Companies adopt environmental sustainability programs mostly for one of three reasons: the customer asks for it, the government mandates it one way or another or the market demands it to remain competitive. But how do you know if the results of your green programs are measuring up? And how do you know if you are ready to respond when governments ramp up regulation of carbon emissions?

Unfortunately, there’s no single solution and standards vary widely. Nevertheless, transportation and logistics companies can still gain a firm grasp of the strengths and weaknesses in their sustainability programs, and develop a plan to position themselves for success as the playing field changes. They can start by taking stock of their total carbon emissions output.

The most obvious sources of greenhouse gas (GHG) emissions in the supply chain are trucks and other vehicles, such as forklifts, which use fossil fuels and participate directly in the movement of freight. But when accounting for your company’s total carbon footprint, you’ve got to consider every aspect of your daily operations and how it relates to the environment. It means understanding more than the impact of trucks, it means evaluating everything from electricity levels to natural gas use and fully understanding your operations.

Lean tools and methodologies, such as value stream mapping, are especially valuable in helping understand carbon streams and how to drive out waste from them. Understanding the larger picture provides a more complete view of where to focus sustainability efforts. All of this analysis provides insight into the true impact of your organization’s supply chain on the environment.

There are different segments which influence sustainability, and different systems for measuring their impact. Understanding what measurement is most effective for which area of your operation is an important step to accurately and fully measuring the extent of your carbon footprint. These can include, among others, the GHG Protocol, the National Greenhouse Energy Reporting (NGER) Act, the Climate Registry Information System (CRIS), EPA’s SmartWay Transport Partnership and any custom systems. Creating a plan will help to identify your carbon emissions inventory with the various registries, and integrate them into one manageable and measurable program.

The ultimate goal is putting in place effective measurement tools that provide an accurate accounting of sources of carbon emissions, and how these affect your footprint. It’s imperative to creating meaningful, realistic and, most importantly, credible sustainability and carbon management programs. A number of organizations, including Menlo Worldwide, are developing the capabilities and methodologies to help companies manage this emerging challenge.

It’s not an issue of if carbon management and reporting will become a requirement, it’s when. There’s never been a better time to take action and position your company for success. The risks of waiting for an industry standard and not starting out on your own path are simply too high.

Source: www.wikipedia.org

For the past 18 years, the University of Tennessee, Knoxville has conducted its “Annual Trends in Logistics and Transportation” study.  This year, the unprecedented challenges brought on by the global recession were at the forefront of survey participants’ minds. Economic hardship produced intense pressure to reduce costs across supply chains. Unpredictable demand for goods and services, increased customer demands, and volatile commodity and fuel prices combined to make 2009 one of the most difficult operating years ever for businesses.

Over the many years that we have been conducting the Annual Trends study there have been several economic down cycles, although none compared to the intensity of 2009. While companies always seek to become more efficient, challenging economic times drive companies to become even more relentless in their quest to reduce costs. What we discovered from our analysis is that these cost-cutting initiatives can impact firms both positively and negatively for several years after the economy recovers. What lessons have we learned that can be applied to the current situation?

• Cost-cutting must be done using a “strategic filter”
• Investments in improving supply chain capabilities should not be delayed
• Even in bad times, customer service cannot be sacrificed

The reflection on the past led us to the theme of the 2009 study — sustainable supply chain management practice. The changes we are dealing with today are not for a season. Some argue that continual economic and social change is the “new normal.” Instead of constantly re-orienting to the changing conditions, perhaps a wiser approach would be to create a supply chain practice that adapts to conditions. While the term “sustainable” has been used lately in the context of environmental and green issues, it also succinctly conveys the need to build and develop approaches and techniques for managing and operating the supply chain that will make the firm more responsive to a host of circumstances such as those cited above.

We have identified five drivers that constitute the core of sustainable practice in supply chain management. These drivers are optimization, synchronization, profitability, adaptability and velocity. They comprise the engine that will fuel growth and success. They represent capabilities that will be difficult for the competition to emulate, and they are fundamental to creating a supply chain that will outpace the competition.

Why are these drivers so critical to successful supply chains? Perhaps it is the unique set of capabilities, both individually and collectively, that they represent. The following provides a short descriptor for each driver:

Optimization is the alignment of global supply chain resources — both tangible and intangible, owned or outsourced — to facilitate the success of supply chain members.

Synchronization is the ability to coordinate, organize and manage end-to-end supply chain flows — products, services, information and financials — in such a way that the supply chain functions as a single entity.

