Posts filed under 'Green Sourcing'
January 21st, 2008
David Bush - Iasta
Adrian Gonzalez of Arc Advisory Group, wrote an article in a recent newsletter which begins with:
I was listening to the radio this morning and an ad played for the station, promoting how they play today’s hit music, with few commercial interruptions. The promo, voiced by a woman with a soothing voice, ended with what I’m guessing is the station’s new tagline: “92.9 WBOS, A Carbon-Neutral Radio Station.” What the heck does that mean, I wondered. It seems like everybody is jumping on the “green” bandwagon these days, including everyone in supply chain management.
I thought this was pretty funny, but he goes into some of the take aways from the presentations that were given at the CSCMP conference on sustainability. The final summary was speculating on whether consumers would actually pay more for green products. This is an interesting question that will be asked for a long time.
Are consumers willing to pay more for green products? This is the million dollar question, and most people think the answer is no, except for certain niche products. It’ll be interesting to see what happens to the toy industry this holiday season, after the ongoing recalls of toys manufactured in China containing lead and other toxic substances. Then again, consumers haven’t cared much that Apple’s iPhone contains brominated flame retardants (BFRs) and polyvinyl chloride (PVC), toxic substances that other phone manufacturers have eliminated from their products. Apple has sold over 1.4 million units since the end of June, and analysts forecast strong sales during the holidays. At the end of the day, consumers vote with their wallets; if we don’t change our buying decisions, why should companies change their practices?
I have to say that I probably agree with this, especially on a consumer cost curve the goes up. In fact, its probably more like a bell curve that inexpensive items and luxury items will have the consumer decision effected by environmental conscience, but the wide middle ground will not. This leaves companies to plan for, and benefit from, cost savings only through effective supply chain sustainability for most of their products. Sales will probably not change from these changes.
Last week, my wife (growing increasingly disturbed by the amount of consumables in our house), came home with 5 nylon shopping bags from Meijer. I found this concept fascinating, it works because every one wins. My wife’s guilty conscience is briefly soothed, while the execs are grinning behind closed doors about the fact that they:
1. just lowered their costs by purchasing less paper and plastic bags,
2. charged the client a voluntary “tax” for shopping at Meijer, essentially turning the shopping bags into a profit center, and
3. get to do it all with a straight face of becoming more environmentally friendly.
I would be pretty proud of myself if it was my idea and some body probably got a promotion because of it.
Entry Filed under: General, Green Sourcing
January 9th, 2008
David Bush - Iasta
This article is a little old now, but the topic is not and is one of the hottest stories around. This short brief is about energy efficiency being good for the bottom line, as well as the environment.
The green movement is gaining momentum across broad sectors of U.S. companies – and it’s no coincidence that the interest is growing as the intersection of greenness and the bottom line becomes clear…
Until recently, cheap labor was the driving force in companies in the apparel and electronics industry moving production offshore. But increasingly, it may be a search for cheaper energy that causes another wave of manufacturers, in different industries, to adopt similar strategies…
Bunch also says U.S. manufacturers need to take action, because if they don’t, laws and regulations that are far worse for business may be put in place…
PPG has set targets for increasing energy efficiency by 5% per year, objectives Bunch says they have been exceeding. With the rising cost of natural gas and oil, those goals add as much to the bottom line as they do to the environment, providing a lasting incentive.
This is just another example of eco-friendly sourcing that has the dual effect for both the companies and rest of us. I think 2008 is going to be very big year for transformation to more green sourcing. The idea has been around and is certainly not a taboo topic, but I think things will really start heating up and be discussed (and implemented) even more than before.
Entry Filed under: General, Green Sourcing
December 10th, 2007
David Bush - Iasta
A recent article in ecommercetimes points to information from Booz Allen Hamilton on carbon footprint in food processing. Their basic definition is good for understanding the reasons for designing better ways to increase energy efficiency.
“The four primary factors driving businesses’ interest in the energy-efficient supply chains are cost savings, productivity gains, regulation concerns and emerging end customer interest.”
The story goes on to explain how farmers in the potato industry were given a very strict moisture tolerance for potatoes, but in an effort to maximize weight within the tolerance (and get more money for the harvest), they artificially raised the water levels. These extra grams of water meant more revenue for the same crop. In turn, it took the potato chip manufacturers, more energy to cook off the extra water and cost more to produce the chips.
The solution lies in aligning the incentives on both sides and allowing the manufacturer to take advantage of UK emissions credits while maintaining the producers margins on a lower moisture content food. Booz gives the following recommendations in summary:
“The first step is to understand the specific carbon footprint of your business’s supply chain, in the context of overall strategy and operations. The second step is to discern the extent to which emissions relate to your specific needs, versus those inherent in supply chain management. The third step is to define your approach. It is likely to be a combination of three types of measures:
1. Reducing your footprint through demand reductions and energy efficiency in design, construction and operation.
2. Replacing conventional energy sources and materials with low- or zero-carbon alternatives, including materials and equipment with low-embodied carbon.
3. Offsetting unavoidable carbon emissions through a program of credit trading and other verified means.”
This example comes from the UK but has similar examples everywhere. Understanding where the incentives are and tracing it back through the supply chains are complicated but useful goals in cost reduction.
Entry Filed under: General, Global Supply Issues/Risk, Green Sourcing, Suppliers
November 28th, 2007
David Bush - Iasta
I am always fascinated by the concept of “green” supply chains. This not only because I was an Environmental Science major in college, but because, it is interesting to read where companies can actually lessen their impact on the environment and reduce their costs with the same strategy. It seems impossible on the surface, but very true.
In fact, I like to show prospective clients how they can use our optimization technology to account for green suppliers in their award allocation while maintaining the lowest cost.
To that end, it was great to see a new blog by Avaro CEO, Tim Albinson, which is dedicated to the subject. I recommend saving 2Sustain to your favorites or blog reader and become exposed to concepts that Tim speaks of. His first post was to define sustainability, which is a good way to start.
Entry Filed under: General, Global Supply Issues/Risk, Green Sourcing
The e-Sourcing Handbook
The e-Sourcing Handbook is a modern guide to supply and spend management success.
