I interviewed Robert L. Lattimer who discussed what he considers to be the next generation of sustainability, which he refers to as Universal Sustainability. Robert L. Lattimer is the Senior Fellow, Diversity Studies, John J. Heldrich Center for Workforce Development, Edward J. Bloustein School of Planning and Public Policy, Rutgers, The State University of New Jersey. Prior to this, Robert was a Global Partner and Practice Leader, Accenture/Andersen Consulting, as part of the firm's Organization & Change Strategy Practice.

 

Robert provided an overview of Universal Sustainability based on an article that he authored and which was published entitled Universal Sustainability: The Next Form of Competitiveness. The article was published in Competition Forum Journal, September, 2011. He also wrote a recent editorial, Universal Sustainability: The Economy and Competitiveness 2012, which was published February 2012 in Sustainability: The Journal of Record.

 

 

Robert discussed the key messages contained within the concept of Universal Sustainability, which are as follows:

 

1. Framing the Issue: The issues associated with Universal Sustainability; that it is my position that the operating framework of Universal Sustainability may hold the key to unlocking the next wave of business innovation and growth. It may also promise to reconnect economic competitive organizations and policymakers with that of the success of the global society. It is this new model, this new construct of Universal Sustainability that may well shape the next form of economic competitiveness and social stability.

 

When seen through the lens of the economic and social lens, Universal Sustainability is a new economic and social discipline, as such represents in my view, the next generation of sustainability, which goes beyond a focus on the environment, preservation and conservation. Universal sustainability goes beyond this. It has a primary focus on the economy, with a primary focus on education, science and technology, political systems, as well as preservation, the environment and conservation.

 

In essence, Universal Sustainability is viewed within in the context of next generation thinking around the concept and notion of sustainability.

 

2. The Current Reality: The needs of the 21st century global society are numerous; issues involving the economy, education, environment, political systems, social structures, science and technology, regional conflicts, healthcare, acceptance of diversity, economic inequalities, globalization, and so much more are have an impact, are creating a crisis of great complexity, of which must be addressed within a context.

 

It has been my observation, that the calculus of sustainability is rarely applied to such issues, except in isolation, and that is because its problem-solving and decision-making boundaries are perceived as too narrow, that is they are focused on environmental and conservation issues, even when expanded to the notion of the triple bottom line.

 

The introduction of the new, more expanded model of sustainability, Universal Sustainability, and its framework of a more inter-connected and integrative approach, offers the operating framework for the greater resolution to the issues as presented within this current and challenging reality; we are now at the tipping point.

 

The current reality is sustainability within the narrow context. We are now expanding beyond the current reality to a new reality which is the notion of Universal Sustainability as it relates to next generation thinking. It is a much broader context, a more integrative context and a more problem solving and decision making process that deals with the dilemmas, challenges and opportunities of 21st century global society.

 

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3. Redefining Sustainability: A New Global Value System: Although the roots of Universal Sustainability grew out of the sustainability movement, Universal Sustainability should be considered as the next generation, and as such, Universal Sustainability has a focus on identifying and establishing the intersection of social and economic progress. The concept of Universal Sustainability rests on the premise that both economic and social progress ought to be addressed to the attainment of the highest returns on global social progress, rather than on a narrow definition of profit attainment. As such, the operational concept of Universal Sustainability resets the boundaries of capitalism by integrating competitive economic and social progress, there-in is the new integrative approach.

 

Universal Sustainability also incorporates Dov Seidman's notion of "situational values" and "sustainable values." Situational values involve calculations about what is available in the here and now; they are about exploiting short-term opportunities rather than consistently living the principles that may create long-term success. Sustainable values are the values that connect us deeply as humans, such as shared responsibility. Situational values push us toward the strategy of becoming "too big to fail." Sustainable values inspire us to pursue the strategy of becoming "too sustainable to fail."

 

4. The Promise of Universal Sustainability: Universal Sustainability in summary promises a recalibration, a rebooting of the current form of capitalism to that of a more integrative economic process that contains the elements of innovation, profit and social stability, within the sustainable values construct.

 

The New Age of Competitiveness

 

Economic competitiveness lies at the crux of the matter, or the foundational element - profits versus societal issues. When we talk about competitive organizations and the environment, conservation and situational values versus sustainable values the operative process that is designed to develop a 21st century global society that is sustainable.

 

It redefines the notion and differentiates the process between sustainability (which has a primary focus on environment, conservation, and preservation) to the Universal Sustainability Process which has a primary focus sustainable values. Those values then inspire us to pursue a strategy of becoming too sustainable to fail.

 

We integrate social values such as the social indicators for progress and human indicators for progress, within the overall rebooting and re-defining the 'new capitalism'. The new capitalism does not have a primary focus on just profits, but on sustainable values which incorporate social indicators for progress and human indicators for progress within the profit motive. The new age of competitiveness with be more sustainable because of the value system of sustainable values and the integration of the processes of the human index and social indicators of progress, within a profit oriented operative motive.

 

It is a recalibration and rebooting of the process of sustainability.

 

Concluding Remarks

 

It is also important to note that Ann Lee-Jeffs and Robert Lattimer work very closely on this issue, and they are co-authoring a book on Universal Sustainability; it is scheduled to be presented to the publisher by January 2013.

 

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Robert L. Lattimer
Senior Fellow, Diversity Studies & Lecturer*
John J. Heldrich Center for Workforce Development
Edward J. Bloustein School of Planning and Public Policy
Rutgers, The State University of New Jersey



*Lecturer; Rutgers Graduate School of Business, corporate/organization strategy.

About Dustin Mattison

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I interviewed Dennis Gawlik who discussed 'Right Sourcing' and Green Supply Chains. Dennis Gawlik has been in supply chain, supply management, purchasing   and procurement for roughly 30 years. Currently, he is working at  Liberty Mutual on process improvement throughout their system.

 

 

Challenges with green supply chains

 

Dennis thinks the best place to start is asking “what is an appropriate definition for sustainability and green supply chains?” Most people are using the current definition from the late 1980s from a UN commission. It is a good definition, however it has some drawbacks. If you look at the definition you see it is about the actions we take today and not affecting the relationships or future generations. The problem Dennis has with this is that the definition starts out with 'sustainable development'. In that case, sustainability is actually an adjective, not a noun. That can be problematic when you are looking at how to approach sustainability in the supply chain.

 

In a continuum looking for a better definition Dennis would direct people to an author named John Ehrenfeld from MIT. He has an excellent definition which is an elegant definition which said something to the effect that

 

'sustainability is the possibility that humans and other life will flourish on the earth forever'.

 

This is a really interesting approach to sustainability because it is not about development and continuous growth. It is looking at it from a holistic naturalistic approach. John is a very prominent person in industrial ecology. He wrote an excellent book called 'Sustainability by Design' which looks at sustainability from a systemic approach.

 

One of the things Dennis learned from John and others is that on a continuum from current to future state, with the future state being sustainable green supply chains, we are currently just at the beginning. Unfortunately, a lot of the work we are doing right now is reducing un-sustainability. If you look at sustainable efforts at large organizations you see they are trying to be less un-sustainable.

 

If you look at reduced carbon or reducing the waste or doing recycling, etc. Everything is primarily focused on reducing un-sustainability, as opposed to promoting full sustainability. Therefore, when Dennis looks at Green and Sustainable Supply Chains, this is the context he is working with now. However, Dennis believes we need to reduce un-sustainability. For the next 5 to 10 years this is the area Dennis will be involved with.

 

In our transportation modes it is about being more efficient in our modes and plant selection. Currently, instead of outsourcing and nearsourcing there is a current concept called 'Right Sourcing'. This is a good green sustainable concept where you look for the appropriate location for a warehouse or factory etc that takes into consideration the triple bottom line effect (people, planet and profits).

 

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You look at your transportation miles, waste and all the components from a holistic standpoint. You are looking at something called “Right Sourcing”.

 

This will take a good portion of the next decade for us the work through and to come up with a good solid solution to head into the future.

Progress made

 

We are starting to get closer to equilibrium or sustainability. Toyota for instance has a goal and has reached zero waste to landfill out of their North American locations. All of the waste coming out of their facilities has a zero net effect to the land fill. They are a leader in many of the waste reduction platforms.

