2Sustain

Over the past few weeks, Capgemini, a global leader in consulting, technology, and outsourcing services, released results from two different studies about current trends in supply chain management. Both reports include information specific to sustainability initiatives, and like surveys I’ve blogged about before, ultimately, the findings are somewhat blurry. While companies seem to be in agreement about the benefits of ‘going green,’ there’s still a lot of confusion out there about how exactly to move forward in this direction.

In the first study, Capgemini, in cooperation with the Georgia Institute of Technology, Oracle, and DHL, took an in-depth look into logistics outsourcing. This survey polled 1,644 logistics executives from North America, Europe, Asia Pacific, and Latin America, and uncovered some very interesting trends:

•    98% of companies surveyed agreed that green supply chain initiatives, such as local sourcing, are essential for future business success. However, there is widespread uncertainty about how to develop and manage sustainable supply chain operations.
•    46% of respondents said that the effect of supply chain operations on the environment was a factor when considering a 3PL.
•    It appears that greening the supply chain will continue to have a growing impact on network design, transport modes, equipment, business processes, behaviors, and balance sheets.
•    A changing business environment means that companies today must focus on a wide range of possible supply chain disruptions, including theft of material goods, theft of intellectual capital, natural disasters, product tampering, and port closures.
•    Successful companies are beginning to develop comprehensive supply chain collaboration and logistics integration. They are working closely with 3PLs to set up comprehensive processes that will increase agility, lower costs, and improve efficiencies of their supply chains.

Dr. John Langley, from the Georgia Institute of Technology, does a great job of summing up that last point. “The greatest shared challenge is that of forming and growing successful collaborative relationships between users and providers of logistic services,” he says. “Without a commitment from both sides little progress can be made in the greening of the supply chain and supply chain security. More than three quarters of 3PL users rate consolidation, routing and mode selection as the top services 3PLs can contribute to green strategies. However, just 31% indicate that their 3PLs currently offer these capabilities.”

For another perspective on trends in supply chains, logistics, and transportation, take a look at “The 2008 Supply Chain Playbook: Game Strategy; 17th Annual Trends and Issues in Logistics and Transportation,” presented by Capgemini, Georgia Southern University, the University of Tennessee, and SAP. This study surveyed 1,069 individuals representing a wide range of companies from throughout the world. Most of the surveyed companies (57%) had annual sales under $1 billion, while about 13% had annual revenues of $1-3 billion, and about 30% recorded annual sales greater than $3 billion. More than 14 industrial sectors participated in the study, including manufacturing (46%), transportation service providers (18%), and retail (12%).

    The 2008 “playbook” provides a detailed analysis of each survey result –from respondents’ strategic directions and organizational structures to their process integration, communications technologies, and capabilities. In addition, there’s discussion of data specific to sustainability initiatives. For instance:

•    25% of companies in this survey said that they were engaged in green/sustainability projects. (I have to admit, I was surprised with this result. Note the disconnect between this 25% and the 98% from the previous survey who said that green initiatives are essential for future business success.)
•    When the surveyed firms were asked to rank what drives their green initiatives, “priority of the CEO” came out on top. For companies in North America, the second most noted justification for green initiatives was cost reduction, followed by pressure from customers/consumers, improving public relations, and reducing/eliminating hazardous/toxic materials. (Interestingly, the key green driver rankings among international companies were different. The primary driver was still priority of the CEO, but pressure from customers was the second most noted justification, followed by improving public relations, reducing/eliminating hazardous/toxic materials, and then lastly, cost reduction.)
•    Among companies engaged in green projects, most (59%) are doing so in collaboration with their suppliers.
•    Overall, the results suggest that distribution network optimization is currently enjoying a resurgence as companies become more interested in using less transportation, reducing their carbon footprint, and lowering their total energy consumption across the supply chain.

These recent surveys mirror the PRTM global supply chain report I wrote about back in August and reiterate trends I’ve been seeing for awhile. Globalization is driving ever-expanding supply chains, and now more than ever, companies need to focus on these supply chains to order to meet both financial and green objectives.