Executive Briefings

Sustainability: Why Attention Must Be Paid

There are three basic reasons why supply chain managers should pay attention to sustainability initiatives, says Kevin Smith, president and CEO of Sustainable Supply Chain Consulting.

The first reason is because customers want it, the second is because stakeholders demand it and the third is because the government requires it. The most important reason, however, is that all these constituencies can be satisfied while reducing business costs and increasing profits.

Moreover, sustainability initiatives often require little additional effort, Smith says. "Most companies already have some kind of continuous improvement program in place to make their business more profitable and less costly and many of these efforts include sustainability practices," he says.

For example, say a company has a program to reduce the number of shipments by improving trailer utilization, he says. By doing this they are able to ship nine trailers where before they shipped 10. "That is a 10-percent reduction in the amount of carbon going into the air and it also is a 10-percent reduction in total costs, on ton-mile basis, to move product. So if you look for things like that or for simple changes like changing to fluorescent lighting for all of your DCs and warehouses, there are significant cost savings to be had. At a time when top lines are shrinking, being able to deliver bottom line savings is a very compelling argument for sustainability.

Nor do these efforts require a lot of outside consulting help, he says. "It just requires taking a look at what you are doing. You always can find things to do that are sustainable and that will help your bottom line. Look at your overall business and find things that you can do to save money and to increase profits but that also have a positive effect on the environment."

To view this video in its entirety, click here.

The first reason is because customers want it, the second is because stakeholders demand it and the third is because the government requires it. The most important reason, however, is that all these constituencies can be satisfied while reducing business costs and increasing profits.

Moreover, sustainability initiatives often require little additional effort, Smith says. "Most companies already have some kind of continuous improvement program in place to make their business more profitable and less costly and many of these efforts include sustainability practices," he says.

For example, say a company has a program to reduce the number of shipments by improving trailer utilization, he says. By doing this they are able to ship nine trailers where before they shipped 10. "That is a 10-percent reduction in the amount of carbon going into the air and it also is a 10-percent reduction in total costs, on ton-mile basis, to move product. So if you look for things like that or for simple changes like changing to fluorescent lighting for all of your DCs and warehouses, there are significant cost savings to be had. At a time when top lines are shrinking, being able to deliver bottom line savings is a very compelling argument for sustainability.

Nor do these efforts require a lot of outside consulting help, he says. "It just requires taking a look at what you are doing. You always can find things to do that are sustainable and that will help your bottom line. Look at your overall business and find things that you can do to save money and to increase profits but that also have a positive effect on the environment."

To view this video in its entirety, click here.