green sc research report february-march 2008

C

DDD

DDDiiirrr

Copyright 200

GGGrrreeeMM

DDDiiirrreeeccctttooorrr RRRyyyddd

rreeeccctttooorrr LLLooogggiiisss

08 – Ryder Ce

TTThhheee SSSeeeeennn SSSuuuMMMaaannnaaa

SSSuuurrrvvveee

DDDrrr... WWWaaalllffdddeeerrr CCCeeennnttteeerrr f

AAAdddrrriiiaaassttt iiicccsss EEExxxeeecccuuuttt

MMMaaa

enter for Supp

SSStttaaattteeeuuupppppplllyyyaaagggeeemmm

eeeyyy RRReeesssu

fffrrriiieeeddd MMM... LLLaaafffooorrr SSSuuupppppplllyyy

aaannn GGGooonnnzzzaaallleett iiivvveee CCCooouuunnnccciii lll,

aaarrrccchhh 222000000888

ply Chain Man

eee ooofff yyy CCChhhaaa

meeennnttt

uuullltttsss

aaassssssaaarrr CCChhhaaaiiinnn MMMaaannnaa

eeezzz l,,, AAARRRCCC AAAdddvvviiiss

8

nagement

iiinnn

aaagggeeemmmeeennnttt

sssooorrryyy GGGrrrooouuuppp p

Green Supply Chain Survey Results

Green Supply Chain Forum 2008 at Florida International University February 7, 2008, Kovens Conference Center, Miami Florida, USA -Page 1- http://rydercenter.fiu.edu/greensupplychain

The State of Green Supply Chain Management

Table of Contents

I. Introduction …….…………………………..………………………………………………….2

II. Survey Overview ……………………………….……………………………………………..2

III. Profile of Respondents …………………….……………………………………………….3

IV. State of Companies’ ‘Green’/Sustainability Activities ……….……………………7

V. Analysis of “Green’ Efforts ………………………………………………………………10

VI. Key Drivers for “Green” Activities ……………………………………………………15

VII. Benefits and Expectations for the Future ………………………………………….17

VIII. Challenges to Green Supply Chain Implementation ……………..…………….28

IX. Overall Industry Implications and Conclusions ……………………………………29



I. Introduction The environment, particularly global warming, is attracting considerable attention today from the media, academics, analysts, and the business community. The interests of business and the environment were historically viewed as incompatible, but that view is starting to change. Record oil and energy prices, for example, are spurring companies to optimize their transportation operations and reduce their energy consumption. Others are exploring ways to recycle more or reduce the amount of packaging in their products. “Green is good for business,” is the new battle cry, a logical extension of Total Quality Management, Six Sigma, Lean, and other business practices. But are we still in the ‘early adopter’ phase or is this trend more widespread? What types of “green” initiatives are companies prioritizing? What factors are driving companies to become more ‘green’? Who manages these initiatives and how is success measured? Simply stated, what is the current state of Green Supply Chain Management? The Ryder Center for Supply Chain Management at Florida International University, in collaboration with ARC Advisory Group, developed an online survey to answer these questions. This report summarizes and analyzes the key findings from the survey.

II. Survey Overview The online survey was posted in preparation for the Green Supply Chain Forum at Florida International University and was also open to external supply chain respondents. This survey can be found at http://rydercenter.fiu.edu/survey/greensc/greensc.htm where it remains open until April 30th, 2008. As of March 7, 2008, seventy supply chain professionals responded to the survey. These executives came from a cross-section of companies ranging from <$50 million to >$1 Billion in sales and operating in various industry verticals. Respondents were asked a number of questions to establish the key drivers for green supply chain efforts, as well as the benefits and risks involved.



10.0%

8.6%

7.1%

12.9%

14.3%11.4%

31.4%

4.3%

Auto Aero Electronics Mft Food Beverage Cons. Pack. GoodsChemical Pharma Healthcare Retail & WholesaleTransportation & Logistics ConsultingOther Not identified

III. Profile of Respondents 14% of the respondents are in the Transportation & Logistics service sector and 39% are from Manufacturing & Retailing. The remaining 47% of respondents came from firms in Other Industries including Services and 4% of the respondents did not identify their industry. Figure 1: Firm Profile for Respondents

Industry representation is fairly evenly distributed for our sample indicating the wide range of interest in this emerging management concern.



Almost three quarters of the respondents work for companies headquartered in the United States, while 16% are from European companies and 6% from Asia/Pacific companies. This breakdown reflects the survey’s focus on the US market. Nonetheless, the relatively high response rate from US firms is further evidence that Green Supply Chain Management is gaining importance in the US. Figure 2: Firm Headquarters

73.0%

5%

16%

6%

United States Mexico & Latin America

European Union Asia & Pacific Rim



The sample has a heavy bi-modal distribution. Fifty-four percent of our sample are very large companies with revenues of $1 Billion and thirty-three percent are smaller companies with revenues below $50 Million. This indicates a heavy interest of small and large companies in how to address the new business challenges caused by sustainability issues. The lack of representation in the middle market is surprising. Figure 3: Revenue Profile