 

Certainly, when we are transporting goods around the world it has a sustainability issue we need to starting looking into how we become smarter and use the right equation to put together the right combination of transportation modes.

 

Toyota and others are doing a good job of zero waste landfills. Others, such as Boeing in Seattle is doing an excellent job of reducing un-sustainabilty. They are making their planes out of composite so that they are much more eco-friendly from a weight and transport perspective. They are also looking at different bio fuels and different ways to propel their airplanes in the future.

 

Another good local story in Seattle is Starbucks. Starbucks has a very comprehensive program from a recycling. They are also working on a social program with their suppliers to green their supply chain from the origins in the mountains in Central America, Indonesia, South America and Africa where they grow their plants. The program addresses how use the ecologically best manner to bring the product to the US. From a social perspective they focus on how to help the local communities over there. From a total green supply chain perspective, Starbucks is doing an excellent job.

 

Another good example in Seattle is Weyerhaeuser and their land management and stewardship of their land and forests. There are many organizations doing an excellent job and are well along the path.

 

One of the things Dennis would like to encourage is for people to look at the GRI component for lookin at how to put together a strong sustainable program. Many aspects of the GRI program relate to supply chain. The GRI is a global reporting initiative. There are over 1,000 organizations involved. It is very large in Europe and is now catching on in the US. Many of the aspects of this initiative also relate to how you green the supply chain.

 

Direction for supply chain executives

 

The direction for supply chain executives is that it does make sense from a pure profit motive. However, if you are looking at green supply chains beyond profit (from a triple bottom line perspective and the effects on society, people and environment) it also has positive effects from a societal effect. From a marketing perspective you can get a sustainable and strategic advantage from a positioning of your product as a leader in green supply chain.

 

Not only do you want to look at this to stay a leader from a supply chain perspective, but you also want to do it from a company and business case perspective to make sure you have a strong leadership position in the marketplace.


About Dennis Gawlik

 

Dennis Gawlik has been in supply chain, supply management, purchasing  and procurement for roughly 30 years. Currently, he is working at Liberty Mutual on process improvement throughout their system. In addition, Dennis has been teaching in operations, supply chain and sustainable supply chains for about 20 years, the last 10 at Bainbrige  Graduate Institute where he currently teaches two courses. The first is  an integrated course called value and value creation. The second course is sustainable operations.

Dennis_Gawlik.jpg

 

Supply Chain Procurement Manager

Twitter:http://twitter.com/dgawlik1

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Charles C. Snow is a professor in the business school at Penn State, in the management department. He has been there for a long time studying various management topics. Over the last 5 or 6 years he has really been focusing on innovation management. He has been doing a variety of things in terms of research, joining LinkedIn groups and a variety of other things to get it sorted out.

 

What is open innovation and how is it evolving?

 

 

Open Innovation is a term coined by Henry Chesbrough who wrote his book on Open Innovation around the year 2003. The notion of Open Innovation is basically extending the innovation process beyond the boundaries of the firm. The phenomenon began well before 2003.

 

You can't trace Open Innovation back to any single event or company. Charles thinks the Linux movement had a lot to do with what we now call 'Open Innovation' and the culture that surrounds it. Although that movement started off as some say a terrorist action against the giant Microsoft, it was a monumental event in the sense that it opened up the innovation process around computer software development.

 

Essentially, what the Linux movement has shown is that you can get worldwide participation on a particular topic – in this case software development. The Linux kernel is continually being improved by hackers, software developers and interested hobbyists, just so long as they don't exploit the community for commercial gain and as long as they give credit to those who develop solutions for them.

 

It operates as a community, pretty much like the academic research process which Charles works with. They try to develop a solution and make them publicly available and not have so much business objectives in mind. That type of philosophy is now spreading inside and across firms such that the innovation process is opening up. Companies don't do it entirely on their own anymore. A fully open process would be something like Linux or Innocentive which will take your company's problem or challenge and will put it out for problem solvers to work on. If someone comes up with a solution to that problem they get paid $20,000, $50,000 etc. Then the company continues to develop the technology based up on the new solution. In the meantime, the problem solvers wait for the next step problem that interests them and they can work on it. That process is open to anyone, at least in theory.

 

Other processes which are part of the Open Innovation movement are either less open or semi-open, or semi-closed where the focal firm will create process around it such that they can benefit from more brains and eye balls focused on their innovation challenges. IBM runs innovation jams. This is a periodic process for people within the company, but of course IBM is a world-wide company with roughly 420,000 employees. This is a complex activity to try to generate ideas and cull them for the most promising ideas and then to try to commercialize a solution.

 

Charles and his team studied an organization called Blade.org which is in the computer server industry. It was a very creative organization which is a collaborative community of firms where an organizational platform was created by IBM and 7 other founding firms such that firms could voluntarily and in a very open way choose the work with any other member firms in the community on new solutions. This community had about 200 firms in it. In the first 18 months it developed more than 60 solutions which are basically new software and hardware products such as computer servers.

 

Open Innovation is continuing to evolve and the 'cat is out of the bag' so to speak. Charles doesn't see any firm these days trying to conduct the innovation process entirely on its own.

 

About Charles C. Snow

 

 

Mellon Foundation Professor of Business Administration

The Pennsylvania State University

Many people are on the quest for the “perfect scorecard” for the  suppliers to complete. The  problem is that the big customer usually cannot tell the valid  scorecards from those that are poorly completed. This will pose risk to  their operations. Bob Pojasek presents several solutions in the interview below.

 

 

Scorecards and Scalability to Implement Across Supply Chain

 

The gorilla of all scorecards is the Walmart Sustainability Initiative Scorecard with the now famous 15 questions. There are different numbers out there but a lot of people believe they have 100,000 first tier suppliers and the number goes up exponentially after that. Bob has done roughly 30 or 40 supplier scorecards for companies.

 

Typically you have a first tier supplier really strong in the food and apparel, which have gotten more scrutiny than some of the other industries. (at least the ones Bob has been involved in) You are typically dealing with an apparel factory in China or some other developing country.

 

This is particularly prevalent in retail For example, Proctor and Gamble has a scorecard that is mandatory for all suppliers. There is a good number of them out there now. Most of the retailers have their own.

 

Bob's fear is that there is the search for the 'perfect scorecard'. The poor people in the supply chain are getting multiple scorecards. They are getting besieged by scorecards and they are all different. It takes an awful amount of effort. A lot of them, especially at the factory level in developing countries have no idea how to fill them out. As a result, they retain a consultant. It is usually a very small consulting firm, a sole proprietorship or something small. Bob is fearful that some of the scorecards are done incredibly well and some are probably done quite poorly. There are probably none in between.

 

For the retailer or end-customer like an IBM it is a problem because it poses risks to them. If they think the supply chain is in good shape and some of them are not. All of a sudden they start having price and delivery problems which are a big risk to the company.

 

Part of Bob's thinking is that you can certify all of the people that fill these scorecards out, but this probably won't happen. There are a lot of feelings as to whether any of the certifications programs out there are really any good.

 

Alternatively, you could have a deployment of a large number of people with one group. For example, Intertek does a lot of the social responsibilities and human rights. They go out and you have some amount of uniformity of deployment. Good, bad or indifferent, at least they are consistent. The risk can be scaled within that.

 

One of the things you might want to do is have a firm go out and help the company fill out the scorecard. It would be like capacity building. The next year the company could do it themselves. You might have some auditing and insurance of that over time. This way you would have a lot more consistency.

 

Bob thinks the suppliers really do need some help and understanding about what they are doing. When you give them a good idea which will help them be a stronger company you can see the smile on their face. At the end of the day, this is what everyone (suppliers, customers and ultimate consumers) want.

 

What companies are seeking in terms of sustainability solutions for the supply chain

 

There were two models over the years, especially in the electronics industry and going way back, there were companies like Intel and the older computer companies which don't even exist anymore.

 

  1. A team of people at some location would go out and visit the suppliers. They would try to be helpful to them. A lot of times it was like technical assistance because they saw it was a good investment, especially as they started cutting down the number of suppliers. The risk goes way up of course if the suppliers left don't succeed.

