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Why collaboration improves supply chain sustainability and the ways you can do it

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Collaboration could allow organisations to tackle problems far greater than themselves, and work together for more sustainable and transparent supply chains, writes Martin Chilcott, founder and CEO of 2degrees.

With the impacts of climate change, a global population of 9 billion and a dramatic expansion of the middle-classes, our ability to consume the earth’s natural resources is now significantly greater than the planet’s ability to rejuvenate and restore them.

Industrial globalisation and communication technology have given businesses the tools to change the rules, in particular, encouraging companies to outsource production and source materials from the farthest corners of the planet.

As a result, supply chains are becoming more stretched and less transparent, making them vulnerable and fragmented. With this often come increased risks around the environment, security of supply issues, corporate reputation and product integrity.

Recently Jeffrey Seabright, Coca-Cola’s former vice president for environment and water resources, cited, “Increased droughts, more unpredictable variability, 100-year floods every two years,” as problems that were disrupting the company’s supply of sugar cane and sugar beets, as well as citrus for its fruit juices, and said, “When we look at our most essential ingredients, we see those events as threats.”

Also earlier this year, Asda, the Walmart-owned supermarket, following a yearlong mapping exercise of its fresh produce supply chain, bravely announced that 95% of its fresh produce was at potential risk from climate change.

How do we address these global problems? Problems that are bigger than any one company or government. The answers to these threats, I believe, lie in collaboration. It can drive innovation, reduce risk, increase transparency and traceability, create direct operational cost savings, strengthen brand reputation and critically, for global companies like Asda and Coca-Cola, secure supply.

The case for collaboration

Evidence is overwhelming that collaboration is more than just a ‘feel-good’ concept when creating sustainable supply chains: it is now becoming a new commercial reality. Technology provides the ways and means to make it efficient for companies to work together to implement practical initiatives that can deliver measurable returns to their bottom line. For evidence on the power of collaboration, I’d invite you to view 2degrees’ White Paper Joining Forces: The Case for Collaboration. Some examples include:

  • $1.3 billion estimated p/a potential savings in the food supply chain of one leading supermarket as a result of its supplier collaboration network
  • 12% improved profit margin for manufacturing companies involved in collaborative initiatives
  • €4.6 billion estimated p/a savings for the European manufacturing sector through supplier collaborations in areas such as energy, transport and waste

As collaboration takes root within supply chains, we see that instead of traditional buyer-supplier relationships focused purely on optimising financial transaction, a ‘new spirit of partnership’ is developing often based on mutual financial and environmental goals. As Ric Schneider, senior vice president of global procurement for Starbucks, recently said, the role of the Chief Procurement Officer could now more accurately be described as the chief relationship officer.

A great example of this in practice is the 2degrees managed Tesco Buying Club, which started with four participating supplier sites and focused on LED Lighting. Through advice and combining ‘demand’ for LED lights into a single contract, the Buying Club secured a reduction in the cost of installing the technology of around 25% and lighting costs reduced by close to 80%.

The Buying Club is now being fully rolled-out, and Tesco expects hundreds of suppliers to participate as it focuses on a range of technologies and solutions. Here the combination of financial and environmental savings proved compelling.

How to collaborate

The reality is that collaboration isn’t a straightforward case of ‘just talking more’ and normalising best practice across a supply chain is certainly not easy. These are big problems that often require large-scale sharing of experience, know-how and insight, often between competitors.

It requires, in our experience, an online platform, facilitation and processes that enable what we at 2degrees call ‘fully-linked’ collaboration (this is where anybody with a problem or challenge can quickly and easily find someone(s) with relevant experience, or even the very answer that they are seeking).

If we take the example of Asda, in response to the risks posed to its fresh produce from climate change, it created a framework (the Asda Sustain & Save Exchange) that has since been applied across the company’s trading operations, building a unique industry leading initiative to work more closely with their producers to adapt and make a more sustainable supply chain.

To help interested parties on their first steps to ‘fully-linked’ collaboration we’ve produced eight non-technology lessons we have learnt from our programs that are critical to making fully-linked collaboration work within a supply chain.

The future for fully-linked collaboration is exciting and dynamic. I believe that as technology empowers suppliers and their customers alike, it will enable them to overcome the constraints of traditional supply-chains, with their insufficient ‘one up, one down’ communication, and we’ll see the creation of competitive value webs.

For the first time, this will offer the ability for operational management deep within organisations to find peers anywhere on the planet, to share knowledge and solve problems together. Capability so powerful, it will unlock a long tail of efficiency gains and innovation to help reduce risk and exposure for brands and drastically improve sustainable operations.

Martin Chilcott is CEO and founder of 2degrees, the world’s leading community for sustainable business professionals. 

Photo: Akarsh Simha via Flickr

Further reading:

Apple bans hazardous chemicals from supply chain after investor pressure

Samsung to continue using ‘child labour’ supplier

Food and drink sector cut water use by 16% in 2013

Food company General Mills commits to fight climate change

Sustainability in fashion for the future

Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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