Filtering the data by industry shows that almost two-thirds of the large companies are in the Manufacturing & Retail sector, while one-third of the small companies are Transportation & Logistics firms. The fact that most early adopters of “green” supply chain practices in Manufacturing & Retail are large companies, and that most Transportation & Logistics companies, as well as consultants, are small businesses, helps to explain the bi-modal distribution Table 1: Industry by Adjusted Revenue [% of Answers]

Industry Revenue Total Small Co Medium Co Large Co

Auto Aero Electronics Mft 21.2 11.5 Food Beverage Cons. Pack. Goods 14.3 15.2 9.8 Chemical Pharma Healthcare 4.8 14.3 9.1 8.2 Retail & Wholesale 28.6 18.2 13.1 Transportation & Logistics 33.3 14.3 6.1 16.4 Consulting 23.8 14.3 6.1 13.1 Other 38.1 14.3 24.2 27.9

Total 100.0 100.0 100.0 100.0

34.4%

4.9%

0.0%

3.3%

3.3%

54.1%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55%

below 50 Million

50-250 Million

250-500 Million

500-750 Million

750 Million - 1 Billion

> 1 Billion

More aboutHealtrespocompfrom Figur

In regregioour s 32.9%25.7%remaHowewith

than half oft a quarter ath, and Safetonsibilities. Tponent of Suan organiza

e 4: Functio

gard to scopnal to internample is on

% percent o%. C-Level eining sampleever, our samresponsibilit

1122334455

Green Supply CFebruary 7

f our survey are responsity responsibThen again,

upply Chain Mational stand

onal Respons

pe of responnational, andthe US mar

f our sampleexecutives ree either has mple clearly ies across m

0%5%

10%15%20%25%30%35%40%45%50%55% 51%

Chain Forum 27, 2008, Kovens Chttp://rydercente

respondentble for Procu

bilities, it is salthough M

Managemenpoint. The d

sibilities

dents’ respod 12.9% havket.

e holds Manaepresent 7.1other titles shows that

multiple funct

%

23%

16%

008 at Florida Conference Centeer.fiu.edu/greens

ts hold functurement. Whsurprising thaanufacturingt, it has traddata sugges

onsibilities, 5ve global res

ager titles, f% of our sa(18.6%) or the survey wtional group

16%13% 1

Gree

International Uer, Miami Floridasupplychain

tional responhile 16% havat only 7% hg is generallyditionally beests this separ

54.3% have ponsibilities.

followed closample and Vidid not answwas answeres.

11%7%

n Supply Chain

University a, USA

nsibilities in Lve Environmhave Manufay recognizeden managedration persis

local, 22.9%. Clearly, the

sely by Direcice-Presidenwer the quesed by corpor

7% 6%

n Survey Resul

-Page

Logistics andmental, acturing d as a criticad separately sts.

% have e focus of

ctors with ts 5.7%. Thstion. rate leaders

ts

6-

d

al

e

IV. Over strateintermphase Figur

State of

50% of the egy or are inmediate or ae.

e 5: State o

0%

5%

10%

15%

20%

25%

30%

35%

We d'green/

s


Companies

firms particn the early stadvanced sta

f Green Activ

don't have a /sustainability' strategy.

Earga

17.6%


s’ ‘Green’/Su

cipating in thtages, whileage. This im

vities

rly - information-athering stage.

Beyea

32.4%


ustainability

his survey are about 21%plies that we

eginning - active 1-2 ars with initiatives in

progress.

In5r

29.4%

Gree


y Activities

e either don consider the are still in

ntermediate - active 3-5 years with publishedresults and objectives.

5.9%

n Supply Chain

University a, USA

n’t have a “gemselves in the “early a

-d .

Advanced - active f>5 year with designi

sustainability into processes.

14.7%

n Survey Resul

-Page

reen” the dopter”

for ng

%

ts

7-

A mocomprevenbillionsomeresultcompcomp Figur

Table

We dEarlycorpoBegisustaInterobjecAdvainto

Note:

1

1

2

2

3

3

4

4

ore differentipany size. Wnues) don’t hn in revenueewhere in thets further indpanies tend tpanies lag be

e 6: State o

e 2: State of

don't have a 'y (informationorate sustainanning (active ainability statermediate (actctives, active anced (active products and

Cells show % e

0

5

10

15

20

25

30

35

40

45

We don't 'green/susta

strate

38.1

14


ated pictureWe see that a

have green aes) are alreade middle, widicate the “eto lead the wehind.

f Green Activ

f your comp

green/sustainn-gathering stability statem1-2 years, deement, initiattive 3-5 yearswith externafor >5 years, supply chain

excluding miss

have a ainability' egy.

Early gath

28.

4.3

3.1

Revenue <$


e emerges walmost 40% oactivities at ady in the Adith almost 86early adopteway, mid-siz

vities by Firm

pany's green/

nability' stratetage, no form

ment or reportefined/documtives in progre, published rel groups). , designing su

n processes).

ing observation

‐ information‐hering stage.

Bye

6

42.9

34.4

$50 MM


when we comof small comall, while a q

dvanced stag6% in the Ea

er” phase of ed companie

m Size (Reve

/sustainabilit

egy. mal t).

mented ess). esults and

ustainability

ns

Beginning ‐ active 1‐ears with initiatives

progress.