Profitability is the result of creating value through supply chain activities. Asset performance, working capital and returns on investment for infrastructure, technology and people are some of the critical parts that create value in a global environment.

Adaptability is the degree to which respective supply chain members can change practices, processes and/or structures of systems and networks in response to unexpected events, their effects or impacts.

Velocity is the speed at which end-to-end flows occur in the supply chain. It encompasses speed-to-market for new product introduction and execution when conditions are rapidly changing.

As companies work to recover from the economic perfect storm of 2009, revisiting and reexamining their supply chain process against these five drivers of sustainable practice should be a priority. It is an exercise that will help determine if your supply chain can adapt and be successful in today’s “new normal” of continual economic and social change.

Dr. Mary Holcomb is associate professor of logistics at The University of Tennessee. The findings of her 2009 Annual Survey and more information on the five drivers of sustainable supply chain performance can be found at www.transportation-trends.com.

Source: northcom.mil

More than eight years later, the events of 9/11 continue to have a game-changing effect on supply chain design and how global commerce functions. New concerns and opportunities, such as sustainability and the increasing availability of real time data, may also affect the way supply chains are designed.  It has become an increasingly complex activity, presenting significant challenges yet compelling opportunities.

There are two principal reasons why supply chains have become more complex, and a third reason for why this complexity will likely increase in the near future.  All of these have implications for the transportation and logistics industry, including accelerated outsourcing to companies with supply chain analysis, re-engineering and management expertise.

Reason 1. Supply chain design must account for variable operating models, assumptions and business characteristics that are far more diverse and complex than before.  Globalization, the multi-modal movement of freight, regulatory and cost structures, sourcing and financing practices, international border crossings, congestion at ports (sea and air) and on roads are only a few of the factors today’s supply chains must accommodate.  This model complexity invariably results in significant algorithmic and computational challenges associated with software systems that provide visibility and actionable information upon which supply chain operational decisions are made.

Reason 2. Supply chains are inextricably linked now more than ever to the overall performance of businesses. And while supply chains must first and foremost contribute to the overall competitiveness of the enterprise, increasingly their designs have to consider more than just efficiency. In this regard, lean practices and methodologies – pioneered in the automotive manufacturing sector – are finding wider adoption in logistics. Lean practices are driving significant improvements by removing waste and shop-floor inefficiencies that, once corrected, ripple back upstream to drive more consistency, productivity and cost savings. Lean supply chains thrive when there is little variability.  However, the very nature of globally distributed global supply chains breeds variability. Disruptions are anathema to a truly lean supply chain.  Witness the rapid collapse of the Toyota production system in the late 1990s when a major fire occurred at a key brake component supplier.

The events of September 11, 2001 brought significant attention to several questions and motivated the need to think beyond lean and be able to deal with major supply chain disruptions.  Before 9/11, supply chain security meant preventing things from being removed from the logistics cycle by unauthorized parties.  In the post 9/11 world, concern has also focused on preventing disruptive elements from being inserted into supply chain operations to create violent havoc.  Today we ask:  How do we reduce the impact of new security initiatives on supply chain and freight transportation network productivity and how can we design competitively productive supply chains that exhibit “resiliency” (i.e., degrade gracefully and recover quickly) when a major disruption occurs?  In addition, there are growing concerns about the environmental impact of supply chains and how these concerns will affect supply chain efficiency and hence the company’s competitive performance.

Reason 3. A third future contributor to the increase of complexity in supply chain design and analysis is the growing availability of real time data (e.g., inventory levels, production rates, vehicle status, weather, congestion) that can support real time supply chain control.  The availability of these data is enabled by the growing presence of sensor, communications and computer technology throughout the supply chain.  Explicit consideration of uncertainty inherent in the data represents an opportunity to reach the next level of (expected) supply chain competitive performance. This will be achieved by harnessing the value of information contained in the data, invariably at the expense of more complex supply chain models and computationally demanding algorithms.

All these challenges point to the need for new thought, approaches, skills and practices for supply chain design and management. These are areas where advanced 4PLs and lead logistics providers are demonstrating emerging competency.  The growing complexity of supply chain design can be expected to further accelerate outsourcing and the development of a high growth third and fourth party logistics industry.

Ultimately this emerging skill set will enable global businesses to overcome the increasingly complex challenges of our post 9/11 supply chain world and usher in a new level of advanced supply chain design and management.

Chelsea C. White holds the Schneider National Chair of Transportation and Logistics at the Georgia Institute of Technology, where he is the Director of the Trucking Industry Program and the former Executive Director of The Logistics Institute.