November 2003, New Zealand Business Council for Sustainable Development
In large companies, the supply chain manager has a pivotal role in the process from procurement through to managing the reverse logistics, which can be described as the process of moving goods back through the system with the purpose of finding another use for the products, or for proper disposal. Whilst most New Zealand companies are too small for this to be a dedicated position, recognising what is involved is almost a prerequisite to addressing the issues successfully.
Few organisations make significant progress in sustainable development without the benefit of strong and committed leadership which empowers the management team to include social and environmental considerations alongside the economic ones. Often waste management and resource recovery is left to junior management and considered as ‘housekeeping’, and purchasing decisions are made without any consideration of the wider issues.
Each organisation has its own way of entrenching and demonstrating its commitment. Organisations such as Shell and The Warehouse build specific measures into executive incentive schemes. Several have appointed senior managers with the specific mandate to focus on sustainable development and Sanford has even gone so far as to incorporate the word Sustainable in the company’s name.
Having made the decision to get started, organisations follow through with practical initiatives to provide the momentum for the programme. Some examples include The Warehouse’s reverse logistics system that recycles almost all retail store wastes, and the efforts made by Progressive Enterprises and Landcare Research to design new facilities that incorporate ecoefficiency and both social and economic considerations.
Generally speaking a company can elect to follow either a conformity-based approach towards improvement or a process management approach. In the conformity-based approach the organisation elects to follow and implement a system based on a framework such as ISO14001, SA8000 or Enviro Mark. In the process management approach the organisation focuses on its own unique priorities and develops a customised approach.
The process management approach works well for global organisations such as Shell and Danone – parent company of Griffins in New Zealand. The smaller organisation with more limited resources may benefit from using an existing framework.
Having made the initial internal efforts, organisations turn towards the improvements which can be achieved by working with suppliers and service providers. This is often done through a Code of Conduct for suppliers, reviewing the purchasing Terms of Trade and conducting surveys and audits. The greatest gains are made though working closely with suppliers to identify those areas where improvements can be made. However, working with its direct suppliers is not sufficient; companies also have to engage with their suppliers’ suppliers on a similar basis.
A further challenge as well as a benefit, lies in working with suppliers and customers to improve the design of products and the processes that connect the business with customers. Whilst this is the least developed area, there has been some significant success in redesigning packaging and in increasing the recyclable content in products as diverse as mobile phones, whiteware and cars.
Process collaboration with suppliers and customers in planning, forecasting and replenishment has been shown to deliver improvements in manufacturing and logistics efficiency whilst reducing emissions, road congestion and improving employment stability.
The supply chain provides the focus for any organisation, whether service- or product-based, seeking to improve the social, environmental and economic performance of its operations. Apart from the moral imperative, substantial business benefit can be achieved through a combination of leadership commitment, focused and practical initiatives, and improved systems and processes.
This Guide was designed to explain why organisations should act, and to provide tools which can be adapted by individual companies to meet their own needs.
