How to green your export supply chain
Technology has the answer
When you consider the hundreds of processes and decisions involved in a supply chain it is understandable why the challenge of assessing the carbon footprint, let alone reducing it, is one that many companies hesitate to attempt.
Technology is available that can sit across the entire supply chain network and can apply specific business rules and logic in conjunction with powerful algorithms. What is crucial is that the engines behind such technologies are designed to maximise transportation based not just on the traditional factors such as cost and asset use, but also flexible enough to incorporate these new environmental variables. With today’s complex globalised supply chains it is also necessary to be able to understand, evaluate and optimise all transportation, both domestic and international, both inbound and outbound, and from simple point-to-point to complex multi-modal, multi-leg and cross-docking operations.
For many regional or global companies, lack of visibility leads to ‘maverick’ spends, typically airfreight or courier, which can form a significant proportion of overall transportation expenditure. When the information available is inaccurate, out of date, or simply not believed, the desire to be able to ‘see the inventory on the receiving dock’ results in rush orders being placed and shipments being delivered that duplicate those already in transit. The end-to-end visibility of logistics data, when available in the granularity and timeliness required, can be specifically tailored to the decision-making requirements of every collaborative partner in the global network. This is where information can be more valuable than inventory, and the savings in terms of carbon expenditure are obvious.
Using technology in conjunction with the wider environmental strategies, together with appropriate statistical analysis, it will be possible to benchmark the current supply chain in terms of its environmental impact across different geographies and modes. Having achieved this, it is then possible to incorporate the carbon impact of any supply chain decisions more accurately, whether strategic or tactical, such as switching points of production, moving between different modes of transport and so forth.
Environmental ministers and pressure groups such as the Carbon Trust have recently launched a carbon rating table for global corporations, a move to encourage the industry to measure the ecological impact of each product throughout its entire lifecycle. The response from international corporations has been extremely positive, with many household brands signing up to the project. However, for a company to truly limit its impact on the wider environment, it is critical to look across the board and at every element within the supply chain, whether delivered using internal resources or external supply chain partners. Today, there is an opportunity for companies to have a sophisticated supply chain that recognises its environmental impact while also driving business growth through a streamlined and agile network.
—David Morgan is general manager, Supply Chain Edge Products at Oracle Corporation (Asia Pacific).
Demands on suppliers
Suppliers play a key role in helping build a sustainable supply chain. Whether they are SMEs or big companies, the ecological impact they have on the supply chain is scrutinised by their customers, particularly in larger organisations. For example, we deal with numerous small and medium-sized suppliers that need to comply with our Ethical Sourcing Policy to ensure we uphold the integrity of the supply chain.
We look at how the products are manufactured from the beginning to the end, and have criteria SME suppliers need to adhere to.
Some of the aspects suppliers should consider when making their supply chain more eco-friendly include the environmental impact of their products as well as the way they are packaged and transported.
Environmental impact: The environmentally friendly feature of a product can be a point of difference for suppliers. Many products on the market have similar features and benefits. If a supplier can offer the same product but manufactured in a more sustainable way, this product becomes more valuable to large organisations. For instance, to be included in our ‘EarthSaver’ range, items must have at least 20 percent recycled materials or contain 70 percent content that is recyclable or biodegradable at the end of its life.
Suppliers accredited to IS014001, or an equivalent environmental management system, are looked upon positively as this demonstrates that their products were manufactured to high environmental standards. Suppliers should also try to minimise the natural resources used in their manufacturing process to reduce their carbon footprint on the environment.
Packaging: This is another aspect that can assist in making the supply chain more sustainable. Through involvement in the National Packaging Covenant (www.packagingcovenant.org.au), organisations can actively look for ways to reducing their packaging.
Suppliers should optimise the use of their packaging by, for example, reducing product packaging or using recycled or biodegradable materials. In addition to minimising waste going to landfill, an optimum use of packaging can also assist in reducing operating costs.
Transportation: To minimise carbon emissions, suppliers should ensure truck-full deliveries and review the distance and routes travelled by their delivery trucks. Suppliers can also offset their delivery emissions through carbon abatement programs such as Greenfleet. Although carbon footprints are only starting to figure on companies’ list of criteria when reviewing their suppliers, it will become more important as the government’s Carbon Pollution Reduction Scheme becomes implemented.
—Jennifer Williams, CSR manager of Corporate Express Australia Limited
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