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2012

Please provide a brief background of yourself

 

I grew up on the East Coast - Pennsylvania, Florida and North Carolina. I went to undergrad school at NC State in materials science and engineering and has worked primarily in the electronics industry - laser printers, computers. I started Schaffer Environmental 4 years ago and I have been an independent consultant for the electronics industry assisting with world wide compliance to environmental and sustainability requirements.

 

 

What is the state of sustainability in 2012?

 

Positive but Precarious. There is very high visibility to being sustainable and companies are striving to be more sustainable and communicate the efforts they are making more (being more transparent).

 

However, it is precarious as there is considerable external pull for organizations to be sustainable but there isn't always a consistent or tangible measure of what it means to be sustainable. It is a very large and diverse topic and organizations sometimes become frozen when trying to decide what they should do, what is most important and how to do it. They may not always know the best path forward. Sometimes it is a waiting game.

There are not only internal drivers for what companies want to do – things they set as personal goals, but also external voluntary requirements or legal and pending legal things coming down on them. One of the ones I am familiar with is the Dodd Frank Act, otherwise known as the Conflict Minerals requirement that the SEC came out with a year and a half ago.

 

Companies are very interested and want to do it. However, they don't know what to do and the guidance being provided is not consistent. A lot of them are just waiting and seeing. Where they might be able to do some things on their own they are concerned about spending the resources, money and time to learn what it is they will be required to do if they will be an SEC reporting company.

 

It is precarious as they wait and see what happens. It is an issue that will need to be dealt with over time in terms of how you get to that clarity, either externally or internally in various aspects of sustainability.

 

 

Who needs to focus on sustainability?

 

I think most large organizations are aware of sustainability and working on defining what sustainability means to them and what they will focus on within that space. Environmental issues, diversity, compensation (for CEO's for workers), health/safety, labor are all concerns and at different focus levels depending on the company, the pressures internal and external on the company.

 

I think one of the key focus areas has been in the supply chain - what is it that the supply chain is doing or may need to do in supporting sustainable initiatives? How can an OEM effectively communicate and monitor what the supply chain is doing? It is a difficult challenge that organizations struggle with and re-assess often as they have successes and failures in their supply chain or see those in other supply chains.

 

 

Why is it important to take action today?

 

Customers - consumers, governments, companies - are all demanding accountability to some extent and to do business as a global company you will need show the efforts you are making, the successes (and failures) you have had. All of these different players are all demanding some kind of accountability in terms of sustainability. For a company that wants to be global or regional, they need to show the efforts they are making to become more sustainable; how are they designing their products? How are they working with their employees and communities? Talking about the successes and failures they may have had is done primarily so they can keep the customers they have and grow their business.

 

In a lot of cases it is certainly driven by the bottom line of making sure that company is profitable. To be profitable these days you also need to show the sustainability of the company and the efforts you are making.

 

Where have you seen success?

 

One of the really interesting programs I have been a part of for a number of years and seen a lot of success is with a voluntary standard in the electronics industry called EPEAT (Electronic Product Environmental Assessment Tool). This along with the environmental standard that is associated with it which is the IEEE standard, the IEEE1680 and IEEE1680.1 standards establishes a bar of environmental performance and corporate performance for organizations in the computer space. It started in 2004 and went live in 2006. When it started it had 3 companies and less than 50 products that have registered and have a validation that these products are meeting the criteria that are spelled out in the IEEE standard.

 

Today, there are around 35 companies. There are over 3,000 products in that registry. Basically, it expanded from a US program to an international program in 42 countries which are using it now as part of their purchasing requirements. It has had great adoption and use. It has had a lot of interest in the companies wanting to show that their products are green. They like it because it spelled out more or less what they need to do and gives them a little structure, something they are struggling to find in all of these different areas. It also put in a third party that was validating what they are saying. It gave it additional credibility. It really was a win for the manufacturers, purchasers. It is a win for a lot of environmental and corporate performance characteristics that are in these standards.

 

It is growing and in the process of expanding into new products. They are finishing up a standard for television and another standard for imaging devices (printers, copiers, etc). They have initiated some work on a server standard which is still probably a few years away. It has been a really good program to see, granted it is a small area for a certain subset of manufacturers today. It is environmental focused but they do have a little of corporate performance and sustainability things. The next standards that they are working on have an even larger amount of corporate performance and transparency. It is moving from a pure environmental standard into more of a sustainability standard. It is great to see the adoption it has been having.

