Building a green supply chain might be an easier process than it first appears. Paul Tatam, sales and marketing director EMEA at Inovis, a GXS company, looks at some tangible steps organisations can take to reduce their impact on the environment.
Following the worst economic climate for many years, it’s understandable that many organisations don’t place greening the supply chain at the top of their priority lists. After all, the whole concept of green is often assigned to notions of complexity, tokenism and perhaps most importantly, financial cost. However, despite all the accusations of greenwash and the unwillingness to challenge existing processes because of the disruption to current business models, it’s now easier than ever to build a green supply chain without going into the red, while actually adding to the bottom line along the way.
As a starting point, ask any chief technology officer (CTO) what they are most interested in from their supply chain solution, and the answer will often be just a blank look. This is because the supply chain is invariably a small part of a CTO’s remit, and if the current system is working to an acceptable standard, it is likely that in their mind, no problem exists.
To take things to the next level, organisations need to understand the importance of operational excellence, and how they can work smarter and be better informed to drive the efficiency of everyday business processes. This new level of visibility is built on B2B collaboration, specifically through a set of capabilities which allow organisations to communicate more effectively. At a basic level, businesses can look to processes such as reducing or removing paper invoicing from their business. By taking advantage of next-generation automated electronic data interchange (EDI) solutions, organisations can have a real-time platform displaying invoicing information, removing the cost of traditional paper invoicing and dramatically reducing the environmental impact of their operations. Further, by implementing intelligent systems which can spot discrepancies in supply chain data, it is possible to enable businesses to maximise resources and deliver optimum efficiency.
Logistics is an area where many organisations are now looking to optimise efficiencies. For example, why would a retailer send two half-empty trucks from London to Newcastle to collect one load worth of stock returns, when an empty truck returning from Glasgow could easily have collected it? Two less journeys doesn’t sound like an awful lot, but if we multiply this occurrence on a weekly, monthly and yearly basis, then the potential savings, both financial and environmental, are suddenly very significant.
In addition, the emergence of e-commerce and the internet has meant many organisations are now moving away from traditional ‘order in-delivery out’ style models to cross-docking or drop-shipping solutions processes. With little or no storage involved, the benefits are plentiful, including quicker distribution, reduced handling and operational costs and increased warehouse space, not to mention the decreased number of trips to transport the goods to holding stores. Such direct methods can work well; however, without adequate visibility this system can easily fall down. When a garden shed from Frankfurt ends up in Middlesbrough instead of Macclesfield, retailers need to know about it; and so do customers. The key to success here is being able to track and trace an item throughout the whole lifecycle, and have an automated system in place that can flag up non-delivery of stock or other problems during transit. With best-of-breed supply chain solutions, organisations can have confidence in the delivery of the data they need, allowing them to embrace smarter ways of working—and smarter can mean leaner, which in turn leads to greener.
Visibility of the entire supply chain can also enable businesses to better source products and raw materials, again with positive environmental effects. The horror stories of organisations shipping processed vegetables from the UK to Asia before returning the product to the UK to be sold with a ‘Made in England’ stamp are simply unacceptable in today’s economic and environmental climate. Grocers and retailers need to be aware that consumers today are much more focused on how and where products are sourced, and with ‘local’ appeal becoming increasingly attractive to the consumer market, this can have a significant overall impact on the reputation and success of the company. If the procurement manager has access to a user-friendly system that quickly and efficiently details available suppliers on his company’s network, he can clearly see that he doesn’t need to import from China as he has a supplier in the Netherlands. The benefits are again considerable, and essentially very easy to obtain.
It is not only the end consumer who appreciates efforts that are made to ‘green’ business operations. From a corporate social responsibility perspective, many organisations also have environmental policies in place which encourage low-carbon, high-efficiency business practices. In light of this, businesses are increasingly making a considered effort to partner with ‘environmentally-friendly’ organisations that also have proven green policies. A business that can clearly demonstrate its logistical efficiency to partners is therefore well placed to benefit, and from a supply chain communications perspective, sustainable IT can not only work to help automate and optimise the transport and delivery of goods, but can in fact also have wider benefits to the supplier/retailer relationship, including improved order-to-payment processes and transaction speed.
Ultimately, now there is major pressure on retailers of all sizes to be seen as green by their customers. Gartner Research suggests that as this pressure mounts, by 2011 suppliers to large global enterprises will need to prove their green credentials via an audited process to retain preferred supplier status—which means the time for apathy is clearly gone. If ever IT managers were looking for an opportunity to sell in that next generation supply chain system to senior business decision makers, then that time is now.
B2B integration and effective supply chain communication can drive down risk and also reduce the impact that business operations have on the environment—all while improving the visibility of transporting goods for more effective logistics management and even cost savings. www.gxs.co.uk/inovis
