ESSEC Business School, in partnership with the University of Tennessee, hosted in July the European edition of the Global Supply Chain Forum. The event featured keynote speakers Norbert Marchand – European Supply Chain Director for Soparind Bongrain, one of Europe’s leading Agribusinesses – and Philippe Raynaud – Vice President of European Supply Chain for BIC – and set out the objective of giving the more than 60 supply chain professionals in attendance guidance and insight on future trends and concerns.
“The goal of the Global Supply Chain Forum is to bring together supply chain management professionals from across the globe and facilitate the sharing of ideas,” explains Philippe-Pierre Dornier, one of the organizers of the event. “We want to make globalization a reality in this field, in research and higher education, in order to better understand current needs and establish best practices.”
Understandably, supply chain managers today are looking to address concerns brought about by current economic uncertainty: How should businesses approach supply chain risk management? How can supply chain collaboration help business stay competitive in times of crisis? But one of the most interesting points to come out of this forum was the extent to which a sustainable approach to supply chain management can have a positive effect on a business’s bottom line and ultimately help them stay competitive.
At the forum, ESSEC Operations Management Professor Felix Papier hosted a workshop on the subject of the Sustainable Supply Chain where he was joined by a diverse and international group of supply chain management professionals. Their objective was to discuss the importance – and feasibility – of sustainable practices in supply chain management considering the uncertain economic climate confronted by many businesses today.
“In the past, many business leaders had trouble understanding the discussion on sustainability. They were asking ‘why is sustainability important? Why should I care about this?’ Many felt regulation-driven pressure to implement sustainable measures.” explains Professor Papier. “Today this conversation has changed. Managers are more often asking themselves how they can be more responsible with resources because they understand the ethical and financial importance of running their business efficiently.”
Efficiency makes good business sense
Energy and other resources are expensive, so reducing waste and energy consumption is a no-brainer for businesses looking to reduce overall costs for the production and distribution of products and services. This fact is driving important business innovations today like the Boeing Dreamliner, for example, designed to consume less fuel, be more environmentally friendly while ultimately helping airlines save money.
In terms of supply chain management, sustainable measures are helping businesses reduce their overall production costs. “Reducing resource consumption is a big concern,” explains Professor Papier. “A senior manager from the textile industry recently came to me and asked how he could reduce water consumption, for example. These kinds of questions impact not only the environment but also the company’s bottom line.”
Sustainable packaging, designed to allow for easier and more efficient transportation can furthermore help businesses move more units in a single shipment, while reducing waste. This can help them save on plastic, on wood, and on other packaging materials, which ultimately reduces shipping costs.
“In supply chain management, we’re also talking a lot about reverse logistics [the process of moving goods from their typical final destination for the purpose of capturing value],” he adds. “This can mean creating packaging that can come back to us so that we can recycle or reuse it for some other purpose. Reverse logistics are really helping companies to be more competitive. “
Where carbon footprint is concerned, the conversation that is still taking shape is about the impact of international imports. “Currently, when you’re importing form China, your footprint increases,” a participant adds. “If businesses pay the consequences of having large carbon footprints, is China going to loose its place as a low cost provider? China is currently investing huge amounts of money into sustainability for this reason. They have a long way to go but the path has been set.”
Responding to the demands of both clients and employees
The ethical question is very important. Many companies feel an ethical obligation to run their business responsibly, and they can also feel pressure from stakeholders such as clients or employees to be more sustainable, to be the “good guys”.
Internally, corporate image is about employee retention, with many in the workforce today placing a great deal of importance on the environmental responsibility of their employer. Since talent development is a major topic of concern in supply chain management, businesses should look to their environmental policy as a means of attracting and keeping the most qualified employees.
Externally, sustainability responds to client demands and helps companies gain access to new market shares. “In fact, many believe that in five to ten years, the main growth in many industries will come from products that are sustainable, above all because clients are demanding this of suppliers and are even willing to pay higher margins,” explains Professor Papier. “Offering sustainable solutions means capturing this market share and creating new revenues.”
At the end of the day, sustainability in the supply chain impacts the long-term profitability and competitiveness of businesses. It’s therefore understandable that this is an increasingly important topic of conversation for managers. Indeed, investors are already showing reluctance to invest capital into firms that aren’t going to be sustainable and these companies are therefore outpacing those that have bigger carbon footprints. To not take sustainability seriously in supply chain practice and policy is fast becoming an outdated approach.