 

Mark Schaffer

 

Mark_Schaffer.jpg

 

Owner and Principal Consultant

Schaffer Environmental

LinkedIn Profile

I interviewed Ken Zimcosky who thinks companies need to begin transitioning from short-term solutions to long-term solutions.Zimcosky also believes, "The recession is simply part of the pattern of the business cycle." "Firms that can weather the low end of the business cycle," he says, "are going to succeed."

 

Ken Zimcosky spent the last twenty-three years in the United States Army performing logistics operations in different theaters. He's also had experience in the civilian supply chain management and logistics field. Zimcosky holds an MBA with an emphasis in logistics, and a master’s in military studies. He currently works as a contractor supporting the government in logistics analysis and management planning.

 

 

Q & A with Ken Zimcosky 

 

Dustin Mattison: What are the consequences of the recession regarding supply chain management and innovation?

 

Ken Zimcosky: I think some of the issues are going to be that people are going to focus on short-term solutions, and I think that there’s a need to look at the long term as opposed to the short term. I believe that the recession will make people react. I mean, our customers are going to expect some cost savings; however, I think the biggest thing is that it’s going to cause the industry to focus on those short-term solutions as opposed to long-term solutions.

 

Dustin Mattison: What improvements, good consequences, and lessons learned do you see? How are we better off?

 

Ken Zimcosky: I believe that the recession is going to force people to streamline some of their aspirations, and I think that the firms that look at a long-term solution to the problem will develop better relationships with their suppliers.

 

Dustin Mattison: What will we be missing? Are there things that we need to learn to live without?

 

Ken Zimcosky: I don’t believe there are things that we need to learn to live without. I think this recession is simply part of the pattern of the business cycle. I mean, this is a downward turn, and that’s a normal thing within business, so I don’t believe there’s anything missing. I think the firms that can weather the low end of the business cycle are going to succeed.

 

Dustin Mattison: Are there ways of working that need to be changed either as a direct effect of the economic downfall or more as to help avoid dire consequences in the future?

 

Ken Zimcosky: Again, I think if companies focus on a long-range solution to their problems and they work on enhancing their supplier relationships and continuing to look for more efficient supply chain proficiencies, I think you’ll see that we will benefit from that in the long run.

 

Dustin Mattison: Do you have any specific examples from your own experience?

 

Ken Zimcosky: I wouldn’t say there’s any specific examples other than I have tended to focus on long-term planning initiatives, and when you make short-term decisions, they’re not the bulk of your decisions. Every company’s going to have to make short-term decisions, but if you make a good plan, you include your suppliers in the decision process, and work on establishing those relationships and sticking to your plan, I think you can weather any storm.

 

About Ken Zimcosky

 

Field Studies Analyst                       

QinetiQ North America

LinkedIn Profile


Ken Zimcosky holds bachelor of arts degrees in English and history, as well as a master's degree in  Military Studies: Land Warfare from American Public University, and a Master's degree in business with emphasis on procurement and acquisition from Webster University. After serving in the US Army for 7 years, Zimcosky joined HCI Integrated Solutions as a Management Technician. In 2008, served as Fleet Maintenance Manger/Logisitcs Analyst at Stanley and Associates.

 


http://www.linkedin.com/company/10261?trk=pro_other_cmpy

I recently interviewed George Ellis who discussed his views on social supply chains. George grew up in Cleveland, Ohio. He had an opportunity to receive formal education at Columbia University, majoring in mechanical engineering. He also attended Harvard Business School.

 

George has worked in a number of different industries including telecommunications, healthcare, third party logistics, aerospace & defense, and now at Tyco International based in Princeton NJ.

 

 

What is a social supply chain?

 

Social supply chain is the application of social media technology across the entire breadth of the typical supply chain, all the way from supplier's suppliers to customer's customers. It also includes the integration of social media technologies or social media-like collaboration technologies within organizations to connect and empower the people across the entire spectrum of the supply chain.

 

Examples of this emerging trend

 

We are seeing quite a bit on the customer facing side of organizations today. Customers are leveraging social media to connect with their customers from a marketing standpoint to promote and advertise their services and capabilities. Social media is also playing a significant role in customer service. Consumers are able to communicate with the customer service departments of a growing list of organizations through Twitter and Facebook. These are examples of applications on the customer facing side of the supply chain.

 

On the supplier management side of the supply chain, there are applications just now becoming visible and promoted, such as Volerro which is developing a social media type application for managing suppliers. Companies like Rollstream are focusing on supplier community solutions.

