Monday, June 8, 2009
By Patrick Penfield
Whitman School of Management, Syracuse University
In today’s world, supply chains are flawed. They create waste and pollution and are threatening the existence of life on earth. As the population of the world increases and resource availability decreases, companies are starting to realize that supply chains must be re-designed. The supply chains need to be closed-looped, environmentally friendly and conserve and use as little resources as possible.
The future of supply chain management is sustainability. Forward thinking companies are already taking steps to develop sustainability within their supply chains. What is the secret to implementing sustainability? How can we create a sustainable supply chain? What changes must we make to our supply chains in order to become “sustainable” in today’s business world? What processes or steps must we implement in order to achieve this goal of sustainability?
There are seven steps that companies can take in order to become sustainable.
1) The first step is culture. Many companies are transfixed on short term results. The first industrial revolution was defective and has transformed us into a disposable society. Unfortunately we have trained our leaders on how to conduct business from a throwaway viewpoint. The assumptions these executives have had is “if it is within the law, we are allowed to do it regardless of the repercussions to the environment.” This is the first significant paradigm that must be changed.
CEO/Presidents must be sustainability leaders! They have to be relentless about instituting a culture of eliminating waste, using environmentally friendly processes and products and conserving resources as much as possible. This culture starts with the top executive. Their words and actions will play a large role on the implementation of a “sustainability culture” within an organization.
Leaders need to realize that today’s business actions will impact tomorrow’s environment. Progressive companies are appointing high level champions within their companies to signify the importance of sustainability within the organization.
2) The second step to instituting sustainability within a corporation is to educate the organization on sustainability. It is imperative to show employees the benefits of sustainability and what it can do for a company and our environment.
Many organizations are holding conferences and workshops on sustainability. Several universities including Syracuse University have a certificate program on sustainability. There are countless books on sustainability such as The Ecology of Commerce, by Paul Hawken, Biomimicry, by Janine Benyus, Making Sustainability Work, by Epstein, Green to Gold, by Esty & Winston and Cradle to Cradle, by McDonough and Braungart. The books are powerful advocates for change and they show us how doing the right thing for the environment can help our companies!
3) The third step on our journey to sustainability is to complete a sustainability audit of our company’s supply chain. We need to develop a baseline measure for where we are today in order to gauge where we need to go.
This audit should focus on the following areas: energy use, environmental costs, materials recovery, water usage, transportation, products, hazardous materials used, processes, reverse logistics, packaging and social responsibility. Once the audit is complete we can determine our deficiencies and start focusing on improving these processes within our supply chains.
4) The audit results should help the organization with our fourth step, which is determining the goals and objectives for the sustainable supply chain. When developing goals and objectives, companies must make sure their goals are SMART (Specific, Measurable, Attainable, Relevant, and Timely) and that they are focused on sustainability. We should have goals on the reduction of energy consumption, the use of renewable resources, recycled material in our products, eliminating waste and reducing a company’s carbon footprint. We need to set goals that make sense for our company. Incremental steps towards the goals should be the plan. These goals should be incorporated into the overall objectives of an organization.
5) Once we develop the sustainable goals for the organization, the fifth step would be to determine what actions need to take place in order to meet these objectives. A plan must be developed and projects assigned to help meet the sustainable goals of the company. The objective is to achieve a sustainable supply chain but unfortunately it will not happen overnight. This is a long arduous process and one that will take years to change. The actions and projects should facilitate this change and help us reach our goals and objectives.
6) Once the projects are in place the next step is to measure the sustainability progress. Measures must be in taken in order to see how effective we are with our projects. These sustainability measures must be posted and discussed at company meetings. Measuring objectives will drive results! Once we reach a measure we need to raise the bar and focus on getting more sustainability within our supply chain processes. If we are falling short of our measures we need to find out what is preventing us from reaching our goals?
7) Part of the last step on the journey to sustainability is benchmarking where your company is in regards to sustainability. Even though we have goals, and have projects and measures in place, we need to seek out other companies that are trying to achieve sustainability. What are they doing that we can incorporate in our organizations? How can we replicate and incorporate their successful sustainability initiatives? We need to leverage the learning that is occurring in other companies and incorporate it into our organizations, which in turn will benefit society.
The key to becoming sustainable is to develop a culture of sustainability within your organization. Educate your employees, audit your supply chain processes, develop goals and objectives, implement projects to meet your goals, measure your company’s progress towards sustainability and benchmark other sustainability initiatives.
A company will reach sustainability when they produce no waste, exclusively use renewable resources, employ no hazardous materials in their process and develop products that are recycled or used in another form that benefits the environment and society. The Industrial Revolution is evolving into the Sustainable Revolution!
To learn more visit www.mhia.org/green.