Green Is the New Color of the Supply Chain
Through collaboration and the use of IT, companies are greening their supply chains and making a contribution to both environmental and business goals.
Bryan Jacobs, International Director, Corporate Solutions, Jones Lang LaSalle and Michael Jordan, National Practice Lead, Senior Vice President, Energy and Sustainability Services Consulting, Jones Lang LaSalle (July 2011)
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Sustainability in Practice
According to a recent McKinsey global survey, reducing carbon footprint and creating a greener supply chain has increased substantially as a key priority for companies, with 16 percent of respondents citing it as a top supply chain management goal for the upcoming five-year business cycle, compared to only 3 percent citing it as critical within the past three-year business cycle.
Leading-edge companies are making significant strides in developing industry standards for supply chain sustainability. For example, Jones Lang LaSalle recently served on a committee that developed a "Supplier Environmental Sustainability Scorecard" for Procter & Gamble. Designed to measure and improve the environmental performance of its key suppliers, the scorecard assesses the company's suppliers' environmental footprint and encourages continued improvement by measuring energy use, water use, waste disposal, and greenhouse gas emissions on a year-to-year basis. Procter & Gamble's Supplier Sustainability Board encourages more than 20 leading supplier representatives from its global supply chain - including Jones Lang LaSalle - to use the scorecard in their own supply chains.
"Environmental sustainability is a responsibility we all share," says Rick Hughes, chief purchasing officer at Procter & Gamble. "The scorecard is a tool we can leverage together to monitor and measure our improvements at reducing our environmental footprint."
Another example is IBM, which has one of the largest and most complex supply chains in the world spanning 28,000 first-tier suppliers in 90 countries. The company recently announced new management system requirements to advance sustainability across its global network of suppliers. IBM's first-tier suppliers are now required to establish and follow a management system to address their corporate and environmental responsibilities.
Jones Lang LaSalle has developed its proprietary OneView Finance (OVF) Sourcing Module for greening the supply chain. With more than two dozen of the firm's largest facility management client teams utilizing the technology, OVF Sourcing has more than 1,200 client-facing supply contracts initiated into the system across the globe, with more than 20,000 unique supplier records in its database. By rating supplier sustainability within this database to generate an overall supplier performance score, green suppliers can be connected to green clients, enabling them to better support their corporate sustainability goals.
"This global system and its related processes deliver a competitive advantage to Jones Lang LaSalle in both our execution with current clients and selling capabilities with prospective clients," says Marc Campbell, senior vice president of Strategic Sourcing at Jones Lang LaSalle.
This Phenomenon Will Speed Up
The inventor and businessman Ray Kurzweil has modeled how the exponential growth of technologies transforms industries - and the key to this transformation is information. Once an industry or system is translated to an information technology, Kurzweil's Law of Accelerating Returns indicates that the power of these systems will double every year. This compounding effect has great implications for the ability of supply chain professionals to incorporate environmental and social factors into purchasing decisions. Now that sustainable purchasing is an information technology, this practice is destined to accelerate exponentially in the coming years.