By: Oren Jaffe
Let’s bring the concept of a supply chain into the 21st Century by calling it what it actually is…..a Supply Network. A chain is linear, and has links above and below, while a network is dynamic and connected in many places.
There is no chain in this picture, only a web of networks. In today’s complex global business, it is imperative to recognize we have moved from supply chains to supply network.
So why does the semantic difference matter?
A sustainable supply network is comprised of raw materials as they flow from source to product to disposal/reuse. It encompasses people, environmental and human rights activities, information flow and resource consumption. Supply networks include multiple businesses (miners, farmers, transportation, vendors, factories, and retailers etc.). Every organization is involved in multiple supply networks as a manufacturer and/or consumer.
Here than are the nine categories of a sustainable supply network:
1. Social Accountability
Social accountability gives assurance that the people in the extended supply networks are treated humanely (no child, slave, or forced labor), paid fair wages, and have safe working conditions.
2.Climate Change / Carbon and Environmental Management
Smart companies realize that good environmental performance can have positive impacts on their profits, reputation, employee satisfaction, and on society as a whole. Knowing your company’s total carbon footprint allows you to take effective steps to reduce the climate change impact of your business and supply network.
Energy efficiency is doing more with less. The goal is to accomplish tasks and business functions the same as before – or even better. From the supply network perspective, the greatest savings and performance come from focusing on essential systems of an office building, warehouse, or manufacturing facility including:
4. Waste Management
“In 2008, Americans generated about 250 million tons of trash and recycled and composted 83 million tons of this material, equivalent to a 33.2 percent recycling rate. On average, we recycled and composted 1.5 pounds of our individual waste generation of 4.5 pounds per person per day.” (http://www.epa.gov/epawaste/nonhaz/municipal/pubs/msw2008rpt.pdf)
Within a supply network, waste management can involve disposal of hazardous waste, recycling, managing the use and disposal of azo dyes (used in the coloring process of jeans, textiles, t-shirts, and leather), liquid, toxic, and gaseous wastes, along with their unique disposal methods.
5. Air Emissions
BusinessDictionary.com says, “Air Emissions is the release of pollutants into the atmosphere from stationary sources (such as factory chimneys) and vehicles.” While some emissions contribute to global warming others contribute to local air pollution quality, like the ones that cause smog and increase asthma rates in children.
6. Water Management
Water needs to be managed as a resource at every stage of the supply network. Water management is important to companies with a large agriculture supply networks as well as factories that make jeans, textiles, and plastic products which demand a lot of water in production and manufacturing.
According to IDG.com, the agriculture sector uses 742 million tons of water per year, while the food and drink processing sector 307 million tons, and the electronic industry 241 million tons.
7. Chemical Management
A sustainable supply network includes understanding which chemicals are used in the manufacturing process and their impacts. Common chemicals of concern include dyes, drugs, solvents, pesticides, and food additives. The most important regulations to know about are RoHS / WEEE in Europe, the EPA’s existing chemical programs in the US, as well as the new Green Chemistry Initiative in California, which hasn’t grown teeth yet but will have rules about as stringent as Europe’s. Chemicals have hit the headlines recently with reports of lead paint in toys and excess cadmium and mercury in children’s jewelry.
8.Raw Material Extraction
Raw materials lie at the heart of each supply network. To make yours a sustainable supply network, you need to understand where your company’s raw materials come from and how they are extracted. Each material has an environmental and social implication, whether we are talking about minerals used to manufacture plastic toys, precious metals used to make electronic equipment, leather for furniture, or cotton for the clothing we all wear.
One neglected area I’d like to emphasize is packaging materials, both in the manufacturing process and the final product. There’s more of it than you think. Packaging includes: corrugated boxes used to ship products, folding cartons and plastic bags, labels, shrink sleeve foils, point of purchase (PoP) displays and metal cans. By working with your supply network partners (suppliers, vendors, and factories) to reduce or better yet, redesign your packaging, everyone lowers operational costs.
See example of how Wal-Mart is using packaging innovation to reduce waste to lower costs and increase profits (significantly).
How your company transports its products around the world, from source to factory to warehouse to store, is an important piece of your sustainable supply network.
Are there any other categories that should be added? What do you think? Please respond below.
Oren Jaffe is the founder and managing partner of the Sustainable Supply Network Consulting Group (www.sustainablesupplynetwork.com), helping companies to navigate the social and environmental requirements of doing global business along with the business opportunities of greening your supply chain. He is also the co-founder of the national sustainable business networking organization, EcoTuesday, Inc. and has an MBA from the University of San Francisco.