 

I believe we will start to see social media-like capabilities being developed any place in the supply chain where there is a need to drive a more holistic, broader and deeper level of collaboration between players. What is interesting is that we are seeing the development of commercial or B2B solutions, versus the consumer driven social media solutions out there today. The consumer-oriented applications don't have the robust security, search and information management capabilities that a robust commercial collaboration platform would need to have. That is why new tools that incorporate these requirements are being developed today.

 

Within organizations, for example in the supply chain, there is a need for supply chain professionals to grow and development. I have found that Twitter is one of the most effective channels for learning about what is going on in supply chain and learning broadly and deeply. Twitter is emerging as a wonderful learning platform. There are all types of courses at all levels, science programs for school classrooms for example, being developed on Twitter feeds. In the future we are going to see Twitter-like or other social media applications provide much greater focus and more solutions for learning within organizations.

 

I can tell you that both my current and previous employers have internal social media networks within the companies, with firewalls. Companies are going to have to allow their employees to link up with external social media networks as well. These well defined silos, and the barriers between internal and external, over time will erode.

 

The Social Supply Chain Networking Group on LinkedIn

 

I am very excited about it. It has grown very rapidly. Within 3 weeks we have had 220 members join the group. These are mostly people who were in my network but we have also attracted members from the broader LinkedIn community all over the world. The vision is that we will have an opportunity to engage with some of the solutions providers. As we move forward we will also have an opportunity to see some of the jobs offered by those players, and jobs within companies that want to leverage social media across their supply chain organizations.

 

I would love to see learning roles and opportunities promoted, advertised and discussed within the group as well. There is a lot of interest in social media and how it is going to be integrated across supply chain and logistics operations down the road.

 

George Ellis

Global Supply Chain Executive - Sourcing, Procurement, Contracting, Logistics, Distribution, Lean Six Sigma, IT Systems

LinkedIn Profile

I interviewed Ory Zik, Founder CEO Energy Points who discussed an innovative approach to supply chain sustainability using a calculation engine and that helps companies get the right calculations for their specific sustainability problems, taking into account their resource consumption and their location and time.

 

 

 

 

 

Ory has a PhD in physics from the Weizmann Institute of Science in Israel. As a student in 1994 he founded Green Peace in Israel. Ory then started and ran three start-up companies. Energy Points is the fourth. His last start-up was a solar energy company that did and is still doing solar boosting for conventional park lands, which means that they build huge structures in the desert to harness solar energy. This company is actually the segway to Energy Point because while running this company he started to ask the question “how does sustainability add up to numbers that allow you to make decisions?”

 

For example, in solar energy and solar thermal you buy a lot of steel, concrete and glass and cover a lot of desert area to harvest energy from the sun. The question then is how does it all add up to allow us to make a decision and the right sustainability decision? After working with this question for a while Ory decided to step down as the CEO of the company in order to start Energy Points. The company was started about 1 year ago. They got funded 6 months ago which up until now is $4.5 million. The company current consists of 4 people  and they work with about 12 Fortune 500 companies where they help quantify their sustainability and make better decisions for finding the right tradeoffs between sustainability and financial decisions.

 

What is wrong with the way sustainability is approached today?

 

Many people today are making decisions without having any quantitative base for those decisions. Typically, companies are trying to make sustainability decisions by looking only at cost reduction. However, cost although important, does not reflect sustainability. Take a very simple example, in Massachusetts for the same $10 you can buy 3 gallons of gasoline, 100 Kwh of electricity, and a few thousand gallons of water. These 3 things have totally different sustainability value but they cost the same $10.

 

You need another measure of sustainability which is not dollars. The main thing wrong with sustainability today is that people try to make sustainability decisions only on the basis of cost. When it comes to sustainability itself they don't have numbers, they just use adjectives and describe things in general terms without numbers.

 

We come up with a set up numbers which on the one hand are intuitive and people can understand them because we normalize everything into something people can understand. On the other hand, we calculate everything accurately and vigorously in a transparent way, taking into account specific locations of the companies we analyze.

 

Why do you think location is important?

 

I will give you an extreme example. If you want to rate your water footprint, clearly water in Albuquerque New Mexico and Boston Massachusetts will need to have different ratings because of the different situation of water in those two locations. Water in the Sahara and water in London are totally different. We rate them as different. Without taking location into account and just coming and saying that you reduced your water footprint, without knowing where you have done it and the drought situations in different locations, it doesn't account properly for sustainability footprint.

