Ph.D. Desirée Knoppen: “Supply chain professionals are able to see the whole ecology of a firm´s business”
Overwhelming scientific evidence has been ignored or simply put aside. As a consequence, the 2015 UN climate change conference in Paris does not aim anymore to stop global warming (as was the aim of the Kyoto protocol) but rather to refrain global warming to exceed two degrees of pre-industrial levels.
Last June, help came from an unexpected angle: Pope Francis published his encyclical Laudato Si on climate change, adding moral and theological arguments to the already broadly communicated scientific arguments. He arrived at sharp conclusions that I like to repeat here as they point to the essence of the issue: 1. Global warming is real; 2. Human activity is the key source behind global warming; 3. Rich countries have an “ecological” depth with poor countries; 4. Strong international institutions are required to stop global warming; 5. We need to put pressure on our politicians while also be willing to make sacrifices at the individual level (BBC Mundo, 18 June 2015).
Consumers will pay for the service, rather than for the product. Consequently, producers´ responsibility will extend beyond the sales moment of the product to cover the whole life cycle
Responsibilities as individuals
The latter conclusion can be further sharpened, however. As individuals, it is not only about making sacrifices. It is about opening up to a new economic system –founded upon durability rather than throwing-away values and habits– where the consumer becomes a user rather than an owner of material stuff. In this system, consumers will buy for instance cooling capacity versus a fridge; and we will buy lighting versus lamps. So, consumers will pay for the service, rather than for the product. Consequently, producers´ responsibility will extend beyond the sales moment of the product to cover the whole life cycle. In this new scenario, producers of cooling capacity or lighting will focus all efforts on developing fridges and lamps that last for a long time and that are energy efficient. And they do so, because this allows them to maximize their returns without having to charge the consumer for doing so. In other words, the aims of producers and consumers become aligned, without jeopardizing the environment.
Producers´ responsibility will extend beyond the sales moment of the product to cover the whole life cycle
Some examples of this new economic model are: Pay per lux offered by Philips for office lighting; fridge capacity rental offered by Bosch for lower income households in Amsterdam (who would otherwise buy a cheap fridge to minimize initial purchasing costs but who would have a higher energy bill throughout the life cycle of this relatively non-efficient apparatus), and car sharing offered by Avancar in Barcelona and Madrid. All these examples do not represent sacrifices as suggested before, but rather wakening up from a state as described by Peter Senge – author of popular management books and professor from MIT: “we are sleepwalking into disaster, going faster and faster to get to where no one wants to be” (Patagonia, 2010, HBP).
Sustainability initiatives from Supply Chain
Extending this novel producer-consumer view upstream to include material and component suppliers, there are areas for huge impact. Supply chain professionals are uniquely positioned to be able to see the whole ecology of a firm´s business and to identify and benefit from sustainability initiatives. They are in the position to pose and answer questions in the relatively new sustainability language: How to measure outcomes environmentally? How to justify trade-offs on, for example, more emissions but less water? How to involve suppliers to increase re-assembly options of products?
So, what can we do from a supply chain perspective? There are three key areas to get started. First, start measuring your impact to subsequently involve your suppliers in this exercise. Green score cards and methods for carbon footprint calculations are widely available and can be developed for different scopes of the supply chain. These measurements constitute a solid base to deepen collaborative activities to reduce waste and emissions, with the ultimate goal to sustain competitive advantage for the entire supply chain. Second, reconsider your packaging from scratch. Packaging highly impacts movement and storage requirements and imposes constraints on the supply chain such as stackability. Third, rethink your network on a regular basis: why are you moving stuff; are your choices for see, air or road shipments still justified; how occupied are your transportation means; how much energy are you consuming? Trade-offs likely change over time and should thus not be considered to be static.
Companies that implement sustainability initiatives in their supply chains more and more report profits related to these initiatives
The good news is that the number of companies that report to have sustainability on top of their agenda is growing. And, companies that implement sustainability initiatives in their supply chains more and more report profits related to these initiatives. Beyond profits, people may become inspired and even passionate about participating to shape a better world. Finally, the more experience managers have with sustainable initiatives, the more benefits they perceive (according to a global annual survey held by MIT Sloan Management and Boston Consulting Group, since 2009).
So, what are we waiting for?