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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

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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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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