When I was in London recently at the Start Summit on sustainability that we organized with the Prince of Wales, I was impressed to see how committed companies remain to greening their supply chains. This was particularly evident among many of the UK's biggest retailers that participated in the Summit.
You might think that, in difficult economic times, sustainability would fall by the wayside. In fact, we heard first-hand how critical, economically and socially, sustainability is to companies. Investing in sustainability isn't charity. When you put money into improving a business, whether it's for product quality or sustainability, the savings and the value you wring out can pay for themselves and position you to be the low-cost provider.
The reason why companies are working with their suppliers is clear. According to estimates, 80 percent of the greenhouse gas emissions of some companies' supply chains occur outside of the company's own operations. The emissions of shipping finished goods alone can be cut 10 percent by setting up guidelines for energy use and monitoring supplier performance, with corresponding savings in energy costs.
Much of the focus we're seeing is on changing the way energy and water is used or the handling of waste in the production and packaging of products in order to reduce carbon footprints and conserve precious resources.
I see two other areas that are ripe for innovation:
- Logistics. When we think about how people procure and move things, there's an real opportunity to use math to figure out whether different routings and logistics can keep customers happy while also saving energy to move goods ranging from computer chips to consumer packaged goods. UPS, for example, has just launched a new ad campaign, "We love logistics," to help companies of any size take advantage of global reach while saving time, money and paperwork. The recent focus on logistics has in part led to the movement to eat "locally sourced" fruits and vegetables versus food grown thousands of miles away.
The technology and the business processes that make traceability possible are available now. I'm convinced that the ability to provide traceability will differentiate low cost providers from those who will be endangered species.
One of the conference's goals was to encourage more collaboration around issues such as traceability and logistics. Rather than focusing on the supply chains within their narrow industries, for instance, businesses have an opportunity to learn from each other and share best practices.
In fact, supply chain challenges are actually quite similar across many industries. Not one of us can do it alone. Businesses and their suppliers will benefit greatly with they work in tandem with governments and NGOs on making supply chains more sustainable.