 

It is the same with energy. If your energy source is clean versus coal on the other extreme, energy saving measures have different impacts.

 

Can you talk about your business model?

 

We are building a calculation engine to power sustainability decisions. We are not displacing anyone from the marketplace. We are just enabling people to do the sustainability calculations right. Today, Fortune 500 companies and many government organizations have enterprise software, sustainability consultants and energy management companies which allow them to manage their resource consumption. However, all of this help does not allow them to calculate sustainability right.

 

Our business model is to enable those third party consultants and enterprise software vendors to calculate sustainability right. We sell the calculation engine which powers sustainability decisions. Basically, it is a SaaS model that is cloud based where people can go into a calculation engine and get the right calculations for their specific sustainability problems, taking into account their resource consumption and their location and time.

 

What impact does behavior have on sustainability?

 

By coming up with the right way to quantify sustainability we open up a huge potential for behavioral change. Think about how calories or food points changed the way people diet. Once you have a way to measure and quantify things you can start having feedback and start changing your behavior because you know quantitatively the impact of the different things you do. Without it, people are living in mansions and buying Priuses and they think they are doing good for the environment because they don't have a number system. There is no incentive to make a real behavioral change.

 

In a way, our impact on behavioral change is similar to food points or calories and their impact on the diet.

 

 

 

Ory Zik, Ph.D.

 

Founder and CEO of Energy Points Inc. Energy Points use analytics and bid data to maximize enterprises energy productivity while minimizing their environmental impact. Its integrated source-to-site energy analytics directs intelligent data-driven use of electricity, water and waste.

 

Prior to Energy Points was the founding CEO of HelioFocus Inc, where he currently serves on the board. The company is a leader in solar thermal solutions for conventional power plants.

 

Prior to HelioFocus, was the founding CEO of QuantomiX Inc., which was the first to visualize live cells and biopsies in an electron microscope (sold in 2006).

Holds B.Sc. (*** laude) in Physics and Mathematics from Tel Aviv University; M.Sc. (*** laude) and Ph.D. in Physics from the Weizmann Institute of Science. Holds worldwide patents.

 

 

 

About Ory Zik


 

Ory-Zik-headshot_small.jpg

Ory Zik, Ph.D.


Founder & CEO at Energy Points


LinkedIn Profile


Website

I interviewed Stuart Emmett, CEO, Author and Trainer at Learn & Change Limited. He discussed his book 'The Relationship Driven Supply Chain; Creating a culture of collaboration throughout the chain'. The book is central to supply chain, because it isn't just competitive advantage between companies, it is also competitive advantage in how you organize the supply chain. This idea has been around about 10-15 years.

 

 

To actually get competitive advantage through supply chain we have to start working with other people in the supply chain. What we commonly find is there might be a link to the first tier level supplier or tier 1. However, it often doesn't go beyond that. It seems pretty clear that unless in tier 1 we start working closely with that supplier that involves sharing information that there has to be something in it for the supplier. The world collaboration tends to creep into it. When we talk about competitive advantage amongst supply chains we can also talk about getting 'collaborative advantage'.

 

Unless we work with people and share things with them, including sharing gains and benefits, we are obviously not going to start getting the best out of them. Life is very much about what you actually give than what you take. There are fundamental basic principles here which we need to grasp hold of. It is a difficult concept for a lot of people because oftentimes people are thinking “me, me, me” all the time. Once you have people buying in you have power relationships coming in.

 

The book revisits supply chain in the first part, taking a look how people fundamentally work together. Teamwork is a classic one to look at. Stuart believes supply chain is the ultimate team game. However, as most people know, trying to get teams working is often difficult, at least with internal company relationships. For example, procurement doesn't get along with the end customer, production doesn't get along with marketing, etc.

 

These are all pretty well known things, but enormously difficult at times for some organizations to get some change coming through. The book looks at relationships and going away from competing and adversarial relationships, moving us towards working together collaboratively. The book gets into classifying relationships. Then when you drop back into fundamental aspects of supply chain it is very much about working with people, trying to get win/win.

 

Not to say it is all embracing and works with everything we do in supply chain, because it clearly doesn't. However, it clearly works in most areas. If we are dealing with people who have monopoly power, such as if selling basic commodities, it is quite difficult to work collaboratively with people.

 

Yet, sitting down and working together actually has benefits.

