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Sustainable Supply Chain Management (SSCM) policy

 

Does your company have a Sustainable Supply Chain Management (SSCM) policy and strategic plan reflecting the reduction of carbon emissions and green house gases (GHG) in the years ahead? As public awareness rises, the pressure for companies to become more eco-friendly and offer GHG reducing practices has increased. More and more companies are adopting goals to reduce carbon emissions in years ahead, but how are they going to measure and achieve these goals? The challenge lies in how to characterize and measure the supply chain impact resulting from the deployment of eco-friendly products/processes.

To tackle the challenge of measurement we must first define the landscape of SSCM. SSCM is the strategic, transparent integration and achievement of an organization’s social, environmental, and economic goals in the systemic coordination of key inter-organizational business processes for improving the long-term economic performance of the individual company and its supply chains (Carter & Rogers, 2008, International Journal of Physical Distribution and Logistics Management, Volume 38, Number 5).

A July 2009 study done by the BPM Forum indicates nearly two-thirds of supply chain and operations professionals have marginal or no visibility across all tiers and levels of their value chain, although 90% of the respondents indicated their management subscribes to enhanced trading partner visibility, flexibility and sustainability across the entire supply and demand chain. According to a recent ECO-Operations™ report:

 42% of companies do not include supply chain partners as part of the carbon and energy footprint
 76% said their customers have not yet asked them to reveal their carbon footprint, but two-thirds expect customers to demand this in the next year.
 78% of companies rate the level of synergy and accountability in their global trading network as suboptimal.
 85% of respondents say they are actively involved in new programs that drive operational efficiency, corporate social responsibility and cost-savings across supply and demand chains.
 More than half of respondents indicated their competitors are applying green practices for competitive advantage.

The opportunity exists to create the end-to-end view but thus far companies are falling short in meeting that goal. Lack of leadership, visibility and standardized sustainability metrics are holding companies back from achieving bottom line benefits and resulting impacts. The need is to create a baseline designed to characterize the end-to-end process and to take actions having a measurable impact on that baseline.

Logistics processes represent a large and growing emitter of carbon dioxide. According to Dan Gilmore, of Supply Chain Digest, global logistics processes contribute ~ 5.5% of the total greenhouse gas emissions generated by human activities, with transportation activities responsible for 89% and the rest attributed to warehousing and distribution facilities. Within the transportation sector, trucking is responsible for more than half of carbon dioxide emissions whereas ocean represents 20 percent, and rail/air for the rest. Of course, different modes of transportation have different emission efficiency. For example, truck carriage generates about six times the carbon emissions of rail to move the same level of freight.

Given this data, it is not surprising Logistics and Supply Chain programs represent real opportunities for reducing a company’s carbon footprint. A company can wait and figure out what it’s going to take to develop a full and comprehensive GHG measurement program or it can do the obvious and continue to implement Lean practices focused on reducing time, touches and waste from the Supply Chain process. In the end, reducing time, touches and waste is all about reducing cost which translates directly into less use of resources including those that contribute to eco-impacting GHG emissions.

We invite you to engage the Supply Chain professionals at ASIL to facilitate development of your company’s Sustainable Supply Chain Management strategies. ASIL consultants are Logistics and Supply Chain professionals with over 100 years experience including the design and deployment of lean and effective supply chains. We have a proven track record of delivering pragmatic solutions and welcome the opportunity to serve you and your clients. Call us today and let us help you achieve new areas of profitability and success.

Contributed by Jennie Bader