  2. Audit the suppliers to conform. If they don't conform they are dumped.

 

Bob always felt the former procedure worked better because it is a two way street. Suppliers really need to know why and how to conform. They need to know why it is important to the customer. It is also important to the customer on the other side to understand the issues the supplier is dealing with. Some of them can be pretty unique.

 

Bob felt for some reason we didn't see much in between. He thinks we see that now. Everything is on analytics and informatics and other funny IT words we have. It is all about data and numbers. Are we really thinking about the processes and the people that are behind the data and numbers? Are we really looking at leading indicators about developing employee engagement and developing process improvement, or are we simply dropping the suppliers that don't come up with the results?

 

This really pushes people to be thinking about how they are reporting the results, though you wouldn't want to say 'stretching' the results a little bit. Results are really important and need to be looked at but you really need  some longer term thinking. In the sustainability area they use a global reporting initiative which really is a lot of short term thinking.

 

Helping suppliers is longer term thinking because if you help a supplier you are more likely to keep and work with them. Obviously, they will also be more loyal because they recognize that investment. Over the long term it is a good thing but it is not a model that all of the customers would choose.

Bob has seen it a lot in the electronics industry and he thinks we will see a lot more of it in the retail industry.

 

Conclusion

 

It is not an esoteric thing. It is not about altruism but a real practical thing. If you think of the suppliers and what they are doing you will see:

 

  1. Operational Issues: They are using resources to make products or provide a service. Why aren't they looking at resource productivity just like they look at worker productivity? How hard is this water working for you? How much do we get out of our energy?  How much do we get out of these materials? If you make a bad product, you throw it away or you recycle it which creates another waste. If I made all good product the first time I will use less resources and save a bundle of money.

  2. Reputation Issues: You have the social well-being of your workers in the community that you are in. Obviously, if the community doesn't like you they can make life miserable for you. This will cost you a lot of money to overcome.

  3. Vitality Issues: The vitality of having a healthy community economically and a healthy facility economically. Keeping your customer financially fit.

 

To Bob, sustainability is these 3 things. You cannot separate them.

 

You can't just worry about climate change, or just focus on environmental sustainability. Everything matters, big time.

 

A lot of people on the climate change see it as hedging against the volatility of energy cost as we are seeing our gasoline prices will probably go to record levels by May of this year.

 

If people look at it as a practical thing and take down the slogans and banners, Triple Bottom Line and all of those slogans which no one really knows what they mean. Instead look at it from a business point of view of environmental stewardship, social well-being, economic prosperity and how they relate to each other. Every company is doing that. Some are doing it better than others. Very few are calling it sustainability but that is what it is.

Everyone needs to get practical about it and if you run your business very well you are probably doing sustainability.

 

About Bob Pojasek

 

Bob Pojasek has been a consultant and a teacher for roughly 40 years. He participated in the first Earth Day in 1970 during his senior year of school. This changed his life and brought him into the environmental field. In 1992 he was attracted to the Earth Summit which took place in Rio de Janeiro and he actually did attend the Rio +5 Conference five years after the main event. Bob has been practicing sustainability since that time.

 

Bob has been teaching for about 15 years at Harvard University. He teaches 2 courses in sustainability. They are distance learning courses and he caps his enrollment to about 130 students in both classes. He usually has people from around 20 countries. Bob also consults full time. Teaching is an adjunct position. He works for quite a large Fortune 300 engineering firm. Bob has only been with the company for 4 months and he came from a firm with 27 people to the current firm with 27,000 people.

 

Bob finds that a lot of his work in sustainability revolves around the supply chain, especially with the big retail companies with large supply chains. Retailers are really trying to hedge against volatility, especially in energy and materials costs and possibly water in the water stressed areas. Much of his work prior to joining his current company has been with the people in the supply chain trying to conform with the mass of scorecards and other devices which have been put their way. Bob has been helping filling them in and putting programs in place to make their customers happy. At the same time they have the same goal in terms of trying to reduce the volatility, especially price volatility within their own operations. It makes them more stable and makes their customers quite happy.

 

 

Robert B. Pojasek, Ph.D.

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Sustainability Leader

Shaw Environmental and Infrastructure Group

100 Technology Center Drive

Stoughton, MA 02072

617.589.4121  Office Direct

LinkedIn Profile

I interviewed Paulie Anthony who discussed the importance of knowing what your recycling partners do with your e-waste. One of the things e-Cycle is proud of is that they are the only mobile buy back and recycling company in the world to have achieved their e-stewards certification. This is something they have been working on relentlessly over the past year and a half. It is a very rigorous standard and very difficult to achieve. They felt they needed to achieve it because it is so important and they try to develop trust, especially with their enterprise clients. Achieving that certification differentiates them from other companies because other companies can't do it.

 

 

 

Unfortunately, the EPA estimates that 70 to 80 percent of electronics recyclers are exporting some form of e-waste to developing countries.

 

 

E-Cycle works with many of the Fortune companies across the country. To be able to receive that certification basically gives them the confidence and trust that e-Cycle is rigorously audited and that they uphold the highest global standards in terms of environmental protection, data security and workers' safety.

 

What are the e-stewards standards?

 

The e-stewards standards is a globally recognized standard. Since there is no legislation in the US about exporting waste overseas, the international environmental community got together and created these standards which are very rigorous and continuously improving and which includes ISO14001. It basically prohibits in every way any export of e-waste into developing countries overseas.

 

They are rigorously audited and every year every one of their downstream partners are rigorously audited. Every piece of their devices (plastics, circuit boards, etc) can be accounted for. They can make sure their downstream recyclers are also audited rigorously to ensure they are doing everything properly.

 

It is the only standard that specifically prohibits all toxic wastes being disposed/shipped overseas, in landfills that have incinerators, the use of prison labor (who may be handling sensitive corporate data), and the use of child labor and slave labor in any of the recycling processes. The e-stewards standards are recognized globally.

 

Who in the supply chain is impacted and what are some of the implications?

 

One thing people have to realize is that it is important to know who your recycler is when people in procurement, asset management or IT recycling are getting rid of older technologies, whether selling or recycling. It is also very important to know who their chain partners are.

 

Your brand is at stake. We are finding computer equipment and electronic phones and mobile devices overseas that can actually be attributed back to these companies. They are in toxic waste lands that are actually poisoning the local population. They are burning circuit boards in acid baths to extract precious metals from them and they are inhaling the fumes. They are burning plastics that have harmful toxins such as mercury, flame retardants, etc in open air. The workers are doing it because they are desperate to make possibly $8/day because they need the money.

 

 

According the the EPA, only a small percentage of e-waste in this country is even being sent to recyclers, as little as 11% to 14%. The remainder of e-waste is dumped or burned. Also, 70% to 80% of e-waste given to recyclers today is exported to less developed countries.

 

 

For example, when giving your old computers or mobile phones to recyclers the recyclers may disassemble these parts. Some things may be recycled responsibly. However, they may have a buyer that takes old batteries and sells them in China where they are dumped and toxic led is leached into the landfills.

 

The recycling company may think that they are doing something right. The company that hires them may also think they are doing something right. In truth, it is actually ending up overseas, or there is fallout where they may sell pieces or parts that someone in China may buy. Some of these parts may be used while the rest dumped and burned.

 

It is very important throughout the entire chain to know exactly who you are working with and who they are working with down the entire chain from procurement to final disposition. It is a growing problem. 60 Minutes did a great expose on it called the 'Toxic Wasteland' that showed what was going on. Legislation is coming out and the watchdogs are out.

 

Corporations have to protect their brands. They have to protect their data. They have to protect the environment. Making sure that they work with e-stewards recyclers is very important. There are many out there and more growing A lot of enterprises have already taken the pledge to become e-stewards enterprise businesses where whenever possible in every way they pledge to use an e-stewards certified recycling company. Large companies need to ensure their recycling initiatives are actually not harming the environment and the recyclers are actually sending it where they say they are.

 

How should we move forward?

 

Check out http://www.e-cycle.com/ and http://e-stewards.org/ to find a list of e-stewards certified recycling companies. Currently, e-Cycle is working on launching a 'Take the Pledge Campaign'. They want to raise awareness of this problem and encourage enterprises to take the pledge to detox their companies and make sure they are fulfilling their sustainability initiatives.