19.0

42.9

28.

Revenue $50

Gree


mpare the stampanies (lessquarter of lage. Mid-sizearly or Beginthis movemees are fast f

enue)

ty activities

Revenue <$50 MM

38.1

28.6

19.0

4.8

9.5

‐2 in

Intermediate ‐ a5 years with puresults and obje

4.8

0.0

1

0MM‐$1B

n Supply Chain

University a, USA

age of “grees than $50 mrge compand companiesnning stagesent, where lfollowers, an

by company

Revenue $50MM-$1

14.3

42.9

42.9

0.0

0.0

active 3‐blished ectives.

Advanced>5 year wisustaina

proc

9.59.4

Revenue >$

n Survey Resul

-Page

en” activity bmillion in nies (over $1s fall s. These arge

nd small

y revenue

B Revenue

>$1B3.1

34.4

28.1

9.4

25.0

d ‐ active for ith designing ability into cesses.

0.0

25.0

$1B

ts

8-

by

1

e

Lookimoreactividoes sectofindininto” Figur

1

3

4

6

7

ing at the ane advanced tties. 85% onot have a

ors are alreadngs, that Tragreen activi

e 7: State o

0

5

0

45

0

5

Man

7.4

3

No 'green


nalysis by indthan the Traof the Transpgreen stratedy past the ansportation ities by their

f Green Activ

ufacturing &Retail

3.3

25.9

7.4

n' strategy.


dustry, we snsportation portation & egy yet, whilearly stage. & Logistics

r customers,

vities by Ind

& Tran

14.3

7

25.9

Early


see that the & Logistics sLogistics sece about 60% This data sservice com namely Man

dustry

nsportation Logistics

71.4

14.3

0.0

Beginning

Gree


Manufacturisector whenctor is either% of the Mansuggests, alo

mpanies are gnufacturers

& Othe

29.0

0 0.0

Interme

n Supply Chain

University a, USA

ing & Retail n it comes tor in the earlynufacturing ong with othgenerally get& Retailers.

er (incl. Serv

0

22.6

32.3

6.5

ediate A

n Survey Resul

-Page

sector is o green y stage or & Retail

her research tting “pulled

vices)

59.7

Advanced

ts

9-

d



V. Analysis of “Green’ Efforts When asked: “Which green/sustainability projects is your company undertaking?” Carbon footprint reduction in transportation is the top “green”/sustainability project companies are undertaking, mentioned by 57% of the respondents. Recycling of products or scrap material and reduction in energy consumption was also mentioned by more than fifty percent of the respondents. Reducing the carbon footprint of their overall supply chain network was also in the top five. Elimination of hazardous materials in products and manufacturing processes was mentioned about 27% and 21%, respectively. Surprisingly, the reduction of waste, either in packaging or manufacturing, showed very different results; reduction of packaging was mentioned 45% of the time while manufacturing waste reduction was mentioned by only 21% of the respondents. Table 3: Green/Sustainability Projects ‘Green’/sustainability projects Check All Top 3 Optimize transportation operations to reduce carbon footprint 57.10% 51.40%Recycle returned products or scrap material 57.10% 38.60%Reduce energy consumption in manufacturing and buildings 54.30% 45.70%Reduce packaging 45.70% 25.70%Redesign supply chain network to reduce carbon footprint 30.00% 20.00%Increase use of renewable energy sources (e.g. solar, wind) 27.10% 18.60%Eliminate/reduce hazardous/toxic materials from products 27.10% 12.90%Eliminate, reduce, or repurpose manufacturing waste 24.30% 11.40%Eliminate/reduce hazardous/toxic chemicals from manufacturing processes 21.40% 11.40%Implement Design for Environment practices in product development 18.60% 11.40%Other 10.00% 8.60%

Not much activity is taking place to implement ‘Design for Environment’ practices in product development or to eliminate/reduce hazardous or toxic chemicals from manufacturing processes. There could be two possible reasons: (1) these initiatives may require more time and investment (long payback period) than other types of initiatives; and (2) most survey respondents may not be fully aware of the initiatives taking place in product development and manufacturing, since only about 7% of the respondents have responsibility in these areas. Overall, it appears that companies are tackling the ‘low hanging fruit’ first, either activities that are already part of standard practices, such as optimizing transportation, or activities that are reactionary responses to acute problems, such as escalating fuel and energy prices.

