Also obvious.
  3. Research, Develop, Repeat
    A good strategy does evolve over time. An organization that doesn’t realize this gets left behind. But stating fact is not helpful.
  4. Rewire the Organization
    Sustainable strategies do often require a different modus operandi. It’s not business as usual to go sustainable.
  5. Reinforce the Value
    The CEO must take a leadership role. But that’s true of any initiative.

They are not likely to produce good strategy. Why?

  1. They do not address the fact that the organization must also recognize the challenge to be overcome.
  2. They do not address the fact that the organization first has to understand what sustainable means. Otherwise, the radar can’t be recalibrated.
  3. They do not indicate what the measures are that will indicate success.
  4. They do not address How? It’s difficult to successfully engineer massive organizational change.
  5. They do not address how the CEO reinforces this value vs. other organizational values.

Organizations need lots of help, and lots of depth, to get sustainable. High level fluff is not going to help them.

Will Procurement Heads Also Be Responsible for Facilities and CSR?

A recent article over on the CPO Agenda on how the CPO is “an agent for change” pointed out that, at many organizations, the CPO is getting a broader realm of responsibility as she has to be well versed in change management to succeed at her job. In particular, many CPOs are now being tasked with logistics, risk, revenue, demand management, IT, sales support, property, CSR (Corporate Social Responsibility), and/or FM (Facilities Management) — with CSR and facilities becoming increasingly common.

The article highlighted three individuals in particular who were also responsibile for property and/or Procurement — Kath Harmeston, CPO of Royal Mail; Steve Jones, Director of Procurement and Property at Biffa Waste Services; and Patrick Dunne, Director of Procurement and Property at Alliance Boots — and how their role is not only cross-functional, but logical. Property and Facilities Management require great Procurement skills to keep costs down and value up, and combining the functions results in synergies that reduces internal management costs across the board. Plus, CPOs who are responsible for multiple functions get a much broader view of the business and the experience they gain gathers them a lot of respect in the C-Suite. As Kath Harmeston noted:

I was accepted as a budget-holder, a stakeholder and CPO at the same time. I was seen as quite a different animal — one that could see both sides, played a fair game and stood for accountability, traceability, auditability and transparency.

Similarly, CSR fits well with Procurement. Both Siemens and Clarks, where Barbara Kux is the head of Supply Chain Management and Chief Sustainability Officer and Matt Turner is the CPO and CSR officer, respectively, have combined the functions. It makes logical sense since Procurement directly dictates how sustainable the company is with what it buys and determines how sustainable the company’s suppliers are.

Reading the article, it appears only logical that, as more
companies figure out that the head of Procurement is the perfect candidate to lead these functions, more and more CPOs are going to be tasked with property, facilities, and sustainability as time goes on. What do you think?

BioPlastics – Another Easy Way to Conserve Petroleum Supply

There are two easy ways to conserve petroleum supply by over 10% annually in the US (and higher still in countries where petroleum is used as a major energy source for electricity production). The first is to stop burning oil for electricity. There is just no need to be using petroleum (products) for electricity production given the plethora of alternate options available, including natural gas, (clean) coal, nuclear, wind, hydro, and waste. If we didn’t burn oil for electricity production, oil refinement, process heat, and heat for industrial buildings, a good 13% of annual usage could be conserved.

The second way is a full-out switch to bioplastics. Right now, plastics consume at least 1 of every 10 barrels of oil in the US every day. That’s a lot. And considering that we can now produce a 100% plant-based PET product made from fully renewable sources that has a molecular structure identical to petroleum-based PET products, there is no reason not to switch to bioplastics. The only reason they are currently more expensive than petroleum based plastics is economy of scale. If everyone started investing in them, the costs would come down as the resulting investment would fuel R&D which would, in turn, create better materials that can be synthesized quicker, easier, and more cost effectively.

But it’s not going to happen until, as the author of this recent article in Environmental Leader on “turning plants into plastics” hints at, one of two things happen:

  • Supply Chain Sustainability Catches On in a Big Way
    And the leaders decide to move to bioplastics en-masse before oil-based plastics become prohibitively expensive. Or
  • Government Mandates the Move to BioPlastics
    The tax credits suggested by the author won’t be enough. The government has to mandate it, because, unless the tax credits make bioplastics significantly cheaper, the average organization will hold off on the switch.

Personally, I’d like to see the government ban non-bioplastics for all common uses in industry and retail. Just like I’d like to see them ban the use of oil for electricity production. Reserving oil for transportation (where electricity still isn’t an option most of the time), agricultural and construction machinery, and (family) home heating, where it would cost too much to retrofit millions of homes, would decrease petroleum need by about 25%. That’s 1 in 4 barrels saved for future use. This would not only extend the life-span of our oil supply, but keep costs down as well.

Delphi’s Advice for Successful Supply Management

While we’re on the theme of best practices and lessons learned, there is a good article over on SupplyManagement.com that chronicles the advice of Sidney Johnson, VP of Global Supply Management at Delphi, who tells us that we should “Focus on Three Things to Ensure Success”.

A. Understand your business beyond supply chain.
Most Procurement organizations spend too much time on the function and not enough time on the business. It’s also important to have staff who can walk in to any business and have credibility. That’s why a great Procurement team needs to have diversity of thought and experience across the business.

B. Build your brand for the profession.
This starts by building a team who knows how the rest of the business operates but also includes understanding how the organization produces its goods and services and how quality and reliability is checked and mainained. Remembering that, in most organizations, Procurement is responsible for over 50% of the organization’s cost, the organization won’t make it if it doesn’t perform. Be sure to have a vision, set the mission, and be the suppliers’ customer of choice.

C. Focus on things that help you today and tomorrow.
This should include a focus on emerging markets as the BRIC will soon account for 40% of the population of the world’s top 10 economies. And it should include a focus on sustainability as the next level of consumers will be more green. The moving target of sustainability may have taken a bit of a setback in the recession, but you can be sure that it will be back with a vengeance.

Lean from Toyota and Put Talent First

There’s a great article over on Industry Week on “Staying True to the Toyota Way During the Recession” which started off with a truism that every manager should remember:

Always remember that management should work for team members, instead of team members working for management. We should always show respect for every individual, and we need to make sound decisions locally because no one knows what’s best for your team members in your own culture better than you.

A productive team member is one that is respected, enabled, and free of distractions, disturbances and road-blocks. A good manager understands that the buck not only stops here, it starts here too. Employees should not waste any time on issues that need management resolutions — those issues should go straight to management. A manager does what she can to make sure her employees have the technologies and resources they need to do their job effectively. A good manager thinks of the success of her team before her own success — not the other way around.

Furthermore, a great company places a very high priority on long-term employment security for its employees as they are not “human resources” to be hired and fired on a whim. That’s why morale is approaching an all-time low and up to 90% of your employees are waiting for the job market to come back so they can high-tail it to a better job, or at least a different job.

And a great company gets creative and looks at its CSR and employment policies in a holistic way. When Toyota couldn’t make cash contributions to the charities it typically supported, and plants were idle, it offered manpower in the form of its engineers instead. And it used their brainpower in creative ways to cut overhead and operational costs to reduce the cost of keeping them onboard. And, most importantly, it retrained them so that, when the downturn started to reverse, they were ready to take advantage of new opportunities.

Put people first and you are more likely to succeed.