 

Examples

 

There are so many examples. Once you start looking around it is quite surprising what is actually there. There have been classic examples in the UK in recent years. This year London is hosting the Olympic games this summer. There is a lot of new construction going on to support that. It all seems to be working on time. The major structures have been built. Everything seems to be going forward. What is quite interesting about that is about 2 or 3 years ago where a new national stadium was built. That was a total disaster. It overran in terms of time, budget and when you examine it you see it was a classic construction project where all risk was passed to the supplier. The people letting the contract when back to the government and felt that by externalizing everything and passing it onto a supplier they wouldn't have any problems. This is a false view. If a supplier fails, you are going to fail. This is ultimately what happened. They got caught up in large price increases.

 

There are some good examples around. Not too far away from that is the London Heathrow airport where they were building a new terminal 5. The interesting thing about that is it was a far bigger project, about 4 times in value than the project with the national stadium. This project opened on time and within budget. For this project there was no externalizing of everything to the supplier. It was a collaborative idea. Suppliers were involved from the early stages. Little teams were involved with the excavation, the steel erection etc. There were 60 teams involved altogether. The whole project was managed without wait.

 

These examples are just from the construction industry. Retailers, for example have been looking to share information with suppliers. There are commercial changes in relationships which look to benefit for providing information. This concept is across every sector. It is fundamentally trying to get people working together. Oftentimes, they are not working together but in their own silos and separately.

 


About Stuart Emmett

 

StuartEmmett.jpg

 

CEO,  Author and Trainer  at Learn & Change Limited

LinkedIn Profile

Samantha Putt del Pino is the co-director for a team within WRI's Climate and Energy Program which is called Business Engagement in Climate and Technology. One of the flagship projects they have within that team is the Next Practice Collaborative. Samantha has been working with WRI for nearly 12 years, working with mostly large multinational companies, thinking about climate change strategies,  how companies can build the business case to take action on climate change, think through how to navigate various risks and opportunities and thinking through strategies for developing a comprehensive approach to climate change as well as other large scale sustainability challenges.

 

 

What is the Next Practice Collaborative and why is it important?

 

The Next Practice Collaborative has grown out of a history of work with the private sector that WRI has had over the last 10-12 years. They have been working with companies to really think through how they approach climate change and sustainability strategies. The Next Practice Collaborative in particular is a relatively new group of companies that are working with WRI and each other to explore strategies that are 'Next Practice', beyond today's idea of Best Practice.

 

If you look at what a sustainable world looks like, with zero carbon, climate resilience, operating within ecological limits, etc. There are a number of different ways you might think about what a sustainable world looks like. However you define that it is quite clear that business not only needs to think differently about its operations, but they also need to think differently about the types of products and services they provide and where and how they might source their materials.

 

In that scenario, questions around climate, sustainability and related issues are seen as driving growth and driving value creation and are really core to the company. Rather than something that a company might do as an add-on, it is something that is really driving growth within a company. On the path to getting there companies are working with the Next Practice Collaborative and with each other to explore some of these next practices.

 

What will best practices be in 5, 10, 15 years time? How will they position themselves and get ahead and game and competitive in that scenario?

 

There are two key things the Next Practice Collaborative is looking at:

 

  1. How can companies make sense of all the big environmental trends and challenges that will shape tomorrow's markets?

    How do they understand which of the trends that are going to be most relevant for them? How do they think about those trends and challenges in terms of how they might create long term risks for the company, but also how might they create opportunity? How can the act on that today and how do they go through a process of identifying partners they can collaborate with who might be able to support the opportunity, or who might have a shared risk and can work together with the company to mitigate that risk. The Next Practice Collaborative is working together with their partners on a tool to help companies navigate through this and will be road testing it in the May June time frame this year.

 

  1. Thinking through how companies can overcome some of the financial barriers that can lock companies into short term thinking?

 

The Next Practice Collaborative is particularly exploring internal caps and allocation and how different approaches such as Total Cost of Ownership can help free up capital for the Next Practice strategies.

 

At the end of the day these 2 components taken together will really help deliver a business case for action that is consistent with the large scale transformative type actions that we think are necessary to achieve a sustainable future.

 

There are a number of groups out there that have done some really great work on thinking through what a sustainable future looks like. There are organizations such as those that work with companies on future scenarios. There are groups like the World Business Council for Sustainable Development and their Vision 2050 Initiative that has worked with companies to think through what a sustainable future looks like.

 

Our work is trying to complement those kinds of activities and help companies think through in very practical terms how they take these big trends and understandings of how our world is changing, how dynamic it is and how they need to position themselves and really think through on a practical level how to turn that into something as sustainability or supply chain manager where you can tackle those issues today.