It is important to really take a second look at who you are using for your recycling partners and make sure that if they are not clear and transparent regarding who they work with and if they have been audited, then you may need to take a second look and really watch your back. The watch dogs are out and they are starting to reveal more recycling companies which were supposedly reputable but are being exposed for actually harming the environment.

 

About Paulie Anthony

 

Paulie.jpg

 

Director of Marketing at e-Cycle LLC

Responsible Mobile Buyback,

Recycling & Data Protection

LinkedIn Profile

Charles C. Snow is a professor in the business school at Penn State, in the management department. He has been there for a long time studying various management topics. Over the last 5 or 6 years he has really been focusing on innovation management. He has been doing a variety of things in terms of research, joining LinkedIn groups and a variety of other things to get it sorted out.

 

 

Does innovation vary by industry type?

 

Just about anything you would focus on would vary by industry, because each industry has its own culture, way of doing things and stage of development. The two things Charles has been focusing on in his research and writing is firstly the notion of value configuration. Each industry has its own way of creating value and firms that wish to participate in that industry need to understand what the value creation process is like.

 

There are 3 main value configurations which are helpful in understanding how industries work.

 

  1. One is the well known value chain introduced by Michael Porter. This is representative of companies like Starbucks, BMW or any company in which value is added at each stage of production.

  2. Another type of value configuration is called the value shop. This would be illustrated by something like a consulting firm or a hospital where the basic way of creating value is to mobilize resources to create a customized solution for the client or customer.

  3. The third type is called Value Networks. The illustrative companies here would be telecom companies, Facebook, etc. In these type of industries firms create value by connecting those who are or wish to be interdpendent.

 

Any firm that wants to compete in a particular value configuration needs to understand how it works and to design their own strategies and business models around that value creation process.

 

The second key feature of industries are the level of knowledge required to operate in that industry. The knowledge intensive industries such as bio-technology and nano-technology, professional services, computers, micro-electronics, etc are the industries in which innovation occurs continuously. In order for a firm to be successful in that environment they need the organizational structures and management processes which can keep pace with the the developments in knowledge.

 

Does innovation vary by firm?

 

Yes. Those were Charles' original studies where they looked at competitive strategy and tried to determine the capabilities required to support those strategies. In every industry they looked at, starting with college textbook publishing firms, followed by electronics firms, food processing firms, private hospitals. In every industry they looked at they found 3 common forms of strategic behavior.

 

They labeled them Prospectors, Defenders and Analyzers. These studies were done in the late 60s, early 70s. Labels were developed later on which pretty much supplanted the original labels. However, the behavior hasn't changed at all. Today they are referred to as first movers, fast followers and late movers. Obviously, a first mover (Prospectors) are going to be engaged in the most amount of innovation and it tends to be innovation within the realm of technology, products, and market.

 

Second movers, or Analyzers, tend to focus mostly on commercialization and market building. They simply work with technologies which have improved themselves. They don't engage in a lot of experimental behavior which to some extent will fail. That strategy has a particular type of innovation in mind.

 

Finally, the late movers or Defenders typically engage in process innovation. They usually have a fairly narrow product and service line. They tend to have a lot of stability in their operations. They are efficiency oriented where they try to find things to do right, rather than finding new things to do. As a result, they simply try to become more efficient by developing better production systems, distribution systems, etc.

 

Depending on what your competitive strategy or approach is in the industry, the types of innovation you will engage in varies quite a bit.

 

Differences in innovation across economies and cultures

 

Charles hasn't personally done a lot of research in different countries and economies. However, he has traveled a lot and has taught executive programs and courses in more than 25 countries. Charles has a lot of impressions about how the innovation process works. Charles was intrigued by something from the McKinsey newsletter where they talk about innovation in China in 3 different industries; autos, semiconductors and pharmaceuticals.

 

Given where China is in its development, roaring ahead but coming from further up the learning curve, in autos for example they don't even focus on technical achievement. This is because the knowledge and expertise is already spread around this global industry.

 

They typically partner with a global firm like GM for the technology. The Chinese will focus on modular platforms so that they can commercialize their own models. This form of innovation in the automobile industry is rapidly developing in China.

 

In Semiconductors on the other hand, China is still in an investigative mode to try to determine the best way to proceed. According the McKinsey article, 33% of the world's chips are purchased and used by China. There is a huge market there but Chinese firms are not the technological leaders of this global industry. The government has organized a policy process which basically says they will make purchases from domestic firms as the highest priority. That policy basically incentivizes other semiconductor firms in the world to find partners among Chinese firms because if they can do business with them the government will make the purchase from the Chinese firms.

 

Of course, the global leaders in semiconductors are worried about the transferrance of their IP. All of that needs to be worked out. The Chinese government is trying to create policies that will encourage global semiconductor firms to be interested in partnering with Chinese firms to further develop the industry.

 

In pharmaceuticals in China Charles sees it as how it developed in the US. The big pharma companies have outsourced R&D to smaller firms. The pharmaceutical industry is more a biotech industry now. They let these new technologies and therapeutic approaches develop in the small R&D firms typically owned by entrepreneurial scientists. If something becomes promising and potentially commercializable they then license the technology or acquire the firm entirely.

 

The big pharma companies have basically over the years reduced the size of their own R&D teams and have learned how to spot promising activities developing elsewhere. According to the McKinsey article, this is what the Chinese are doing. They are trying to develop their capabilities in partnering, exploration and manufacturing so that they can essentially license or acquire firms wherever they exist in the world that are developing promising new technologies.

 

About Charles C. Snow

 

 

Mellon Foundation Professor of Business Administration

The Pennsylvania State University

I interviewed Stuart Emmet, the author of The Supply Chain in 90 Minutes book. Stuart's background for the last 20 years has been in training delivery and very much in supply chain, procurement and logistics. Before this he worked in the 3rd party sector. Stuart has always worked in the service sector in the UK and for 7 years in West Africa in Nigeria doing operations jobs.

 

 

The Origin For The Creation of The Supply Chain in 90 Minutes Book

 

In early 2000 Stuart became conscious that there were a lot of good books around in supply chain. However, there wasn't something that provided a quick overview for people who were moving into supply chain. It helped people who were coming from other functions step of their functional silo view of things. Supply chain is about trying to get out of the silos and integrating left and right from the silo you are in. While working in Nigeria for 2 weeks Stuart was in the hotel and has this idea again. He mapped out the topics it should cover and then he began writing.

 

Right from the day the book was published it had a good place in the market because it had received some very good reviews. The Institute for Supply Management (ISM) said that on a five point scale the book received a five on content as well as technical quality and that it was about supply management and general management.

 

8 Supply Chain Rules

 

 

1. “Win the Home Games First”. This is what Stuart considers to be the most important. Which is really a sports analogy for team games. We need to get our internal structure working well and better first. We need to win the home games before going out and playing the away games. Before we start going outside the organization towards suppliers and customers, we need to make sure we have a good internal structure working. Internally we need to integrate, coordinate and get that working before we go outside.

 

2. Format of Inventory. The format of inventory and where it is held is of common interest to all supply chain players and must be jointly investigated and examined. We can stop people from working independently from each other and start looking across at the inventory side as showing we are all interdependent. If I start ordering but not sure how you are actually working, I may order something but will not be sure if we already have stock. There are many things which can happen with inventory with the Bullwhip effect, etc.

 

3. The optimum cost/service balance is only ever going to be found by sitting down and working with all the other players in the supply chain. This is a part of the supply chain which Stuart likes most. It involves looking at the relationships and looking what is going on with the inventory, lead time examination, and getting the collaboration and the relationship side coming through.

 

4. Going for fixed and reliable lead-times, rather than the length of the lead-time. If things are not reliable and if we get variability we don't satisfy and run out of stock, etc. Someone has classically said that “uncertainty is the mother of inventory”. Anything we can do to examine lead-times and trying to get it reliable has got to work.

 

5. The customer is the business. It is their demand which drives the whole supply chain. We need to get good demand profiling and try to work as best we can with customers. Having good views of demand when needed actually help us.

