Executive Briefings

Reverse Logistics: The Right Service Provider Mirrors Your Sustainability Efforts

Analyst Insight: Selection of service providers in the area of reverse logistics is getting more complex for the companies that are following the "triple bottom line" philosophy. Additional criteria in the selection process are required to ensure that the relationship between the customer and the service provider increases sustainability efforts and enhances the value of the network both upstream and downstream.

The "triple bottom line," a phrase coined by John Elkington in 1989, has become a guiding principle for corporate strategists of the 21st Century. Although the term may not be a familiar one, the underlying elements - people, planet and profit - certainly are. This means companies are striving to achieve success through financial means, environmental/green/sustainability efforts, as well as through social channels.

From a reverse logistics perspective, companies that are pursuing the triple bottom line philosophy, during their service-provider selection process need to consider additional criteria in order to leverage synergy from the customer and service-provider relationship. These include:

•  Alignment of Vision: Is there an alignment of corporate vision between the customer's and service provider's organizations?
•  Brand Equity: Is the service provider known for its sustainability efforts in the industry? How will the market perceive this relationship?
•  Processes: Do the processes of the service provider promote sustainability efforts (i.e., reuse of material, minimal usage of energy and water as well as environmentally friendly final disposal of the product, etc.)?
•  Supply Chain/Value Network: Will the service provider enhance the cause of sustainability both upstream (i.e., primary customer/end customer) and downstream (i.e., all tiers of supply base, including logistics service providers)?
•  Advocacy and Industry Leadership: Will the customer's relationship with the service provider drive positive changes and establish new industry norms?
•  Leveraging Intangibles: Will the relationship with the service provider act as a catalyst for generating and implementing new ideas and initiatives toward sustainability efforts?

The Outlook

In 2010 and beyond, the number of companies that publish corporate social responsibility reports will grow significantly. This shows that corporations acknowledge their broader role in caring for communities and the planet.

In order to ensure that their relationships with service providers help corporations enhance their sustainability efforts, these additional criteria will be crucial for decision makers.

The "triple bottom line," a phrase coined by John Elkington in 1989, has become a guiding principle for corporate strategists of the 21st Century. Although the term may not be a familiar one, the underlying elements - people, planet and profit - certainly are. This means companies are striving to achieve success through financial means, environmental/green/sustainability efforts, as well as through social channels.

From a reverse logistics perspective, companies that are pursuing the triple bottom line philosophy, during their service-provider selection process need to consider additional criteria in order to leverage synergy from the customer and service-provider relationship. These include:

•  Alignment of Vision: Is there an alignment of corporate vision between the customer's and service provider's organizations?
•  Brand Equity: Is the service provider known for its sustainability efforts in the industry? How will the market perceive this relationship?
•  Processes: Do the processes of the service provider promote sustainability efforts (i.e., reuse of material, minimal usage of energy and water as well as environmentally friendly final disposal of the product, etc.)?
•  Supply Chain/Value Network: Will the service provider enhance the cause of sustainability both upstream (i.e., primary customer/end customer) and downstream (i.e., all tiers of supply base, including logistics service providers)?
•  Advocacy and Industry Leadership: Will the customer's relationship with the service provider drive positive changes and establish new industry norms?
•  Leveraging Intangibles: Will the relationship with the service provider act as a catalyst for generating and implementing new ideas and initiatives toward sustainability efforts?

The Outlook

In 2010 and beyond, the number of companies that publish corporate social responsibility reports will grow significantly. This shows that corporations acknowledge their broader role in caring for communities and the planet.

In order to ensure that their relationships with service providers help corporations enhance their sustainability efforts, these additional criteria will be crucial for decision makers.