 

Who is involved?

 

We are working with a variety of companies that are eager to push the envelope. We have a core group of companies that include companies like Alcoa, Akzo Nobel, Johnson & Johnson, Siemans, Staples, Target, UTC (United Technologies Corporation) and Wells Fargo are among the core companies. There are several others that we are also engaged with as part of WRI's larger corporate network that we work with on a number of issues that are also providing important insights into the work.

 

What are the implications for the supply chain executive?

 

It is a really interesting and challenging question for supply chain executives. For a lot of companies we have learned over time that the supply chain is a significant part of the company's environmental footprint in many instances. The Greenhouse Gas Protocol has developed a standard for corporate value chain and accounting which is a really excellent way for a company to assess their risk exposure and their opportunities based on what we currently know.

 

What the Next Practice Collaborative is trying to do is to think through in terms of how a supply chain manager might think about this. The question is how do long term trends impact them? The tool that I reference is modeled after an adapted SWOT analysis, looking at strengths, weaknesses, opportunities and threats and trying to think through how we might use that approach so that a variety of sustainability is managed, including supply chain executives can think through these issues.

 

If you think about some of the large scale threats which we know about such as climate change and extreme weather, we have seen many instances where these things can impact supply chains. One example in terms of extreme weather is the floods which hit Thailand last year. These floods were the worst in 60 years. It had a ripple effect across a lot of company's supply chains. One example that has been talked about in the past is the fact that computer hard disk manufacturers had their production facilities located in the flood zone. Western Digital was one of the companies that was there.

 

This had a ripple effect on companies that needed hard disk drives. Dell Computers for example took a hit on their earnings because the cost of hard drives went up as a result of those production facilities being affected by the Thailand flood. Seagate is another manufacturer of hard disk drives not located in the flood zone but having component parts coming from there which were affected.

 

We have seen companies like Good Year Tire and Rubber for example put out a press release last year commenting that there was going to be a shortage of  airplane tires for a while for the same reason, they had production facilities located in the flood zone. That is one example of how extreme weather effects can ripple across supply chains. There have been examples of how food or water scarcity has impacted food supplies and driven up commodity prices for corn, wheat, and for other things which have created civil unrest, which can have an impact on how companies may be able to simply operate in some areas.

 

There are real questions for a supply chain manager regarding how they think about the threats, not just to the company but where they are sourcing their materials from.

 

In terms of opportunities how might a supply chain manager think about new ways to manage their supply chain once they understand the spectrum of threats that may be facing them in the long term?  They might be able to think about real time data, new types of logistics, new technologies that can help them manage the supply chain. They might be able to think about alternative raw materials, sourcing materials that are closer. There is climate change and extreme weather.

 

We think it is important for companies to think about these trends not just in the immediate but also the long term and understand how they might map their own core competency onto either managing these risks or harnessing the opportunities. There is an opportunity to think through here about what kinds of expertise a company might have to address threats and opportunities and how they can manage that impact.

 

A key component that a lot of companies are thinking through and in terms of the supply chain is how can they collaborate with others to mitigate the risk or leverage an opportunity? A key challenge that we hear from a lot of companies is that a lot of these threats such as climate change or water scarcity, or some other kind of environmental or social risk, are larger than one company can deal with themselves. To affect larger transformative change there is a question of how companies can identify the right partners.

 

It could be by working with producers in the supply chain. It could be by working with customers, policy makers and with internal stakeholders as well to really understand how they can leverage new partnerships to think about collaborative ways of addressing these large scale problems.

 

Samantha Putt del Pino
Co-director: Business Engagement in Climate and Technology

LinkedIn Profile

I interviewed Tony Wines who discussed the importane of metrics in sustainability and the supply chain.

 

 

Why are metrics important in sustainability?

 

We are seeing a lot of change in the world, particularly in places such as China where for the first time we saw the 12th Five Year Plan established by the Chinese government. Over 20% of that Five Year Plan was related to sustainability, carbon reductions and improvement in operations surrounding sustainability and the environment. We are seeing that the legislation in particular around the world, if you include Europe as well with the EU-ETS is driving very strong requirements for companies to measure and monitor their carbon emissions.

 

I believe this is one of the first steps towards stronger legislation around carbon taxation, carbon crediting, and carbon measurement.

 

Many organizations haven't yet really established really strong metric tools to do this. It is very manual. It is very difficult to get transparency from office to office and department to department. We are seeing there is a need to have sustainability as part of a daily business process. As a result of that you need to have the transparency tools and metrics to measure the way that your organization is performing.