Non‐G

T

Whensupplsurprno plindusmeasquick Figur

Tablegreen

Compe

Non-GCarbon

Techn

Consu

Third P

GovernProtec

Transp

Custom

Suppli

Government O

Technolog

3

Governm

Transportatio

Yes, working

Not working

Not working

n it comes toly chain activrising: only 3ans to engastry circles! surement mekly or easily,

e 8: Externa

e 4: Which on/sustainabil

etitors

Government Orgn Disclosure Pr

ology Compani

ltants

Party Logistics

nment Agenciection Agency)

portation Comp

mers

ers


Competitors

Organizations

y Companies

Consultants

3PL providers

ent Agencies

n Companies

Customers

Suppliers

g with these pa

g with these pa

g with these pa

o cooperatiovities domin3 respondentge with themIt also sugg

ethodologieseven at the

al Cooperatio

of the followility initiative

ganizations (e.roject)

ies

(3PL) provider

es (e.g. Environ

panies


0 10

3

11

16

17

21

21

10

artners on the

artners but exp

artners and no

on with exterates. Anothets reported wm. This is nogests that acs for green a industry lev

on on Green

ing external s? [Number

Yes,thes

th

g.

rs

nmental


0 20

1

1

26

30

37

21

1

1

ese issues

ploring the po

o plans to enga

rnal parties, er interestingworking withot the unifiedhieving stan

and sustainavel.

Efforts

parties are yof responde

, working with se partners on hese issues

3

11

16

17

21

21

26

30

37

Gree


30

17

15

16

18

16

35

ssibility

age with them

working witg finding, alth competitord approach tndard metric bility activiti

you workingents]

Not workinthese partn

exploringpossibil

10

21

17

15

16

18

16

18

12

n Supply Chain

University a, USA

40 5

18

12

17

17

17

16

14

11

partners on th

th suppliers othough not crs, and 35 sathat is talkeddefinitions aes will not h

g with on

ng with ers but

g the lity

Notthesno pwith

n Survey Resul

-Page 1

50 60

8

7

hese issues

on green completely aid they havd about in and

happen

t working with se partners andplans to engage

them on theseissues

35

17

17

17

16

14

11

8

7

ts

1-

ve

d e e

Almoto mestandseriousustafor pawith tTable

Figur

Table How compMetricMetricMetricMetricMetricWe d

st 40% of theasure greendard metrics us questions

ainability proackaging andthe top greee 2.

e 9: Green/S

e 5: Green/S

would you chapany's green/sucs for other inics for recyclingcs for hazardoucs for energy/fcs for packaginon't have gree

Me

Metrics for h

Metrics fo

Metrics f

We don't h


he 56 firms tn/sustainabido not yet e

s about how ojects if they d energy coen/sustainab

Sustainability

Sustainability

racterize the stustainability acttiatives

g. us/toxic materifuel reduction. ng reduction. n/sustainability

trics for other

Metrics for

hazardous/toxireduction.

r energy/fuel r

for packaging r

ave green/sustmetrics.

Early


that are actility results inexist or are well compacan’t establ

nsumption ability projects

y Metrics by

y Metrics by

tate of your tivities?

ial reduction.

y metrics.

0%

initiatives

recycling.

c material

reduction.

reduction.

tainability

2

Beginning


ve with green their firmsstill being denies can actlish a baselinare the mosts companies

y State of Gr

State of Gre

Early 0% 0% 2% 4% 4% 30%

10%

2%

4%

4%

4%

4%

4%

16

16

2%

2%

2%

5%

9

Intermed

Gree


en activities . These reseveloped in tually managne and meast common. Ts are doing, a

een Initiativ

een Initiative

Beginning 4% 4% 4% 16% 16% 7%

20%

30%

6%

6%

5%

5%

9%

diate Adv

n Supply Chain

University a, USA

do not havesults indicatethis area. Itge their greesure progresThese metrias shown pr

ves [Observa

es [%]

Intermediate 0% 2% 2% 5% 5% 2%

30%

7%

%

%

11%

11%

vanced

n Survey Resul

-Page 1

e any metricse that t also raises en/ ss. Metrics cs coincide reviously in

ations]

Advanced 2% 5% 9% 11% 11% 0%

40%

% 2%

ts

2-

s

Total 5% 11% 16% 36% 36% 39%



More than a third of the firms responding to the survey either did not track their competitors or felt that they are lagging their competition and industry peers in regard to green activities. These numbers reflect the fact that, as the previous page highlights; many companies lack the metrics to adequately understand the scope and progress of their sustainability activities. If companies are unclear about what they’re doing internally, how can they compare themselves against other firms? Then again, almost two thirds of our sample felt that their companies were at least on par with their competition in regards to green activities. These results are more likely based on perception than actual benchmark data. Figure 10: Benchmarking Green Efforts against Competition

10.80%

35.40%

29.20%

24.60%

Our company lags the competition and industry peers.Our efforts are comparable to the competition.Our company is ahead of the competition.Don't know ‐We don't track our competitors' efforts.

Greenby Enstatedapprophase Figur

dep

Pa

n efforts arenvironmentad, companieoach is domie).

e 11: Respo

Note: UnMaCoAdThGeWeCoInfLeThOuMyimHaCu

Part odep

We have a ''Cpartment with

m

A cross‐funexecutive fu

rt of our Envirdepartm

Part of ou


e mainly run l, Health, an

es are managinant at this

onsibility for

nder ‘OTHER’ tharketing Initiatiommittee Membd hoc projects ahrough a Greeneneral Corporate have formed onservation depformally by a gad by EH&S de

his is a newly reur Customer bay company is oplementation

as yet to be defustomer manda

of our Regulatpartment's res

Corporate Sust fully allocatedmanagement.

nctional team mully allocated t

projects.

ronmental, Heament's responsi

ur Supply Chairesponsibili


out of the Snd Safety deging sustaintime (anoth

Green Effort

he following wave bers with otheracross a wide rn Committee te Mandate buta Green Comm

pt and operatiogroup of interesepartment withegistered compase interest in ewner operated fined ated, and define

ory Compliancsponsibilities.

tainability'' d resources an

managed by anto sustainabilit

alth, and Safetibilities.

in departmentties.