 

6.It is only movement to the customer that adds the ultimate value and smooth continuous flows are preferable. Of course, it is only the movement towards the customer that gives us the ultimate value. Clearly, things being delayed, reverse charges, etc add cost. It is only when the product is being received by the end user or customers that we have the ultimate value.

 

7. We should be looking at everything as a whole. It is an holistic type of thinking involving systems thinking and how well the systems work together in terms of not just the people but the systems and processes we have.

 

8. Information flows lubricate the supply chain. We need to be making sure we use the appropriate information communication technologies, whether track and trace systems, having good email systems, extensive systems approaches where have computers talking to each other up and down the chain.

 

About Stuart Emmet

 

StuartEmmett.jpg

 

CEO

Learn & Change Limited

 

LinkedIn Profile

I interviewed Jason Vag who discussed how to guarantee your success by choosing a 3pl right from planning to implementation. Jason Vag is a Partner at Sonoma Consulting, a firm that specializes in helping organizations transition from in-house warehousing and distribution to working with third-party logistics providers (3PLs). Learn how to select a 3PL, how to set reasonable expectations, the importance of sharing knowledge and information up front, the basics of establishing a comprehensive vendor-management program, how to establish a set of success criteria, and the importance of communicating details of the transition to all players.

 

 

 

Given the economy, costs have become a big concern for most companies, which is compelling many to look at outsourcing non-core functions. One of the areas where companies are looking to gain savings is in the supply chain. That is where Jason Vag and his company, Sonoma Consulting, come into play -- helping organizations transition from in-house warehousing and distribution to working with third-party logistics providers (3PLs)

 

The first piece of advice Jason provided is to view your logistics provider as a partner, not as a third-party company or run-of-the-mill supplier, because even though you are outsourcing some functions, you still own the supply chain. The relationship goes beyond just being partners, Jason says, it is really an extension of your organization, which is why the selection process is particularly important. "You need to pick a provider that you feel comfortable with, that you have a good rapport with, and that you believe truly wants to invest in your organization as much as you want to partner up and let them become a part of your organization," Jason advised.

 

Once you have chosen a third-party logistics provider, and you have moved into hammering out all the legal aspects of a contract, always keep in mind that the agreement has to be a win for both sides. Of course, every company is looking for very specific service levels at the best possible price, but Jason cautions companies to be realistic and to make certain that the service provider is comfortable with delivering on your demands.

 

As you move into the implementation phase, you should plan on being very involved, especially with regard to sharing information upfront, rather than down the road. As a matter of course, Sonoma Consulting recommends involving your 3PL in all internal meetings early on. Invite them to your office, or if that isn't possible, arrange conference calls for critical supply chain meetings specific to those area that the 3PL will be taking over in the future. This, Jason says, is where the 3PL can really begin to understand your business -- where the pain points are, any unique customer requirements, and all intricacies of the operation. 3PLs are very good at what they do, and they bring a lot of knowledge to the table, but too many companies make the assumption that the 3PL will simply be able to hit the ground running. Again, Jason advises companies to be realistic and to understand that a 3PL may know the marketplace and the particular industry vertical, but they can't possibly know how you run your business until they are brought into the loop and integrated into your organization.

 

As you continue to work with your third-party logistics provider, it is very important to establish a comprehensive vendor-management program, and make certain it is well-executed. It goes without saying that you will have established service level agreements and metrics for which the service provider will be held accountable during the contracting phase. Those metrics are certainly important and necessary, Jason says, but it is also important for everyone to have an understanding of the day-to-day metrics needed to run the business. Jason has seen firsthand how companies will focus on the contractual metrics, while the day-to-day operational metrics are taken for granted or overlooked, leaving them scrambling to extract those metrics from the logistic provider's information systems, compile them and then communicate them in a meaningful way.

 

Along those same lines, in the early weeks of transition, Jason advises establishing a set of success criteria. In other words, how do you know if your first day of transition was successful? If we sent you a hundred orders, did you receive a hundred orders? Did you ship a hundred orders? If not, where did those fall down?  It is all part of the testing phase, which includes what Jason calls, the "golden order," a procedure that involves isolating an order and "handholding" or "walking" it through the entire process with sign-offs at each critical step. In addition to serving as a physical test run, it also provides assurances that information is flowing downstream and upstream as required.

 

Finally, Jason Vag reminds companies not to neglect any internal or external entities that will be effected by the transition. Salespeople, for example, should be kept apprised of everything that will impact their customers, and customers should be advised of any process changes, from different shipping labels to different carriers showing up at their doors. "You can't over-communicate," Jason said, "if you anticipate a slowdown, or a one or two-day shutdown, during the transition period, it is essential that you not only communicate that information, but also plan around it." The main thing is, you don't want the perception to be that the project isn't going well because you didn't hit 100% throughput on the first day, and that is something that can by mitigated through communication.

 

About Jason Vag

 

Meet Jason Vag: Jason Vag is a seasoned business professional with over  12 years of experience in supply chain including ERP, WMS, TMS, RFID,  and visibility. He has directly worked for two “Big 5” consulting firms  as well as two Fortune 250 companies, with experience in dozens more.  Jason’s experience across multiple industries and functional areas  allows him to bring a unique understanding of operations and technology  to clients. Jason’s expertise is in leading large scale mission critical  projects involving both operations and technology. Additionally, Jason  has expertise in supply chain strategy, operations management, business  process design, 3PL relationships, program management, technology  selection and implementation. Jason’s background includes international  experience in Europe, Latin America, and Asia.

 

LinkedIn Profile

David Zatz defines risk management from both the supply and demand side of the equation. He views risk management as more of a generalized business risk and doesn’t see anything in recent activity which would lead him to believe that risks are increasing or decreasing. However, David certainly sees opportunities to lessen risk. Those (risks) have always been in place and continue to be in place.

 

 

Actions Taken to Minimize Risks

 

David believes one action to minimize risk is to manage the complexity of your product portfolio. He also thinks it is not just managing the complexity but also product portfolio management in general. This is an underutilized practice that can yield some significant results.

 

What would product portfolio management entail?

 

It basically means a holistic view of your product portfolio. It is the means by which you decide whether you discontinue a product or not, or whether you launch a product or not. You need to have a pretty firm idea of your corporate strategy, of the kind of businesses you want to be in. Then you need to reflect that strategy into your product portfolio. When you are coming up with a new line extension you better ask yourself if that product or line extension is supporting your corporate mission. Sometimes you can get lost in the trees and not see the forest.

 

Cross Functional Collaboration between Operations and Sales/Marketing

 

David Zatz doesn’t think you can have a product portfolio management process without multi-functional active involvement. In particular, involvement is needed by leaders in those functions. It is not the type of function you can push off to lower or middle management. Senior management must be involved in the decision making process managing your product portfolio.

 

Conclusion

 

Most companies are under managing the complexity of their product portfolio. There are a lot of products that you launch. There are a lot of locations that you move into. There are a lot of businesses that you expand into which at the end of the day do not make your company any more money and in fact drain profits from your company. This is not always readily obvious unless you are measuring it.

 

 

Core Competencies

 

David has spent a lot of time fine tuning my relationship management skills in an attempt to expand business development for consulting services.  Functionally, what makes David unique is product lifecycle management (PLM). He thinks PLM is also a little understood and under utilized function that bring tremendous savings through collaboration and through trying to follow a strategic mission in many consumer products and other industries.

 

 

Approach to Solving PLM problems

 

Probably the best solution involves implementing some enterprise-wide PLM software. Perhaps a module of your existing enterprise systems or stand-alone systems, which ever fits your IT configuration set. David thinks that often the systems can often put the business process discipline into place that is needed to make PLM successful.

 

About David Zatz

 

David Zatz Picture.jpg

David is working on a paper that I will be publishing on product life cycle management and project portfolio management.

 

Director
Supply Chain Consulting
SmartOps Corporation

 

LinkedIn Profile

I interviewed Dave Newman and Jon Blumenauer who discussed corporate sustainability.

 

Dave Newman has 26 years experience at Nike in Finance and Operational roles. He represented Nike's global logistics organization in the sustainability implementation. He has always had the passion for the intersection of sustainability in the supply chain.

