Executive Briefings

Supply Chain Visibility: Lots of Talk, Little Action

How far do companies have to go, before they become truly "green"? A long, long way, if the results of a new survey are to be believed. According to the study by the Business Performance Management Forum (BPM) and E2open, nearly two-thirds of respondents lack the visibility needed to monitor the environmental impact of their supply chains. This despite the fact that 90 percent say their top management supports the notion of "enhanced trading partner visibility, flexibility and sustainability across the entire supply and demand chain." Too bad lip service doesn't run supply chains.

The survey of 125 professionals in supply chain, operations, finance and executive positions was conducted in the second quarter of 2009 - not the best time for launching big corporate initiatives. One of the major problems, says BPM senior vice president Derek Kober, is that "companies don't have systems and processes in place to have all of the information at their fingertips." That's especially true when it comes to calculating a company's carbon footprint, despite all the hoopla surrounding that term. Says Kober: "We showed that 60 percent of companies have either no visibility or very marginal visibility across all tiers."

Modern-day supply chains, with all their complexity, are riddled with weak links. Some 35 percent of respondents to the survey have 1,000 or more trading partners, Kober says. And those entities are changing constantly. Most companies continue to struggle with obtaining consistent, verifiable data to assess the performance of their suppliers. The problem only grows worse as they move up the tiers to vendors who are two, three or more steps removed from the original equipment manufacturer.

Interestingly, the survey doesn't find the recession to be a major factor in the failure of companies to achieve supply chain visibility. On the contrary, says Kober, "our sense was that the [poor] economy actually could be driving the need for some of these better practices." After all, a program that achieves greater visibility for "green" motives is also likely to result in efficiencies that will have a positive impact on the bottom line. And, in many cases, companies have little choice but to act. Concerns about terrorism and other security breaches are driving tighter rules on the early filing of data about overseas suppliers of raw materials, components and finished goods. So better visibility is coming, whether companies like it or not.

Eventually. In the meantime, there are those dreaded internal silos, which stymie any attempt at collaboration between corporate functions, let alone with outside partners. Any company looking to calculate its carbon footprint has to unite executives overseeing finance, operations, supply chain and corporate social responsibility, to name a few. "It's a multi-disciplinary effort," says Kober.

He sees some hope on the horizon. Eighty-five percent of survey respondents say their companies are actively involved in launching new programs for efficiency and social awareness across their supply chains. And two-thirds expect their own customers to demand a higher level of environmental responsibility over the next two years.

The biggest companies - the ones with the highest public profiles - will help to push things along. Consider the recent announcement by Wal-Mart that it will soon begin monitoring its suppliers' environmental initiatives. (See my earlier post, "Wal-Mart Tells Suppliers to Go Green. Will They Listen?") Combined pressure from government, consumers, social activists and the Beast of Bentonville could finally force companies to translate their talk into action. One can only hope.

More information at http://www.bpmforum.org/

- Robert J. Bowman, SupplyChainBrain

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How far do companies have to go, before they become truly "green"? A long, long way, if the results of a new survey are to be believed. According to the study by the Business Performance Management Forum (BPM) and E2open, nearly two-thirds of respondents lack the visibility needed to monitor the environmental impact of their supply chains. This despite the fact that 90 percent say their top management supports the notion of "enhanced trading partner visibility, flexibility and sustainability across the entire supply and demand chain." Too bad lip service doesn't run supply chains.

The survey of 125 professionals in supply chain, operations, finance and executive positions was conducted in the second quarter of 2009 - not the best time for launching big corporate initiatives. One of the major problems, says BPM senior vice president Derek Kober, is that "companies don't have systems and processes in place to have all of the information at their fingertips." That's especially true when it comes to calculating a company's carbon footprint, despite all the hoopla surrounding that term. Says Kober: "We showed that 60 percent of companies have either no visibility or very marginal visibility across all tiers."

Modern-day supply chains, with all their complexity, are riddled with weak links. Some 35 percent of respondents to the survey have 1,000 or more trading partners, Kober says. And those entities are changing constantly. Most companies continue to struggle with obtaining consistent, verifiable data to assess the performance of their suppliers. The problem only grows worse as they move up the tiers to vendors who are two, three or more steps removed from the original equipment manufacturer.

Interestingly, the survey doesn't find the recession to be a major factor in the failure of companies to achieve supply chain visibility. On the contrary, says Kober, "our sense was that the [poor] economy actually could be driving the need for some of these better practices." After all, a program that achieves greater visibility for "green" motives is also likely to result in efficiencies that will have a positive impact on the bottom line. And, in many cases, companies have little choice but to act. Concerns about terrorism and other security breaches are driving tighter rules on the early filing of data about overseas suppliers of raw materials, components and finished goods. So better visibility is coming, whether companies like it or not.

Eventually. In the meantime, there are those dreaded internal silos, which stymie any attempt at collaboration between corporate functions, let alone with outside partners. Any company looking to calculate its carbon footprint has to unite executives overseeing finance, operations, supply chain and corporate social responsibility, to name a few. "It's a multi-disciplinary effort," says Kober.

He sees some hope on the horizon. Eighty-five percent of survey respondents say their companies are actively involved in launching new programs for efficiency and social awareness across their supply chains. And two-thirds expect their own customers to demand a higher level of environmental responsibility over the next two years.

The biggest companies - the ones with the highest public profiles - will help to push things along. Consider the recent announcement by Wal-Mart that it will soon begin monitoring its suppliers' environmental initiatives. (See my earlier post, "Wal-Mart Tells Suppliers to Go Green. Will They Listen?") Combined pressure from government, consumers, social activists and the Beast of Bentonville could finally force companies to translate their talk into action. One can only hope.

More information at http://www.bpmforum.org/

- Robert J. Bowman, SupplyChainBrain

Comment on This Article