Looking Through Sustainability-Colored Glasses
Supply Chain Improvement is a Sustainability Investment
By Clay Thomas, Principal ArganoSCMO2
Sustainability is now in the everyday business lexicon—everyone wants to say they’re doing it and most companies’ annually stated goals show it as a high priority. But it is important to understand both how differently the term is defined and what “hard” metrics are being employed to demonstrate and measure the actual progress being made toward achieving these goals.
What Exactly is Sustainability?
Naturally, a search turns up multiple definitions or interpretations for a basic meaning in business terms—are you seeking to impact the long-term environmental, economic and social conditions for future “us” or are we talking the developmental activities undertaken to meet current growth and profitability needs that do not compromise ability of future “us” to have those same aspirations. With concepts broadly defined and nuanced, it is no wonder that homage paid to “sustainability efforts” on companies’ home pages are possibly more vague than other priorities noted in mission statements or values.
When searching for “hard” metrics to measure sustainability, more common ideas like carbon footprints or emissions, packaging waste and percent recycled inputs are most often referenced. Coors, as an example, is moving to a completely cardboard-style packaging for six-pack cans instead of the traditional plastic rings. Since the cans are aluminum, this makes the entire unit either recyclable, re-usable or compostable while saving about 1.7 million pounds of plastic waste annually. That’s a “hard” number that can also translate to money saved or costs avoided.
While the more commonly broadcast metrics are most often related to environmental impact, there are other “soft” metrics surrounding initiatives whose impacts are harder to measure or may seem more intangible. Examples here may include moving business- or customer-facing communication to all digital which cuts down on printing and ink needs to physically targeting fewer intercompany movements of product before it reaches the customer—a little more difficult to put a number on!
In thinking about “process” consulting, and in particular supply chain planning consultancies—we are inherently pursuing sustainability goals in our customer work, even if not recognized as doing so before the word became a focused movement.
What’s more, we not only pursue sustainability metrics for our customers in the work we do, but can also lead by example in changing how we conduct our business to drive towards reaching our own sustainability metrics—unlike certain celebrities and political elites who tell folks to combat global warming and reduce carbon footprints from ritzy photo op meetings they show up to in their private jets and yachts!
Indirect and Accidental Sustainability
It is a strange dichotomy that significant COVID-related disruptions to global supply chains (how many of you are still waiting for refrigerators or furniture to arrive or construction work to be completed?) have also had a positive impact in how we work, particularly when considering results through a sustainability lens. It took a pandemic to demonstrate that working in virtual teams to build better work processes or implement new planning tools can be successful. While some face-to-face interaction will remain invaluable, we have already reduced carbon footprints and emissions through less travel in cars and planes, contract and document digitization and even less power consumption and space requirements in shifting teams away from co-locating at work sites or in regional offices.
At ArganoSCMO2, the implementation and process projects we deliver now are not only done more sustainably by their nature, but the traditional supply chain metric improvement targets of our efforts also improve your company’s sustainability goals. Better forecast accuracy and demand sensing applications reduce overall inventory and obsolescence in the network, which in turn reduces overall spend in inter-company shipments and expedited customer orders, which in turn achieves better production utilization (among other similar metrics).
Each industry or company may have somewhat different sustainability goals that may not be uniform in their definition, but any project that addresses supply chain planning processes and tools will almost universally have some component that seeks an ROI towards meeting at least one sustainability metric. And so, besides the obvious reasons for prioritizing supply chain improvement efforts, they also support your broader corporate sustainability goals.