Othe


Supply Chainepartments aability effort

her indicator

ts

as mentioned: r full time jobs range of discipl t still not downmittee with exeons sted consultanth engagement apany embedding GHG...I strive to co ed by the custo

0%

ce

nd

n ty

ty

t's

er

8.20%

11

Gree


n Managemeand cross-funts in a variet that we’re s

ines to the trenche

ecutive sponsor ts across the com G Modeling in o

ontinually educa

omer (major re

10%

%

.50%

14.80%

18.00%

21.

n Supply Chain

University a, USA

ent departmenctional teamty of ways, astill in the ‘e

es rship as part of

mpany

our software ate myself on s

etailers).

20%

%

.30%

26.20%

n Survey Resul

-Page 1

ent, followedms. Simply and no singlearly adopter

f our first steps sustainability

30%

ts

4-

d

e r’

s

VI. K A detdevelreasosurpr Figur

It shosettincustogreendriveleade

Pre

Key Drivers

tailed analysloped by askons your comrising.

e 12: Green

ows that corng the agendomers are alsn supply chan by a comb

ership to take

essure from Non‐

Reduce

Priority

Pressure f

Compliance wit

Corpo


for “Green”

sis of the reaking the quempany is act

Activity Key

rporate leadeda. It also sso strong foain managembination of ree notice.

Government Org

Pressure from

Pressure from co

Pressure from

Pressure from

Improve p

e hazardous/toxic

Improve publi

Reduce carbon

y of CEO/Board o

from customers/

th government/r

Re

orate responsibil


” Activities

asons why coestion: “Pleasive with gree

y Drivers

ers have grashows that crces in getti

ment has moegulatory an

0

ganizations

Employees

ompetitors

m Investors

m suppliers

roductivity

c materials

ic relations

n emissions

of Directors

consumers

regulations

educe costs

lity agenda

0

0

0

1

1

1

1

3

0

0

3

1

2

3

Ranked 1


ompanies ense rank, in oen/sustainab

asped the imcompliance wng companie

oved beyondnd market fo

5 10

3

5

7

9

10

11

2

3

1

4

3

3

6

7

2

3

5

2

0

2

7

Ranked 2

Gree


ngage in greorder of impobility initiativ

mportance ofwith regulatioes to act. T isolated pre

orces that ha

15 2

21

14

9

6

9

12

7

5

Ranked 3

n Supply Chain

University a, USA

een activitiesortance, theves?” The re

f sustainabilitons and preshe analysis essure pointave caused c

0 25

6

4

6

5

n Survey Resul

-Page 1

s was top 3 esponse was

ty and are ssure from reveals that s and is corporate

30 35

7

ts

5-

s

WhencompSustaprodureducof thecost rlendstaking Figur

n asked: “Wpany's greenainability/envuctivity benection projecte respondenreduction dos support to g when justi

e 13: Justific

Note: Com1 Sustai

cost o2 Cost re3 Produc4 Regula

enviro5 Quality6 Produc

enviro

0%

5%

10%

15%

20%

25%

30%

35%

40%

Susp


hich stateme/sustainabilivironmental-efit. The secots that as a bnts. The comominate the the “green iifying green

cation for Gr

mplete statemenability/enviror productivityeduction projct enhancemeatory or mand

onment and/oy improvemenctivity improv

onment.

stainability projects

Credpro

35.5%


ent best chaity projects?l-improvemeond most imbyproduct be

mbinations ofjustification s good for binitiatives.

reen Efforts

ents for categonmental-imp

y benefit. ects that as aent projects tdate complianr improve cosnt projects th

vement projec

Cost uction ojects

Prodenhanc

proje

27.4%

1


aracterizes th” more than

ent projects tmportant justbenefit the enf environmenfor green ac

business” pe

gories are as provement pr

a byproduct bhat as a byprnce projects tsts, productivhat as a byprocts that as a b

duct ement ects

Regulatocomplianproject

4.5%

11.

Gree


he primary jn a third of ththat as a byptification for nvironment lntal efforts tctivities at arspective ma

follows rojects that as

benefit the enroduct benefitthat as a byprvity, and/or quoduct benefit byproduct ben

ory nce ts

Quality improveme

projects

3%

8.1%

n Supply Chain

University a, USA

ustification ohe respondeproduct havegreen proje

listed by abothat are synebout 60%. Tany compan

s a byproduct

vironment. t the environmroduct benefituality. the environmnefit the

ent Productivity improvement

projects

%

3.2%

n Survey Resul

-Page 1

of your ents chose ve a cost or ects was Cosout a quarteergetic with This result nies are

t have a

ment. t the

ment.

