Supply Chain Sustainability: What We Know and Don’t Know

Supply chain sustainability is a nice idea, but there are a lot of unanswered questions when it comes to the finer details. So, while genuine progress has been made, there are also a lot of businesses whose commitment to a sustainable supply chain is questionable.

When McDonald’s says it wants to start serving “sustainable beef,” this sounds great. The supply chain for meat is one of the biggest causes of climate change, so anything that one of the world’s biggest purchasers of beef can do to make their supply chain more sustainable should be welcomed and applauded.

The issue comes with the self-regulation of McDonald’s “sustainable beef,” as well as the fact that “sustainable beef” is a term that the company has come up with itself. While it is encouraging to see McDonald’s promise to eliminate deforestation from its supply chain, exactly how else McDonald’s beef will be sustainable remains to be seen.

McDonald’s sets benchmarks for many industries, so there is a lot that can be learned from the company’s successes — as well as its failures — with regards to sustainability. In lieu of tough regulation from governments, we need companies to set targets for themselves by which the public and the media can measure them. Striving for “no deforestation in the McDonald’s supply chain by 2020” is a measurable target, but aiming to have “more sustainable beef” is neither specific enough nor truly measurable.

Waste, Wastewater and Pollution

The economics of scale is the principle behind almost every business on the planet, yet its major flaw is waste. When buying in such quantities, the risk of leftover waste increases exponentially. Recycling is an absolute must because the aim shouldn’t be waste reduction; the aim should be zero waste.

Wastewater can be recycled, waste can be recycled and emissions can be reduced to zero…all it takes is imagination and the will to do so. Elon Musk has proven that this is the case. The adventurous entrepreneur has built a solar-powered battery able to give electricity to an entire town in Australia and is also developing electric-powered delivery vehicles. These two inventions could help supply chains the world over to develop zero-emission factories with zero-emission transport. Those two inventions alone could completely cut emissions from a huge chunk of the global supply chain. What’s lacking is the investment and the belief in Musk’s ideas.

This is hardly surprising. Eco-friendly entrepreneurs like Musk have their own version of economics, where the aim isn’t to make as much money as possible but to use his company’s profits to make as much positive impact on the world as possible. It might sound hokey, yet it makes sense that the kind of people ambitious enough to make billions of dollars would also be ambitious enough to commit to such lofty aims.

It’s not just Musk. Entrepreneurs like Bill Gates and Mark Zuckerberg have amassed fortunes while simultaneously attempting to change the world. Of course, this change is not always welcome. As Zuckerberg learned in India, there is a fine line between philanthropy and neo-imperialism.

Things Smaller Businesses Can Do

Away from the machinations of billionaires, what can small to medium businesses do to create more sustainable supply chains? To begin with, it depends on your industry. Reducing carbon emissions might be the aim and there are many ways in which the future of warehousing or the future of shipping could be more sustainable.

However, to run a small business with zero emissions, you need to build the business from scratch, with the idea of zero emissions at the center of what you do. Of course, at some point, you’re going to run into the issue of transport. Without a zero-emission transport system such as the one Musk is developing, you’ll have to resort to whatever you can find.

There are a lot of things that all businesses can do to make supply chains more sustainable…there are a lot of things that governments can do to make supply chains more sustainable…and there are a lot of things that customers can do to influence both groups. What’s more, in some ways, decision-makers at small businesses are also waiting on big businesspeople like Musk to make a sustainable supply chain possible for everyone. In short, the job of supply chain sustainability is everyone’s, meaning everyone has a role to play.

Source: Chain Sustainability: What We Know and Don’t Know

The Ins and Outs for Sourcing and Procurement in 2017 and Beyond

With a couple of months of 2017 under our belts, now is the time to focus our thoughts on ways sourcing and procurement can leverage a number of likely changes expected in 2017, regardless of the industry. Supply & Demand Chain Executive (SDCE) spoke to Adam Cummins, a director for business transformation at outsourcing advisory firm Pace Harmon, about some of his observations for sourcing and procurement in the year ahead.

SDCE: What sourcing and procurement developments will advance robotic process automation (RPA) in 2017?

Cummins: While RPA gained a foothold automating simple processes throughout 2016, we expect to see enterprises taking steps to leverage RPA for numerous tactical sourcing and procurement transactions in 2017 (making manual processing out for the new year in the process). Purchase order (PO) creation and validation are likely high (if not first) on the list for RPA to begin to be used in the sourcing and procurement space, in particular for organizations that have high-volume, low-dollar value PO requirements.

SDCE: Are there new areas that are ripe for RPA enhancement?

Cummins: We think enterprises will begin to explore RPA for other tactical sourcing and procurement transactions, such as goods receipt (for certain types of goods) or PO-to-invoice matching tasks. In addition, punch-out catalogs (which have been performing RPA-like tasks for many years) are a prime candidate for enhancement via more intelligent automation (e.g., automating inventory checking, and accelerating order transaction filling and release for certain types of goods).

SDCE: What team changes are taking place among sourcing and procurement groups?

Cummins: Where sourcing and procurement teams may have previously aligned traditionally to go deep in specific categories (IT, professional services, resins, steel, etc.) or sub-functions (sourcing, contract management, purchasing, etc.), look for enterprises to begin to shift away from that model and move to align more closely with their business unit customers. This shift will enable more direct connectivity between the expertise, knowledge and capabilities of the sourcing and procurement functions with the specific and ongoing needs of the respective business unit customers those sourcing and procurement groups support. Direct alignment and partnership can foster a highly collaborative approach to strategic purchasing needs, while also simultaneously driving a deeper and more robust level of knowledge and expertise for both the sourcing and procurement, and business unit staffs.

SDCE: How can sourcing and procurement drive more value?

Cummins: While securing better negotiated commercial and contractual terms will always be an important area of focus, we expect that more organizations will turn to robust supplier relationship management as a means to drive additional value in 2017. This means moving away from negotiating upfront cost savings via purchase cost reductions toward delivering greater, longer term value by implementing and delivering robust supplier relationship management practices.

SDCE: Is goal No. 1 still cost reductions?

Cummins: Strictly focusing on cost reductions sends a signal to vendors that they will be constantly squeezed on price and you are OK trading performance for lower quality. More effective supplier relationship management can ensure that specific commercial and contractual obligations committed to by supplier partners are, in fact, delivered and measured on a regular, ongoing basis. Such initial governance is critical to making sure that all supplier partners are actively and positively encouraged to follow through on the promises they made during the initial sourcing and contracting processes that led to their selection.

SDCE: What benefits are possible from a more robust supplier relationship management approach?

Cummins: Robust supplier relationship management can help enterprises identify and capitalize on additional value that simple governance of supplier partners typically does not deliver. This may include not only additional cost optimization levers that can be pulled, but also potential new revenue generation opportunities that supplier partners may be able to identify via such partnership approaches (such as joint development or joint partnership opportunities between the buying organization and the supplier partner).

According to Cummins, adopting these ideas will better position sourcing and procurement organizations to provide cutting-edge market knowledge and increase their value to the organizations they support. As sourcing and procurement leaders review and revisit the plans for their organizations in 2017 and beyond, considering one or more of these insights can help ensure that the sourcing and procurement group can maximize the value that makes up much of its mission.

Source: – Q&A: The Ins and Outs for Sourcing and Procurement in 2017 and Beyond