Supply Chains – “Green” Just Isn’t Enough Anymore. It’s Time to Be Energy Productive.
Why are organizations expanding the boundaries of traditional resource analysis to include their suppliers? First of all, many of these organizations realize that a majority of their actual footprints exists in their supply chains. Walmart discovered that over 90% of its environmental impact stems from its supply chain. The United States Environmental Protection Agencies also estimates that more than 75% of emissions in many industries stem from supply chains. Secondly, evolving standards are pressuring organizations to look beyond their direct consumption. The Global Reporting Initiative (GRI) G4 Guidelines requires organizations to extend the boundaries of their analysis to include supply chains:
“The globalization of the world economy has led to a corresponding growth in the complexity of sustainability management. Organizations must now design sustainability management processes that include not just their own operations, but also address impacts of business partners in the supply chain.” - GRI Statement
Ok, so a majority of an organization’s environmental footprint exists in supply chains and reporting standards are evolving to include this analysis. But what direct benefits do organizations stand to gain by measuring and attempting to manage this complex environment? There are the obvious earth friendly “brand” arguments, but the real strategic benefit is that these organizations can identify “hotspots” in their supply chain where regional resources are inefficient and unsustainable. Price volatility and supply shortages disrupt operations and are costly. A water intensive manufacturing plant in the arid Southwest or an electricity intensive plant in the coal dominated Midwest pose real threats to an organization that relies on products or components produced in those regions. These challenges are nothing new, yet organizations still struggle to address them.
What is the best way to actually measure resources in your supply chain? How can you make effective management decisions, directly comparing, for example, the manufacturing plants noted above? . . . .