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Supply Chain Chiefs: Sustainability Isn’t Key

Chief supply chain officers do not see sustainability as a key challenge in 2010/2011, according to a survey by research firm eyefortransport (EFT).

In the survey, supply chain officers identified the “biggest business challenges driving their supply chain agenda” as variability and forecasting (42 percent), cost containment and reduction (39 percent), and supply chain visibility (35 percent).

Sustainability strategies and practices only ranked 11th in the list of concerns, with just over 15 percent.

Similarly, a second EFT survey found that logistics service users ranked sustainability only 15th in importance out of 24 challenges they face, behind such factors as the economy, cost control and fuel price fluctuations.

Respondents from third-party logistics services, however, ranked sustainability sixth, with the economy, cost control and demand forecasting coming tops.

Those responding to the second survey comprised logistics service providers (68 percent), logistics users (24 percent), other transportation providers (6 percent) and others (2 percent).

Overall they rated their companies’ environmental performance more highly than respondents in the same survey the year before. In both years about 90 percent rated their performance as satisfactory or good. But while in 2009, about 70 percent chose “satisfactory” and 20 percent chose “good”, in 2010 the figures were about 45 percent each.

In both of the surveys out this week, at least 35 percent of respondents represented companies whose annual revenues exceed $1 billion, and at least 68 percent in both surveys represent companies with sales over $50 million.

An eyefortransport survey last year found that improving customer relations was the biggest driver of sustainability initiatives among shippers, third-party logistics companies and supply chain providers.

Another eyefortransport report found that improving efficiency is the most important motivating factor for shippers when deciding to upgrade or purchase supply chain technology.

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9 thoughts on “Supply Chain Chiefs: Sustainability Isn’t Key

  1. It is very interesting to see these type of surveys but sometimes difficult to understand what is happening. If a Supply Chain Officer is managing, say, a portfolio of 50,000 suppliers and if each of those suppliers has typical wastage (ie unnecessary spend) of: 20-30% of energy consumption, 20-80% of packaging, 10-20% of materials, 30% of water, etc then that is a LOT OF MONEY that 50,000 suppliers are going to pass up into the client. Someone has to pay for the waste. Do you know what the wastage figures are through your supply chain?

    The Supply Chain Officer may justifiably be concerned about reducing costs through the supply chain, but it is precisely the issue of sustainability that gives a powerful handle on identifying those unnecessary costs and energising suppliers to step up to the mark. Supply chain sustainability is a powerful means of supply chain streamlining, cost reduction and agility enhancement, and the topic can be used to improve communications and business relationships through the supply chain. Unsustainability is usually the mark of waste, unnecessary costs, and lurking business vulnerabilities.

  2. I agree with Mr. Gell in his argument that “Supply chain sustainability is a powerful means of supply chain streamlining, cost reduction and agility enhancement, and the topic can be used to improve communications and business relationships through the supply chain.”

    Perhaps the question posed “what are the key challenges supply chain managers face” might suggest that supply chain managers are already getting a handle around this issue and the “concern” level is not as great. That is not to say that organizations are not acting in a more sustainable manner. As the survey went on to indicate, well over half (more like 60 percent)of those companies surveyed had implemented or were initiating sustainability focused efforts in 2010- actually a pretty good number!

    Finally I think that the survey erred in calling out sustainability as its own category given the embedded nature of sustainability in a number of other categories, namely: cost containment; transportation and logistics constraints; product lifecycle, government mandate compliance.

    Much more work remains in 2011 but I am confident that supply chain greening and sustainability is here to stay. Read why on my latest post “Five Reasons that Sustainability and Supply Chain “Greening” Will Stick in 2011 wp.me/prxyA-iN or http://bit.ly/bPC8wT.”

    Best- Dave Meyer
    http://www.valuestream2009.wordpress.com
    @DRMeyer1

  3. In my opinion, this gets to a flaw in the survey tool itself – and in some respects, an overarching flaw in the “sustainability value” discussion. Back in 2002, I gave a presentation on how to create economic value through sustainability in the supply chain (http://slidesha.re/cdDrfh). Back then, my point was to find key buying criteria as defined by your customers and THEIR customers then determine if/how a sustainability concept can be applied for competitive advantage. This could mean many different things, but they all should tie back to hard costs and/or other truly relevant aspects of the customers purchasing choices. Vague claims of sustainability simply aren’t meaningful. Dave Meyer’s comments above are spot on. I have no doubt that experienced EHS/sustainability professionals are rolling their eyes at the article’s comments about the “second EFT survey” and how the survey tool drew such a clear distinction between some amorphous thing called “sustainability” and cost control, fuel price fluctuations and demand forecasting. If done correctly, sustainability should be inseparable from those.

  4. I find these kind of surveys does not really reveal much about attitudes towards sustainability in supply chains or other areas.

    Sustainability is never going to be more important than costs, forecasting and other business priorities. After all, if they dont do any of that there wouldnt be a business in a first place!

    The questions should be how important sustainability is in the context of striving towards developing a better business (increased profits, better marketing, public relations, legislation etc) and you’ll find sustainability is absolutely key in business success.

  5. There is a huge overlap between efficiency in logistics and greater sustainability. If you become more efficient -reduce empty legs, waiting times, fuel consumption, extraordinary shipments due to poor forecasting and out of stocks, then these can all generate metrics to support improved evironmental performance. So, whilst much of the demand for sustainable actions seems to come from their customers, there are plenty of win-wins.

  6. Thanks to Dave Meyer and others for their comments regarding Sustainability – “the survey erred in calling out sustainability as its own category given the embedded nature of sustainability in a number of other categories, namely: cost containment; transportation and logistics constraints; product lifecycle, government mandate compliance.”

    While it is currently a hot topic, sustainability is simply good business sense all across the organization. Finding efficiencies, reducing cost and waste and changing business processes to reduce environmental impacts and improve returns all tie directly back to the bottom line in a very positive sense. Companies that are not focused in this area are likely missing some important gains for their businesses.

  7. I echo the comment and sentiment of Michael Gell and of Andrea Feunekes. As part of a holistic supply chain approach, sustainability is the thread weaving its way through the vision and the implementation of that vision. So many of the concerns in the survey are reflective of shorter term worries and meeting quarterly projections and shareholder pressure. ALL legitimate to be sure, but typically cpounter productive to the overall meaning of sustainability and generational value creation.

  8. Thanks all for seeing mine and others points of view on this issue above. I have posted a review of the EFT survey here, from my perspective.

    The Sky’s NOT Falling: New Supply Chain, Logistics Surveys Cite Positive Benefits of Sustainability, Challenges Ahead « ValueStreaming http://bit.ly/fKGAUN

  9. The majority of the article gives great insight. One angle that needs to be explored is registration of substances by the supplier(i.e. REACh). Many chemical manufacturers rely on supplier registration of substances in raw materials and intermediates as part of the organization’s strategy for REACh compliance. Supply Chain leaders who control this well may capture business benefits, leading to higher prioritization of Sustainability within the organization.

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