t

ts

6-

st r

VII. Four orienenha57 mincrea Figur

Re

Benefits

of the top fited benefitsnced public entions). Thased consum

e 14: Expec

duced raw m

Re

Re

Increased b

Most im


and Expect

ive expected. The top twrelations (50

he third is remer loyalty a

ted Benefits

material or co

educed manu

Reduced p

Reduc

educed servic

Im

Improve

Increased

Incre

brand loyalty

Reduce

Enhance

Enhanced p

mportant


tations for t

d benefits gewo benefits t0 out 57 meduced energ

and revenues

s generated

mponent cos

facturing cos

packaging cos

ced uncertain

ce related cos

mproved quali

ed productivi

d market sha

eased revenu

y by consume

ed energy cos

ed brand imag

public relatio

Important


the Future

enerated by that rate eithntions) and gy costs (49 s (44 and 45

by Green Eff

0 10

sts

sts

sts

nty

sts

ity

ity

re

es

ers

sts

ge

ns

4

5

6

8

9

12

15

17

18

19

20

2

Less imp

Gree


green activither most impenhanced bout of 57 m

5 mentions,

forts

20 30

8

9

0

21

24

26

17

32

12

31

25

22

24

6

1

portant N

n Supply Chain

University a, USA

ties are exteportant or imbrand image mentions) fol

respectively

0 40 5

4

27

25

29

28

26

6

1

8

8

12

13

10

4

2

28

1

5

Not importa

n Survey Resul

-Page 1

ernal marketmportant are(49 out of lowed by

y).

50 60

8

1

4

3

2

1

2

1

ant at all

ts

7-

t e



When filtered by industry the results are even more interesting. Only 16% of the respondents working in the Food, Beverage, Consumer Packaged Goods industry see brand image as the most important benefit and instead focus on energy savings at (almost 67% mentioned it as the most important benefit). Retail and Wholesale representatives share that view and 75% of the respondents mentioned energy savings as the most important benefit. Transportation and logistics companies expect increased revenues (55%) and consultants clearly focus on brand image and public relations as the most important benefit (71% and 57%, respectively) for their business. Table 6 - Benefits derived from going 'Green' by Industry Category

Industry

Auto Aero Electronics

Mft

Food Beverage

Cons. Pack. Goods

Chemical Pharma

Healthcare Retail &

Wholesale Transport & Logistics Consulting Other

Enhanced public

relations

Most important

n 3 2 1 4 3 4 7 % 42.9 40.0 25.0 50.0 33.3 57.1 41.2

Important n 3 2 3 3 5 2 8 % 42.9 40.0 75.0 37.5 55.6 28.6 47.1

Enhanced brand image

Most important

n 2 1 0 3 3 5 7 % 33.3 16.7 0.0 37.5 37.5 71.4 41.2

Important n 4 2 4 3 5 2 8 % 66.7 33.3 100.0 37.5 62.5 28.6 47.1

Reduced energy costs

Most important

n 2 4 1 6 1 1 5 % 28.6 66.7 25.0 75.0 12.5 12.5 31.3

Important n 4 2 2 2 4 5 10 % 57.1 33.3 50.0 25.0 50.0 62.5 62.5

Increased brand

loyalty by consumers

Most important

n 1 1 0 3 3 5 6 % 16.7 20.0 0.0 37.5 37.5 71.4 35.3

Important n 3 3 3 3 4 1 8 % 50.0 60.0 100.0 37.5 50.0 14.3 47.1

Increased revenues

Most important

n 0 2 1 4 5 2 4 % 0.0 40.0 33.3 50.0 55.6 28.6 23.5

Important n 4 2 1 3 4 4 9 % 66.7 40.0 33.3 37.5 44.4 57.1 52.9

WhenMore think effortthe s Figur

n asked: “In efficient, Dothat overall

ts. This provustainability

e 15: Efficie

0%

10%

20%

30%

40%

50%

60%

70%

M


your opinioon't affect ef supply chai

vides furthery efforts.

ency Assessm

More efficien

67.2%


on, green supfficiency, or in managemr evidence th

ment on Gree

nt Don't


pply chain inLess efficien

ment will becohat the indus

en Supply C

t affect effic

24.6%

Gree


nitiatives mant?” two thirome more estry expects

hain Initiativ

iency L

n Supply Chain

University a, USA

ke our supprds of all resefficient due

bottom line

ves

ess efficient

8.2%

n Survey Resul

-Page 1

ply chain spondents to green results from

t

ts

9-

m



When asked: “Do you expect a change of importance of green transportation and logistics issues over the next three years?” 83% of the respondents felt that it will increase in importance, while only 10% expect it to rise to #1 priority. No respondent thought of it as a trendy “fad” and only one respondent thought it may decrease in importance. Figure 16: Change of Importance on Green Transportation/Logistics Issues

10%84%

5%1%

It will become the No.1 priority.It will become more important.It will remanin at the same importance level.It will be less important.