 

 

What is being measured?

 

The standard measurements would be related to electricity consumption, which would be called Scope 2 emissions, electricity, waste management surrounding water and fuel. We also look at Scope 3, which is related indirect emissions surrounding travel costs, trucking, warehousing & distribution, the cost of handling a distribution center and measuring the emissions from a factory or distribution center and looking at how those factors can be reduced.

 

It is a lot around electricity, water, recycling, wastage, and at the same time fuel and travel.

 

Which companies are most in need of using sustainability metrics?

 

The airline industry, particularly in line with the new EU-ETS regulations in Europe whereby there is a push for carbon monitoring for airlines flying from the US or Asia into the European markets. That is driven very heavily by the government and the EU regulators.

 

The next step will be the shipping lines, particularly in line that they are also being asked to regulate their carbon emission management and evaluate ways of reducing costs and creating visibility. IMO is also focusing heavily on this area.

 

I think that will filter down naturally to the 3pl market and trucking companies all around the world as the pressure from some of their customers grows towards providing visibility.

 

When will sustainability metrics be a common requirement in business?

 

We have seen a lot of growth in the expectation around the metrics in the last couple of years. We feel we are almost at a tipping point now where if you were to look at the leading logistics providers around the world, they already have strong sustainability models in place. Many of them have developed their own metric tools and modeling tools to understand their emission management and reduce emissions.

 

The leading companies are seeing that this is a way of reducing cost and improving productivity within the organization. They are very heavily focused on concentrating on the strategy long term. We haven't yet seen the drive towards environmental metrics as an industry norm. But I do think we are getting significantly more pressure from both legislation and client base. That will definitely drive even the small and medium sized enterprises to start to pick up the metric tools.

 

Within 12 to 18 months we would like believe there will be much stronger measurement requirements within the industry.

 

Conclusion

 

We are definitely seeing the leading logistics providers are being heavily pressured by some of their key customers around the world. Certainly the retailers have been very strong on this, particularly organizations such as Walmart, Marks & Spencer in the UK, TESCO, etc. They are all very heavily focused on measuring their supply chain within the green sector. Their expectations are that their suppliers, as well as their logistics providers, would have a green strategy or sustainable strategy which is aligned with their organizational requirement.

 

We are also seeing that some of the leading logistics providers are trying to focus on working very closely, collaboratively with their key customers to drive improvements within the green supply chain. I think this is a strong method to work on long term retention, but at the same time differentiate the product within the industry. Realizing we are in times where product differentiation is quite difficult I think the leading companies have seen sustainability and technology as a very clear opportunity to differentiate the product and improve branding within the organization. I think we are seeing those moves already as an industry trend.

 

What we haven't yet seen of course is the great majority of companies taking it as an industry norm, which I think will come hopefully within the next 1 to 2 years.

 

About Tony Wines

 

tonywines.jpgTony  Wines has been in the logistics industry for 21 years. He started with  DFDS which is now DSV in the UK offering air/ocean and  warehousing/distribution. His early years were associated with the 3PL  and supply chain business. Tony moved to Asia in 1999 to establish  offices there. He got a position with INTTRA, the e-commerce platform  based in New Jersey. He ran the Asia Pacific office for eight years,  which is where is technology and e-commerce background has come from.  Tony worked with them until roughly 2006.

 

Tony  then established Turnkey Consulting in 2006 in Hong Kong. The focus was  to be a leading logistics provider and help organizations establish  networks and market entry into Asia. They were successful in doing this  with quite a few European companies who in turn were interested in  understanding a little more about green supply chain.

 

As  a company they got themselves established with certification processes  such as ISO14001 and LEED certifications to understand the processes  around that. They were strongly driven by the concept that there is very  little accurate metrics in the logistics industry that allows the  majority of companies to measure sustainability footprints and  environmental metrics. That has been holding back a lot of the small and  medium sized enterprises who are trying to get some access into making  their first steps into the sustainability field, but they don't know how  to start.

 

Tony's  organization has built software around that called Turn Green Solutions  which measures carbon footprints and establishes/helps your ISO  certification process or accreditation process. They do carbon  offsetting and focus heavily on eco-supply ratings for some of the  larger retailers of manufacturers who want to measure the performance of  their suppliers. They also create customized KPIs and customized  modules such as fuel management metrics to help companies understand the  effects of the missions and NOX and SOX around fuel.