 

Jon Blumenauer spent about a decade in international operations in apparel manufacturing. He also worked for Nike and spent a lot of time in Asia and Europe. He worked with a supplier and another company in international operations. For the last 5 years he has been doing sustainability strategy consulting.

 

What is corporate sustainability?

 

Jon: It is a big question that can be interpreted in many ways. Jon and Dave interpret sustainability as the intersection of economic, social and environmental issues where all three areas are being considered. In their experience, a lot of organizations may focus on one or two of those issues. For example, the social component began as what people considered sustainability with philanthropic activities, looking at worker's rights etc. Environment has become a big topic lately but to round out the full picture of sustainability you need to consider both social, environmental as well as the economic aspects because if it doesn't work in terms of the corporate sector and being profitable. Otherwise you won't be able to stay in business. All three elements are important.

 

Trends in corporate sustainability

 

Dave: Jon and I are very passionate about the supply chain. Consumer facing brands have the pressure of making sure they understand the impacts of their supply chain. Now we are starting to see Walmart's suppliers to the brands or the companies that have B2B relationships suddenly are now required to report and understand the impacts of their activities to their customers.

 

Jon: A trend for awhile was reporting to the consumer. Now it is the reporting to the customer. The ultimate consumer may be a brand or retailer. But as more research is being done we are finding out that most of the environmental impacts are upstream in the manufacturing, raw material extraction process and in the transportation. These are areas where if you really want to make an environmental impact you really need to address these upstream areas in the supply chain.

 

How can companies get started?

 

Dave: It is often a challenge because it is understanding those relationships. Typically we think of conversations with key suppliers and vendors about the need to begin gathering information. It is really a conversation with your key suppliers and stakeholders about whatever goals or pressures those brands are facing and engaging a dialogue about getting the data and helping companies to understand these impacts which Jon talked about enable to determine what are the actions going forward.

 

Typically, it starts with that conversation and beginning to understand those opportunities exist. Then you can get down to practical measures, whether its energy efficiency, opportunities within the manufacturing arena, materials or close looped recycling programs, or it could be the way product is sourced and delivered to marketplace. It is a really big area, but typically it starts with conversation and dialogue and looking at where opportunity exists.

 

Jon: Just to follow up on that a simple question is “what is important to your customers?”. This is going to identify key drivers. It may be social components. We may want to make sure the work place is safe and healthy for the people making your products. It may be environmental issues. We want to make sure that this is not polluting waterways. Or the manufacturing of this product is not using toxic chemicals.

 

It is really finding out what the key issues are for your customers. There are many stakeholders involved, but the customers are the key driver so you may want to start there.

 

Then it is just to measure and manage. One opportunity is to start out by benchmarking where your impacts are, then prioritizing based on where your most significant impacts are and the most significant return on your investment. You want to look at things considering the economic lens and you want to start off with the investments that are going to be quick wins. Some of these things may even save you money by increasing efficiency. Then you can look at the more higher risk or more larger dollar investment opportunities as you move on.

 

About Dave and Jon

 

dave.jpg

 

Dave Newman

Senior Strategist

Brightworks Sustainability Advisors

LinkedIn Profile

 

 

 

Jon.jpg

 

Jon Blumenauer

 

Managing Partner

Hutani Sustainability Strategies

LinkedIn Profile

I interviewed Jeremy Newman who discussed the challenges and opportunities of greening operations and supply chains. Jeremy is currently a General Partner and Co-Founder of Living Space Labs, an integrated energy strategy consultancy focusing on the built environment. The built environment can include buildings, factories, and more. When they do work with factories it often involves green operations and  supply chains.

 

Prior to this Jeremy was Director of Energy Operations and Finance at Redhorse Constructors, one of the preeminent green builders of custom homes in the Bay Area. Jeremy also led a consulting team for a solar start up while at Redhorse, working on bringing their operations and their insulation process.

 

Before this Jeremy co-founded a renewable energy company for Virgin Group. They focused on micro-grids, hybrid renewable energy systems, bringing multiple types of renewables into one grid to lower the levelized cost of energy as much as possible.

 

Jeremy also worked at TFS Energy while in graduate school. He has an MPE in Environmental Science & Policy from Columbia. He is LEED® AP in specialty building design and construction. Before graduate school he spent 3 years in the 3rd Armored Cavalry Regiment in the US Army.

 

 

Challenges and Opportunities of Greening Operations and Supply Chains

 

The biggest challenge is that when you first get in there to figure out what low hanging fruit can be accomplished immediately. It will be different for different industries. You want to be able to provide immediate results while tackling the bigger issues identified.

 

If you are building green operations for someone who has a lot of plastic products you might want to tackle some energy efficiency issues while looking for alternate plastics or ways to remove chemicals from the items you are making. You want to be able dual track those issues to provide the client the quickest possible response.

 

A lot of time they are looking to green something after a negative article or press release and tremendous pressure from environmental groups. A lot of it is just knowing what is wrong. Recently in the music industry they have been hit for illegal hardwoods. This is a newer concept to them. A lot of the players in this industry had long term contracts with suppliers for years and had been sourcing all of their wood through them.

 

There is not a thought process there that they need to identify every little source. In the past it had been the supplier's responsibility. More recently, there has been the Lacey Act, originally a law passed around 1907. It was originally intended to stop illegal commercial hunting. It has been expanded a few times. There are plants that also fall into this now. Illegal logging and deforestation is a major focus of it now.

 

It is very similar to CITES: Convention on International Trade and Endangered Species of Wild Flora and Fauna. The Lacey Act is similar to this but it has a U.S. focus. It takes all of the international laws and makes US companies follow them. It gives teeth to a lot of international treaties.

 

Unfortunately, Gibson Guitars recently was hit pretty heavily for some of the wood they had. There was a pretty heavy handed raid on their production facility. Jeremy does not believe it was their intention to break the law. It involved a very small amount of wood they were using. However, a lot of times most companies don't know a particular item from a long term supplier now falls under a new regulation. A lot of times the suppliers don't even know

 

What should executives be doing to green their supply chains, considering they have to sell their management on the idea?

 

Executives need to be proactive. If you are being more reactive on the issue and are waiting until either environmental groups, a negative press release or for someone to come after you, you are losing the message about your product. You really want your product to stand alone as the great item you are selling. It is better to get ahead of the issue. Look for long term cost savings when possible.

 

A lot times executives will find there is a higher upfront cost to doing activities which green supply chains, but a lower long term cost. It is much better to get up front of the issue, rather than having to dig in a get a more defensive posture.

 

The biggest issue Jeremy stresses is that executives need to be proactive. It is not a matter of green washing your company or looking for a fluffy environmental benefit. Unfortunately, a lot of people view the greening of their operations in this way.

 

It is more of a long term regulatory and policy risk which you are mitigating. It is also, mitigating any potential negatives from a marketing standpoint.

 

When you start eliminating those risks it gives you a much clearer path to follow. It lets you avoid some headaches, rather than having to deal with them down the road.

 

About Jeremy Newman

JeremyNewman.jpg

 

Jeremy Newman, MPA, LEED-AP BD+C

 

 

General Partner at Living Space Labs

LinkedIn Profile

I interviewed Stuart Emmett who discussed Supply Chain Rule #1: Win the Home Games First. Stuart asks what if systems could be updated as automatically and effortlessly as software applications?  Stuart Emmett, supply chain coach, mentor and author, shares his insights on system thinking and explains how there is a natural parallel to the supply chain, especially when it comes to interdependent interactions of cross-functional elements.  His company, Learn and Change, Ltd., helps organizations achieve innovations in thought that better prepare them for a holistic approach to supply chain management.

 

  • Stuart Emmet explains that a system exists in order to do something. Its purpose is dependent upon the interactions between its parts, so its imperative to look at things holistically.
  • He defines processes as occurrences with dependencies and variability, both which are universal facts of life that must interact through an interface.
  • According to Emmet, a systems thinking approach is critical for any organization that intends to be innovative or desires to perform strategic change, so his company helps organizations to become open to new perspectives and dynamic though processes. 

 

My supply chain rule number one is: win the home games first. In other words, get the internal structures working before taking it outside.

