The Leading Role of Sustainability in Supply Chain Design

Monday, June 14, 2010 by Julie Urlaub
image: logistics designIncreasingly, businesses around the world are beginning to recognize the value of sustainable supply chain management, often citing cost and risk reduction opportunities.  Companies such as IBM and Wal-Mart are tapping into the value of redesign.  In addition, start-up organizations and newly formed supply chains also realize that working the front end design can have an even greater impact.

With a majority of cost typically locked up in initial design, up to 90% in some extreme cases, the ability to engage the supply based early in the design process becomes critical to the long-term sustainability.  Early supplier involvement is becoming an even more important business sustainability discussion.  In working with procurement organizations in our sustainability consulting, we often ask: who better than your supplier to identify:

•    What is the range of options?
•    How could it be sourced?
•    What will be the environmental and social impacts of design choices?
•    What processes will be used to develop one option versus another?
•    What will be the ultimate energy requirements and waste?
 
Pursuing business sustainability, by definition, requires organizations to be aware of the dynamic relationship with their stakeholders.  Whether designing an entirely new supply chain or simply making a sustainable process change to a single material stream, the ability to effectively engage the external world in the process becomes critical to success.

Our professional consulting works with clients to build a long term business sustainability plan that adds value by identifying critical relationships and taking proactive steps to engage those stakeholders in the process.  Through collaborative stakeholder engagement, organizations can create visibility, promote engagement, create alignment, and ensure the most effective results.

Comments for The Leading Role of Sustainability in Supply Chain Design

Monday, August 30, 2010 by Gene Tanski:
Nice article and certainly agree that including more points of view into a supply chain redesign will add value. I would like to add that either with the current design or with a newly designed supply chain, you cannot afford to ignore the role of forecast accuracy in helping drive the performance of the supply chain. If you could reduce your execution forecast error by 25% or more, what would that mean to supply chain performance? Our clients have experienced a minimum 5% improvement in pre-tax profit performance. AMR Research ranks forecast accuracy as the number one metric to get right for supply chain efficiency. Something to consider in the process of redesigning the supply chain.

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