 

They  have generic products which are there to help companies on the day to  day running and they have very specialized modules which they build and  customize for specification, based on the need of the client.

 

In summary, the businesses they are in is sustainability along with logistics provision.

 

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Dennis Gawlik is an adjunct professor at several universities, most currently at Bainbridge Graduate Institute where he teaches sustainable supply chain and operations. In addition, he has been involved in operations for the last 30 years, including procurement, supply management and contract management.

 

 

Would you suggest creating a long term sustainability plan?

 

The reason this is important is because oftentimes sustainability and supply chain often bubbles up from the bottom. It comes up in several different programs at disparate parts of the organization.

 

Once it is recognized that the people are doing this internally it is important to unify them and create a long term plan for the organization so that you have a common focus and alignment on direction. You are using your resources appropriately. In addition, you are achieving internal efficiencies from your programs and you are able to get the proper momentum going forward. It is very important to do that.

 

What Dennis and his team suggests is to create a program that involves 4 different tiers – 3 primarily function ones and one more of a strategic.

 

These particular tiers revolve around firstly getting the basics of supply management and value change down. The second would involve focusing on the sustainability and integration within the organization. The third would involve properly creating a strategy that governs the entire system. Governing means making sure we have proper reports, data, checks, auditing, etc.

 

Lastly, from a strategic standpoint it is creating a program that involves efficiency and more in a lean aspect. How do create a program that in the long term reduces waste and becomes very efficient in the long term?

 

One of the things we need to do is focus on integration. How do you bring together the various parts of a sustainability program, whether environmental, social, or risk mitigation and waste control? The integration of these four things is very important in a holistic approach to a supply chain program.

 

In addition, internally when you are looking to integrate these programs it is important to look at the entire system. Traditionally, people looked in supply chain in the late 1990s and early 2000s on how do you reduce costs? How do you focus on your JIT programs so that things arrive when they are supposed to? How do you get your transportation time down?

 

Those are all very important, but now we have to look at what are the environmental costs throughout the entire network? Some of those specific things that can be done from that standpoint is looking in your supply chain and identifying and mapping how deep you go within your supply chain to a tier 1, tier 2 and tier 3 level, etc., in affecting how things go from a downstream to an upstream perspective, and affecting everything within the operation.

 

When you start out you normally focus on getting all of the basics right. Looking at your carbon footprint. Getting more economical distribution patterns so that you are reducing your back hauls, making sure trucks are not running half empty, looking at your packaging component, the return parts and having that set up efficiently. Getting the basics right is very important in the beginning so that you have the foundation on which to build on.

 

The next standpoint, from looking at a tier from a planning perspective is to think of ways to integrate all of the functions within an organization. How do you get your operations, logistics, supply chain, to all work together seamlessly so that your efficiencies and costs go down.

 

How does value replace cost in the system?

 

Costs, because of the economic impact we have been through the last few years, has been a primary focus for organizations just to remain viable. Value now becomes important because sustainable supply chains are being used as a strategic advantage and oftentimes a first mover advantage. From a first mover advantage, by being involved early on in a sustainability movement you garner large parts of a market share and are able to hold on to those from a reputational standpoint moving forward. '

 

It is very important to focus on the value because value in the long term will mean that you have a sustainable operation in the enduring focus. Then you are also bringing in the sustainable environmental part of the program.

 

 

Can you talk more about integration of functions, particularly design?

 

This is a good segway from the value component into getting an internal functions all aligned and together and then working for your supply chain both upstream and downstream. Everything always begins in a sustainable supply chain, as with all lean Toyota based supply chains, focusing on the customer and delivering what the customer needs. Oftentimes, what we do is integrate operations, procurement and supply chain all together into one focus.

 

However, you also need to make sure that within an organization all of the other components feed in and become efficient. You have to have your design component. What we are seeing is those forward looking organizations that are leading the sustainable supply chain effort are reaching into their organizations and working closely with their design components to reduce the amount of waste, change the chemical components, to work on packaging. All of these components from a design component all the way through the customer, communications and your marketing component – all have to be integrated.

 

Design is becoming one of the focal points for a sustainable supply chain in the future. That would be a big focus if people are going to be focusing on the second part of your program, once you get the basics done.

 

About Dennis Gawlik

 

Dennis_Gawlik.jpg

 

Sr. Contract Manager - Supply Chain                        at T-Mobile

Founder | Supply Chain Director                        at Leaders in Supply Chain Management in the Greater Seattle Area

Committee on Social Responsibility                        at ISM

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