2Sustain

Today’s guest post is brought to you by Michael Lamoureux, the doctor of Sourcing Innovation. Sourcing Innovation is one of the leading supply management blogs that brings you best practices, education, and innovation in sourcing, procurement, and supply management on a daily basis.

When you hear sustainability, you probably start thinking about carbon, GHGs, PCBs, HFCs, lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls, polybrominated diphenyl ether; or about child labour, health and safety, freedom of association and representation, reasonable working hours and fair wages, and equality; or about solar panels, wind mills, water turbines, tree farms, and organic foods. Typically anything but your supply chain technology platforms. And that’s a problem.

This isn’t to say that your chemical, corporate social responsibility, and environmental concerns aren’t important. After all:

• carbon cap-and-trade is coming (in California by 2012),
• RoHS-equivalents are being implemented in China, Brazil, India, and Japan,
• the number of chemicals covered by REACH is going to increase substantially every year for the next five years,

• companies that are not corporate socially responsible feel the wrath of consumers in their bank accounts,

• the price of oil is about to skyrocket again,

• energy costs are rising globally and, in many states and countries, existing grids could reach capacity as early as next year,

• global food reserves recently reached a fifty, if not a one-hundred, year low, and

• global warming could bring about more Katrinas, Maharashtra floods, or Bam Earthquakes.

You should be very concerned about all of these issues, prepare for those that could impact you negatively, take actions to mitigate those that can be prevented, and, generally, be a good corporate citizen who is concerned about people and the environment in which we all live.

But you should also be concerned about your own sustainability, which depends on your ability to maintain profitability. After all, if you go bankrupt tomorrow, you won’t be able to do much of anything.

This means you need to find ways to reduce your costs in a socially responsible and environmentally friendly manner. Fortunately, as this blog repeatedly points out, there are many ways to do that. For example, you can:

• reduce your packaging,

• switch to LED Lighting,

• use biogas,

• keep your trucks full, and

• recycle.

But there’s more to sustainability than the “reduce, reuse, recycle” across your in-bound and out-bound product supply chains. There’s also your operations, and your supply chain operations in particular. With a good platform that gives you efficiency, visibility, analytics, modeling, and optimization you can:

• free up your staff from trivial tactical data processing tasks to focus on identifying new sustainable improvements you can make to your operations,

• understand not only how much carbon you’re producing, but what aspects of your operation are producing the most carbon so you know where you need to focus your efforts,

• analyze the costs associated with waste and send a clear signal that reduce, reuse, recycle needs to become a mantra within your organization,

• model potential improvements to determine their impacts, and

• optimize each and every decision to give you the greatest total value when cost, quality, and environmental impacts are taken into account.

The reality is that, if it’s not properly addressed, your platform risk* poses one of the greatest threats to your sustainability. Without a good platform, you could:

• not only spend thousands of hours and hundreds of thousands of dollars on tactical data entry that could be automated, but thousands of hours and hundreds of thousands of dollars (or more) cleaning up the inevitable human errors,

• not have a good grip on how much carbon you’re producing, file an incorrect report, then get fined heavily when cap and trade is enacted,

• not understand that it’s costing you more to dispose of the waste produced by your cheap raw materials and packaging than it would to pay for higher quality materials,

• not identify simple lean improvements that could have significant impacts on your operations (and that would be clearly understood with the right model), and

• spend more than you need to on raw materials that actually decrease your environmental friendliness.

So recognize that sustainability is an internal, operational, concern as well and take action. Build yourself a good platform that includes a best of breed solution for each area of your supply management operations (including sourcing, procurement, compliance, and environmental management) and you’ll be much further along on your journey to sustainability.

* Don’t Ignore Your Platform Risk! is a companion post on @Risk.