 

 

When asked to provide a definition of ‘systems thinking’, Emmett explained that it’s comprised of two parts: structure and process. “A system exists to actually do something; it has a purpose.  Its purpose and what it does changes because of the interactions between its parts, so its imperative that we look at things holistically,” says Emmett.


According to Emmett, in the concept of systems thinking, the stressed element should be ‘thinking’. The supply chain is ultimately a holistic system, one that invariably requires new thinking and approaches to problem solving.  Emmett says that most of the tension that occurs in the supply chain industry is the result of a resistance to change or to the application of new ideas.  He ascribes systems thinking to be, by definition, an attempt to encourage new thoughts and innovative approaches and to challenge preexisting solutions.


Emmett provides an astute parallel of systems thinking to the maintenance of computer software. He points out that it’s quite commonplace for owners to regularly update their software applications without thinking twice, and that’s what he recommends for the supply chain world - regular ‘thought’ updates to positively affect best practices and how things are actually done.

 

Dependencies and Variability

 

Systems have purposes.  They exist for a reason, and are meant to accomplish a particular goal.  What that goal is depends upon they system’s structure and process. Emmet explains that with a classic supply chain all the parts (procurement, manufacturing, logistics, etc.), even while serving distinct functions, are interdependent and should be thought of as cross-functional.  Systems thinking is a good discipline to allude to in terms of interdependent interactions of processes and structures.


Emmett accredits a large part of the original intrigue he felt towards systems thinking to his appraisal of the definition of the word “process.”  He defines processes as occurrences with dependencies, and also variability.  “The difficulty inevitably lies in the interface,” ascertains Emmett, and expounds to say that therein rests another parallel. Dependencies, variability and interfaces exist in the supply chain world as well.  For example, questions like ‘How well does procurement work with internal users as compared to external suppliers?’ is analogous to sample problems in the systems thinking world.


As far as variability goes, it’s a perpetual fact of life.  Whether it surfaces on the demand side or the supply side, how the parts interface with one another is a determinant in the proper functioning or fulfillment of purpose. “My supply chain rule number one is: win the home games first,” says Emmett.  “In other words, get the internal structures working before taking it outside.”

 

Cross-Functionality and Collaboration

 

Stuart Emmett shares some details from his experience as trainer, consultant and coach in the supply chain industry.  He says that one of his goals is to try to help people achieve innovation in thought and, while doing so, he often comes across a common barrier: a lack of working internally together. Rather, the supply chain is typically focused upon and affected by external relationships, like customers and demand.  The result can be that companies are often not as well prepared on the supply side of things.


Another barrier could be caused by management, who should be concerned with fluid cross-functionality of all the aspects in the chain, including trade-offs and whether or not people are collaborating to minimize stock and perform efficiently. “Ultimately,” says Emmett, “they need to understand that all elements in the chain should work together, and this is often the opposite of what we actually find.” He believes that change must happen holistically, to the system, which includes how things are structured and what processes are being used. These are the elements that Emmett focuses on when helping clients achieve thought innovation.

 

Intelligent Companies are Learning Organizations

 

For those who are interested in reading or learning more about systems thinking, Emmet recommends two books.  He is the author of “The Systems Thinking Toolkit”, which highlights the basic tenets of systems thinking.  He also recommends Peter Senge’s book “The Fifth Discipline”, a classic explication on systems thinking and systems dynamics.  Both books have in common what Emmett recommends to be at the heart of the discipline: urging companies to move toward becoming ‘learning organizations’,  which means being open to and accepting challenges in the way they do things.


A “systems thinking” approach is critical for any organization that intends to be innovative or desires to perform strategic change, primarily to guarantee that all perspectives are being accounted for.

 


About Stuart Emmett


StuartEmmett.jpg

 

Stuart Emmett is CEO at Learn and Change, Ltd., a London based  organization that offers training, coaching and mentoring solutions and  supply chain, procurement, management and logistics workshops founded on  applied practical experience.  For the past 20 years, Stuart has led  training courses internationally across many diverse cultures.  Prior to  that, his experience has been mostly in the third-party logistics  sector, acting as operational and senior management for transport,  stocks and warehousing.  He is author of several books, including “The  Systems Thinking Toolkit” (2008) and his most recent, “Green Supply  Chains: An Action Manifesto (2010), co-authored with Vivek Sood.

 

LinkedIn Profile

I interviewed Junaid Tahir who has his finger on the pulse of everything from fluctuating commodity prices and measuring total cost of ownership to state of the supply chain industry in Pakistan and the rise of 3PLs in the region. Junaid Tahir provides a bird's eye view of the Pakistan's supply chain industry, and offers suggestions for maintaining an agile supply chain in a volatile economic environment.

 

Junaid recently designed and implemented a system to make stocks available at all IFFCO warehouses, which proved highly successful despite inaccurate forecasts. Junaid is currently performing research for the development of a predictive model (mathematical/qualitative) which will closely match and predict the company's stock requirements.

 

 

Dealing with Fluctuating Commodity Prices

 

Junaid understands how fluctuating commodity prices can affect the supply chain. Commodity prices, he says, have been fluctuating since the financial crisis gripped the economy, and most of the fluctuation has been on the downward side. Junaid believes, in uncertain demand environments, companies with low value-added products, and whose commodities form a significant percentage of the cost, are destined to fail unless they have smart systems to predict demand and align supplies with that demand.

 

According to Junaid, many mass market companies may be structured to acheive efficiency rather than flexibility. Hence, efficiency would translate into lower manufacturing per unit and higher holding cost as the batch size would be higher. Whereas flexibility would mean higher manufacturing cost per unit, but lower inventory holding cost and price decrease risk. In Junaid's opinion, it all boils down to how the total cost of ownership (TOC) is measured.

 

What Gets Measured, Gets Managed

 

Juanid Tahir knows from personal experience that no matter what you're looking to improve, the first step is to measure that activity, and improvement will automatically follow. "There are many hidden costs that companies are not measuring," Junaid says, "Companies only focusing on service levels, and not measuring inventory holding costs or price change costs -- since these may be quite dynamic -- may end up at a local maximum point, rather than global optimum solution. In order to determine the total cost of ownership, one has to measure the right things."

The State of Supply Chain in Pakistan

 

Supply chain is an up and coming field in Pakistan, but Junaid Tahir says despite the fact that all companies have supply chains, the realization that supply chain is about cross-functional teams working together, based on well integrated systems, seem to be lacking. However, any idea having a sound and sustainable value proposition will eventually be adopted, and Junaid says it's only a matter of time until Pakistan's budding supply chain industry hits its stride. Much of it will depend on the level of technology adoption, he believes, which is still not very high as far as ERPs or company-wide systems are concerned.

 

The Rise of Supply Chain Companies and 3PLs in Pakistan

 

Based on perception, Junaid Tahir says there seem to be more supply chain companies and third-party logistics providers in Pakistan than in the past, perhaps because this is an area that can easily be outsourced. Pakistan is a geographically dispersed country, so using a third-party provider, with networks in different regions, makes sound financial sense. Instead of building a supply cain network from the ground, up, using an outside resource presents a lower cost option for many companies. Junaid also attributes the increase in supply chain companies and 3PLs in Pakistan to their ability to adopt new technologies and offer better IT systems, which can provide improved visibility into the inventories, freights and operations.

 

About Junaid Tahir

 

junaidtahir.jpg

 

Supply Planning Manager

Abudawood Pakistan

LinkedIN Profile

I interviewed Bonnie Nixon, Executive Director of the Sustainability Consortium.The Sustainability Consortium is working on providing a scalable system for doing Life Cycle Analysis. This  is very beneficial to all of the retailers and B2B buyers who want to  know why something is greener, compostable, organic, has x amount of  recycled content or that it is socially responsible.The Sustainability Consortium aims to provide the tools to harmonize those standards.

 

 

What is the Sustainability Consortium?

 

The Sustainability Consortium is a consortium of many different entities. One of the initial catalysts for the consortium was an announcements that Walmart made back in the summer of 2009 that they were going to be creating and index. This index would be used for all of the products in their stores and all of their suppliers to ensure that products were getting greener and becoming more environmentally responsible.

