Executive Briefings

The Dollars and Cents of Supply-Chain Sustainability

Hiranya Fernando, senior research analyst with Gartner, likes to begin a conversation about sustainability by saying what the word doesn't mean to her. She's not interested in tree-hugging initiatives that might be launched by companies in good economic times in order to polish their public image. True sustainability, she says, is about maximizing resource efficiency, with a focus on key inputs such as energy, water and raw materials. Using less of those results in lower operating costs "and hits your bottom line, as well as reducing your environmental impact."

The effort can't be restricted to a company's internal operations. Increasingly, says Fernando, companies are looking at the environmental impact of processes that occur both upstream to raw materials and component production, and downstream to logistics and transportation. All must be considered when calculating one's carbon footprint.

Moreover, she says, carbon shouldn't be the sole measuring stick for assessing sustainability. With the failure of many "cap and trade" regimes around the world, carbon has become less of a hot political issue. Companies on the forefront of going green need to broaden their scope to include issues such as water and waste.

The Supply Chain Operations Reference (SCOR) model, developed by the Supply Chain Council as a framework for multiple industries, can be a valuable tool for maximizing sustainability, Fernando says. It can be used as a means of determining specific initiatives at each stage of the supply chain, from product design all the way to the shipment and return of finished goods.

Most companies are still in the early stages of implementing programs for supply-chain sustainability. It's not easy to gather the necessary data from multiple tiers of suppliers, Fernando notes. "Those doing it well know what tools and frameworks to use," she says, "But it's a real mixed bag .... Everybody is trying to figure this out."

To view video in its entirety, click here

Hiranya Fernando, senior research analyst with Gartner, likes to begin a conversation about sustainability by saying what the word doesn't mean to her. She's not interested in tree-hugging initiatives that might be launched by companies in good economic times in order to polish their public image. True sustainability, she says, is about maximizing resource efficiency, with a focus on key inputs such as energy, water and raw materials. Using less of those results in lower operating costs "and hits your bottom line, as well as reducing your environmental impact."

The effort can't be restricted to a company's internal operations. Increasingly, says Fernando, companies are looking at the environmental impact of processes that occur both upstream to raw materials and component production, and downstream to logistics and transportation. All must be considered when calculating one's carbon footprint.

Moreover, she says, carbon shouldn't be the sole measuring stick for assessing sustainability. With the failure of many "cap and trade" regimes around the world, carbon has become less of a hot political issue. Companies on the forefront of going green need to broaden their scope to include issues such as water and waste.

The Supply Chain Operations Reference (SCOR) model, developed by the Supply Chain Council as a framework for multiple industries, can be a valuable tool for maximizing sustainability, Fernando says. It can be used as a means of determining specific initiatives at each stage of the supply chain, from product design all the way to the shipment and return of finished goods.

Most companies are still in the early stages of implementing programs for supply-chain sustainability. It's not easy to gather the necessary data from multiple tiers of suppliers, Fernando notes. "Those doing it well know what tools and frameworks to use," she says, "But it's a real mixed bag .... Everybody is trying to figure this out."

To view video in its entirety, click here