A more differentiated picture emerges when we filter the previous responses by company size and industry respectively. We see that almost 50% of medium sized companies are convinced that green supply chain management will become their top priority. Not surprisingly 25% of consulting firms believe that green issues will become their top priorities in the next 3 years, reflecting the overall importance of the topic and its impact on their consulting work. Surprisingly, only in the Chemical, Pharma and Healthcare sector do we find a significant percentage of respondents to identify green issues as top priority. As expected, none of the respondents thought green issues will lose importance. Table 7 - Importance of Green Transportation and Logistics Issues

by Company Size and by Industry

Do you expect a change of importance of green transportation and logistics issues over the next three years?

It will become the No.1 priority.

It will become more important.

It will remain at the same

importance level.

It will be less important.

Company Size [%] Small Co 5.00 90.00 5.00 Medium Co 42.86 57.14 Large Co 6.45 83.87 6.45 3.23 Industry [% within Industry] Auto - Aero - Electronics Mft 71.43 14.29 14.29 Food - Beverage - Cons. Pack. Goods 100.00 Chemical - Pharma - Healthcare 20.00 80.00 Retail & Wholesale 12.50 87.50 Transportation & Logistics 10.00 80.00 10.00 Consulting 25.00 75.00 Other 5.88 88.24 5.88



One of the most surprising results were derived from questions about consumer attitudes. When asked: “In five years, how much importance do you believe customers/consumers will place on ‘greenness’ when making purchasing decisions?” two fifth off all respondent still look at sustainability efforts as taking a backseat to or being just one part within the tradeoff system of cost, quality and service. In other words, while companies expect a halo effect from the green effort when it comes to brand equity and public relations issues, firms are well aware of the fact that end customers will demand ‘greenness’ within the current market value system. Figure 17: Importance of Greenness in Consumer Purchasing Decisions

34%46%

20%

Some importance, but cost, quality, and service will still dominate purchase decisions.

An equal balance between greenness, cost, quality, and service.

Very important; willing to make cost or service tradeoffs for 'green' supplier.

We th‘greeproduthat athe liall co Figur

W

hen asked mn’ products aucts would yapply.” The st. Food and

onsumers or

e 18: Enviro

Ho

F

Washing Mac

Televi

Comp

Clot

T


managers to and services

you pay 10%two big ticked Washing Mless to willin

onment Frien

0%

Car

ouse

Food

hine

ision

puter

hing

Toys


speculate ons with the qu

% more for aet items in f

Machines follngly spend 1

ndly Option

10% 20

27.10%

24.30%

22.90%

20.00%


n consumer uestion: “As n ''environm

family purchaow. Respond

10% more fo

% 30%

68.

50.00%

50.00%

50.00%

Gree


willingness a Consumer

mentally-frienases, house dents expecor electronic

40% 5

60%

n Supply Chain

University a, USA

to spend mor, which of tndly'' option?and car are

ct only abouts, clothing a

0% 60%

n Survey Resul

-Page 2

ore for the following? Mark all

e at the top ot a quarter oand toys.

70%

ts

3-

g

of of

We th“In fivwhen Figur

Againexistiequafavorundebusin

Sos

Ves

hen turned ove years, ho

n selecting su

e 19: Impor

n, almost 80ng value prol consideratirs with businrstand how

ness proposit

No

me importanservice will st

An equgreenness,

ery importanservice trade


our attentionow much impuppliers?”

rtance of Gre

% of responopositions ofon. Only abo

ness partnersimportant it tion.

o importance

nce, but cost,till dominate decisions

ual balance bcost, quality

nt; willing to meoffs for 'gree


n to businessportance wil

eenness in S

ndents feel tf cost, qualitout 20% of s. It is very cis for green

e whatsoever

quality, and partnering

between , and service

make cost or en' supplier


s to businesl companies

Selecting Sup

that businessty and servicthe respondclear that re

n activities to

0% 5% 10

0.

Gree


s relationshis place on gr

ppliers

s partners wce or put gredents expectespondents fo support an

0% 15% 20%

00%

21.30%

n Supply Chain

University a, USA

ips with the reenness/ su

will mostly looeenness into greenness tfor this survend enhance t

25% 30%35

39.30%

39.30%

n Survey Resul

-Page 2

question: ustainability

ok at the o the mix at to carry ey the existing

5% 40%

ts

4-

A wathe aresult More busingreencost o Figur

0

10

20

30

40

50

60

rning signal nswers to tht of ‘greener

than half ofness. Yet then activities, bof doing gre

e 20: Chang

0%

0%

0%

0%

0%

0%

0%

I


emerges whhe following r’ products o

f our responey also undebut instead o

een business

ge in Costs o

Increase

53.2%


hen one lookquestion: “D

or services w

dents feel thrstand the don the trade cannot be c

of doing Busi

D


ks at the preDo you expe

will increase,

hat green acdoing busineeoff betweencontrolled, s

iness due to

ecrease

27.4%

Gree


eceding analect costs of ddecrease, o

ctivities add ess with custn costs, qualustainability

o Greener Pro

No

n Supply Chain

University a, USA

ysis and comdoing busineor remain un

to the cost otomers does ity and serv

y efforts may

oducts

Change

19.4%

n Survey Resul

-Page 2

mpares to ess as a changed?”

of doing not rely on ice. If the y suffer.

ts

5-

A feaanswclimapract Figur

At thein gregreen10 re Figur

123456789

ar of increasewered yes to ate change wtices?”

