The companies of today are more focused on energy efficiency and sustainability than ever before. In creating a strategy to become more efficient in all business processes, it’s crucial that companies take all parts of their operations into account.
One of the most important parts of enhancing sustainability practices is taking a step back and looking at how the supply chain impacts overall efficiency efforts.
How can an efficient supply chain contribute to sustainability efforts? Let’s take a look:
Supply chain planning
The benefits of implementing sustainable initiatives within the supply chain are tangible. A 2013 report from PricewaterhouseCoopers showed that when companies undertake sustainable supply chain initiatives, there can be significantly positive results. For instance, 43 percent of the operations professionals surveyed reported that making their supply chain practices more sustainable led to cost reductions, and 35 percent said their companies’ environmental impact was improved. In addition, U.S. telecommunications company Sprint was able to save more than $1 billion when it implemented a cellphone buyback and recycling program.
“For operations leaders and managers, sustainability is evolving to mean something far more strategic and commercial than what we’ve known in the past,” the report’s authors noted. “The relative focus is changing from compliance-based and branding activities to a set of reinforcing capabilities that have the potential to generate value to the business—whether the business value is direct, like cost reduction, or indirect, like customer loyalty.”
In order to glean these benefits from their sustainable practices, companies have to make sure their operations are as efficient as possible. This starts with supply chain planning strategies. GreenBiz noted that the first step to fostering a more sustainable supply chain is to take inventory of suppliers and identify the important environmental challenges they may have. For example, the PwC report highlighted Heinz’s issues with poor soil in China’s Zinjiang region. The company identified this problem and was able to implement sustainable practices – for instance, the use of fertilizers and pesticides and the installation of better irrigation – and saw an improvement of 58 percent as far as farm yields in the entire region. This, therefore, translated to real-time advantages for the company.
According to IT research firm Gartner, a successful SCP suite incorporates real-time analysis of the different parts of the chain and allows managers to conduct what-if scenarios. This includes analyzing suppliers and seeing how their potential inefficiencies make a difference within a company’s business processes.
Supply chain logistics
Incorporating efficiency into the logistics side of the supply chain is a surefire path to sustainability, as well. Logistics Viewpoints contributor Steve Banker noted that Wal-Mart has one of the world’s most sustainable supply chains. This is due to the high level of efficiency exhibited by the company within its truck fleet – by investing in fuel-efficient tires and changing some routing and truck loading practices, Wal-Mart was able to achieve an 84.2 percent improvement in fuel efficiency from 2005 to 2014.
The bottom line
When it comes down to it, it’s important to make sure the supply chain is contributing to sustainability efforts, not hindering them. To this end, Oracle SCM solutions from Inspirage can impact how companies approach their supply chain management.
For instance, our Oracle Value Chain Planning applications help businesses improve supply chain performance by analyzing and planning what operations will look like down the line. With solutions like these, companies can reduce cycle time and increase planner productivity, which in turn contribute to efficient practices in the long run.
Contact Inspirage today for more information.