 

This stirred quite a bit of interest from their large suppliers in almost every sector in the home and personal care sector: companies like Proctor & Gamble, Unilever. Interest also came from companies in the food beverage and ag sector such a Coke and Pepsi, General Mills, Tyson, Monsanto and Syngenta. They  also had interest from electronics companies such as Dell and HP in the laptops space, Panasonic and LG in the television space, and also included the paper and packaging industry.

 

Many of these companies came together and shared with Walmart what they thought were possible and feasible and what wasn't possible and feasible in terms of the science and whether products could be compared one against the other.

 

Walmart took this information in and stepped back for a period of time. They approached the University of Arkansas and Arizona State University, which they had previous relationships with through the Walton family and where they were situated. They contracted with those universities to get the science.


Companies were essentially saying that the science doesn't exist for 2 reasons:

 

1. You don't speak about things like carbon, water and waste, or materials and biodiversity, and social and toxicity. We don't have a common vernacular. An analogy might be the calorie where we know what it means to put a certain number of calories in our bodies. However, we have no clue what it means to reduce our emissions by 100 grams. We don't speak that language and don't know what it means.

 

2. The consumer is extremely confused by all of the different labels. There are more than 600 labeling organizations and indices out there. There is a lot of confusion in the green marketplace and social responsibility marketplace.

 

The consortium was created to bring science to this. Today the Sustainability Consortium is administered out of those founding universities; Arizona State University and the University of Arkansas. Since that time the consortium has added a university based in the Hague in the Netherlands and the University of Manchester which is a strong partner of the Sustainability Consortium. They are also now in conversations with universities in Latin America and Asia so that they have solid bases in each major geographic region of the planet. They also have about 20 contracts out with many different universities.

 

The mission of the Sustainability Consortium is to drive a new generation of innovative products. The goal isn't just to minimize the bad. It is to create a space where innovators can come in and where our large scale billion dollar companies can come in to see there is a business case in making greener and more responsible products. This is the vision.

 

The mission is do this credibly (ie scientists and universities), transparently (making sure nothing is done in a black box where we can share with people where the data is coming from), and most importantly; how to be science based.

 

They will be looking to create a 501c3. The Sustainability Consortium is a non-profit and the money comes in through the university foundation.


What do supply chain professionals need to know about measuring and reporting on sustainability?

 

One of the major things that the Sustainability Consortium is calling the 'Sustainability Measurement and Reporting System” or SMRS is about measuring and recording products and services. The most comprehensive way to do that today, if you were to take the most state of the art science which exists out there today, is done by something called Life Cycle Assessment (LCA).

 

LCAs can be a lengthy and costly process to take on. A typical LCA of a laptop might take you a minimum of 1 to 2 years. You look at all stages of the product, from conception and design phase, right through to the manufacturing, packaging, and distribution. You are also looking at the use phase. Then you are looking at the end of life phase. In an ideal scenario you would be implementing processes from cradle to cradle – looking at how you can build products into one another again.

 

What needs to be known about this is that it is still in various stages of evolution. The end of life stages are still being studied pretty extensively for quite a bit of product. We are not as advanced as we can be in some of science. We can be more advanced in terms of toxicity. A lot of the toxicity today is based in risk management approaches.

 

We have government entities and environmental groups coming up and saying we need to look more concretely or specifically at hazards and every potential carcinogen and the toxicity of every product. They are addressing things like social, all of the human rights, discrimination, fair wages, and how look at it in a scientific way so that we can have broad impacts across a whole region. For example, when we know the wages are below minimum wage in a certain area.

 

Finally, in biodiversity. This is where you look at things in scale, not just at one tree or product like a book. You are more interested in the million books in that warehouse or the million books you might be able to not print by using a Kindle. It is also looking at what this means in terms of a forest. Now you are looking at macro-scale over time.

 

The Sustainability Consortium believes that Life Cycle Assessment science is the right approach to this. However, some of the techniques are still under consideration and there hasn't been a consensus on them. Where there has been consensus is on the carbon, on how to measure water; although even water is under debate at times because people often go towards measuring supplies and don't take into account stress testing or scarcity testing. Supplies mean nothing if you happen to be in a water scarce area or in an arid climate.

 

Life Cycle Assessment is being used by the Sustainability Consortium. Given that they take a long time and are costly they have been looking at how to scale this process. The Sustainability Consortium is about credibility, transparency and being science based. They are also about scalability. This is probably the most significant thing they are trying to do to scale these techniques so that when you walk into a TESCO, Walmart, Best Buy or any of these stores you can see up to a million SKUs on the shelf. The Sustainability Consortium is looking at product categories. Instead of a ball point pen you are just looking at ink pens or writing instruments as a product category.

 

Looking at categories allows them to streamline and operationalize the process much more efficiently and effectively. No one has ever done this at this scale. They intend to release tools so that innovations can do LCAs in much shorter amounts of time for much less money. Companies will be able to operationalize it more within their companies. Ultimately, they aim to harmonize the standards so that apples can be compared to apples and oranges can be compared to oranges.

 

If you look at laptop X, if we know the impacts of this laptop in terms of metals, plastics, glass, toxics, rare earths, etc., then when someone else comes and compares their “green” laptop they will have to prove it against the benchmark laptops.

 

This is very beneficial to all of the retailers and B2B buyers who want to know why something is greener, compostable, organic, has x amount of recycled content or that it is socially responsible.

 

The Sustainability Consortium aims to provide the tools to harmonize those standards.

 

About Bonnie Nixon

 

Bonnie_Nixon.jpgBonnie Nixon has been in the sustainability space for more than 30 years. She began in college where she went to Penn State at Three Mile Island. She was pre-law at the time and decided to move into environmental remediation when she saw how complex topics like that are. This was the time she did a bit of activism around nuclear power and more importantly she tried to educate herself on that type of power and the pros and cons of it. At the time there were not a lot of programs in the US on environmental remediation. As a result Bonnie studied in Europe in the Netherlands where they did a lot of progressive work on green plans and looking at how to approach things such as transportation, land use and water management – from a systematic perspective.

 

When Bonnie returned to the US she worked on the Boston Harbor cleanup project and headed up the PR and Environmental Remediation for the $6 billion construction project to stop the dumping of raw sewage into the Boston Harbor. From there she went to California and started a company called Public Affairs Management. For about 17 years she owned that company with about 5 other owners. They grew the company to about 65 people and worked almost entirely on very large infrastructure projects such as water, waste water, transportation, hazardous waste, utility projects, natural resource preservation and construction of facilities in the public realm.

 

Bonnie worked with the public sector, environmental groups, non-governmental organizations, community stakeholders, and businesses that were all looking to either get a project going or inhibit a project. Bonnie's job was to be the mediator and to look at whether there were win-wins for everyone involved and more importantly that the negotiations were fair, transparent and considered everyone's interests.

 

Then Bonnie worked for Hewlett Packard and first started as a contractor and then shifted as a full time employee. She designed a supply chain social and environmental responsibility program.

 

When she first came to HP they handed her a list of 100,000 suppliers and said they were concerned because they had begun to outsource manufacturing and much of their services. They needed help with dissecting the list and figuring out who was high risk, where was high risk, how to manage it, how to protect the brand, how to make morally responsible products, how to ensure there was no child labor making the products, etc. They were careful and wanted to make sure that not only the environmental issues were dealt with, but also the social and human rights and ethical considerations such as corruption, bribery and health & safety, etc.

 

Bonnie designed this program from the outset. She worked on the project for a good decade and helped to create what is called the electronic industry citizenry coalition, which is coalition of 60 of the largest electronics companies in the world who are using the same code of conduct, questionnaires, audit and reporting materials, IT systems, rating systems, training systems, capabilities building of suppliers all around the world in the electronics sector. The electronics sector has been very successful in harmonizing their standards and working to ensure that the supply chains are not feeling the brunt of many redundant questionnaires or different formats of requests coming from different customers, whether they be the government, B2B customers or consumers.

 

Bonnie did this for a number of years. After this she became the head of environmental sustainability for Hewlett Packard where she worked on the 5 to 10 year long term environmental strategy. Which was a real honor for Bonnie. The company moved into the number one position in many different indices and ratings systems.

 

Shortly Bonnie left Hewlett Packard she was offered her current position with the Sustainability Consortium.


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