e 21: Increa

e same timeeen activitiesn'/sustainablespondents.

e 22: Marke

0%10%20%30%40%50%60%70%80%90%


ed regulationthe question

will lead to in

ase in Regula

e respondents. The questle business p

et Force Influ

Yes

88.70%


n continues n: “Do you tncreased reg

ation on Gre

ts also feel ttion: “Do youpractices?” w

uence in Gre


to exist. Almthink the futugulations on

een Practices

that market u think markwas answere

een Practices

No

11.30%

Yes, 93.50%

No

Gree


most 90% ofure legislativ'green'/sust

s

forces will pket forces wed with a yes

s

%

o, 6.50%

n Supply Chain

University a, USA

f all respondve landscapetainable busi

pressure themill lead to incs by more th

n Survey Resul

-Page 2

ents e regarding ness

m to engagecreased han 9 out of

ts

6-

e

f

The mEnd-C Figur

0%

10%

20%

30%

40%

50%

60%

70%

80%

market forceCustomer De

e 23: The M

%

%

%

%

%

%

%

%

%

End‐CuDem

7


es that were emand, Bran

Market Forces

ustomer mand

71.40%


most frequend Perceptio

s

Brand Perceptions

51.40%


ently mentions, and Raw

Raw MaCos

%

22

Gree


oned to impaw Materials C

aterial ts

2.90%

n Supply Chain

University a, USA

act green effCosts.

Other

4.30%

n Survey Resul

-Page 2

fort were:

ts

7-

VIII. We cimplemeasthroubasedchalle Figur

The oUnivewithinClearbusinmanu

O

Re

Ge

Challeng

onclude our ementing sussurement meughout indusd on quality,enge.

e 24: Supply

overriding thersity in Febn the basic brly, industry ness processufacturing co

Changing o

Obtaining chem

New or

Obtaining c

designing supp

tting suppliers

Balancing g

Lack of glob


es to Green

analysis by stainability aethodologiesstries. The n, costs and s

y Chain Imp

heme for theruary 2008 wbusiness prois longing foes includingosts down w

Traini

our manufactu

mical composit

more stringen

carbon‐emissi

ply chain netw

s and trading p

green efforts w

bal standards

R


n Supply Ch

listing the cactivities. Las points to theed to keepservice expe

lementation

e green suppwas the inteoposition andor a better u costs and h

while not neg

ing employees

ring processes

Other

tion data from

nt government

ons data from

work to reduce

partners to act

with customer

in metrics and

ank 1


hain Implem

challenges thack of standahe need for customers’ ctations are

Challenges

ply chain foruegration of gd green suppnderstandin

how green efgatively impa

0% 10%

s

s

r

m …

t …

m …

e …

t …

r …

d …

3%

4%

4%

6%

9%

11%

26%

29

6%

7%

3%

13%

7%

13

4%

6%

6

Rank 2

Gree


mentation

hat respondeards in regamore knowleexisting valuthe second

um at Floridreen supply ply chain impg of how grefforts can beacting quality

20% 30%

%

9%

3%

11%

10%

7%

6%

11%

13%

Ran

n Supply Chain

University a, USA

ents listed wrd to metricsedge develoue propositiomost impor

a Internatiochain manapact on the een efforts ie harnessed y and service

% 40% 50

%

14%

%

11%

11%

k 3

n Survey Resul

-Page 2

when s and

opment ons that arertant

nal agement bottom line.mpact the to bring e.

0% 60%

%

ts

8-

.



IX. Overall Industry Implications and Conclusions

The State of Green Supply Chain Management today can be summarized this way: We are still in the early adopter phase, and the leaders are mostly large companies (over $1 billion in revenues) that are focusing their efforts primarily on ‘low hanging fruit’ opportunities to reduce costs, improve the environment, and enhance public relations.

All of the companies surveyed believe “greenness” will have some importance in consumer purchasing decisions and supplier selections in the future, and 20% believe it will play a “very important” role. In addition, almost 90% of the companies surveyed believe new government regulations related to climate change and sustainability will emerge down the road. Therefore, it’s clear that companies are not treating sustainability as a fad, but as a new aspect of achieving business success, along with cost, quality, and service. This is why sustainability efforts are being driven by the CEO and the Board of Directors at many companies.

But much more work is required, particularly to develop and implement standard metrics and measurement methodologies. History has shown repeatedly that standards accelerate the adoption of technologies, products, and business processes; the same will hold true for sustainability practices once globally accepted standards are developed and implemented, and government regulations are harmonized around the world.

Similarly, in order to achieve the greatest environmental and financial benefits, in the shortest amount of time, sustainability and “green” efforts must be viewed as a global business initiative that extends across companies and industries. This implies that companies must not only work collaboratively with their suppliers and customers, but also with their competitors. However, almost none of the companies surveyed are currently working with competitors on sustainability efforts, and almost none plan to work with them in the future. While opportunities may exist for companies to leverage “green” practices as a competitive weapon, you can argue that even greater benefits exist, for the entire business community and the planet, if companies instead share their experiences and successes in this area with one another.

green sc research report february-march 2008

Documents