June 05, 2008
Envisioning the Sustainable Supply Chain
by Anne Moore Odell
Innovative collaborations between suppliers, retailers and consumers need to be forged so future
supply chains support businesses and the environment.
With the rise of the Internet and the rising cost of energy, the world seems at once larger and
smaller. Hopping into the car for a drive to the mall, or driving a partially full delivery truck
are choices. The impacts of those choices, both environmental and financial, are being examined
anew by consumers, retailers and suppliers alike.
"Future Supply Chain 2016," a report
released by Capgemini and Global Commerce
Initiative (GCI) looks to the near future
and sees new concerns for companies to solve in their global supply chains, from traffic congestion
to carbon emissions to Internet sales.
The report was released as part of the Future
Supply Chain project in which 24 companies, and industry organizations, lead by GCI and Capgemini,
examined different sustainability issues in the supply chain. GCI is a working group of
manufacturers and retailers that works to enhance the supply chain. Capgemini provides consulting,
IT, and outsourcing services.
"Increasing political momentum around issues such as
resource scarcity, climate change, security, and new regulations brings to light critical
challenges that our industry will face in the coming years," said Sabine Ritter, general manager
for GCI. "The 2007 Bali Treaty and other political initiatives are driving the industry to come up
with breakthrough solutions. Such solutions require new thinking, new approaches and new
collaboration on infrastructures."
The key, the report puts forth, to a more sustainable
supply chain is sharing. Companies need to share warehouses, transportation, and, most importantly,
information to help reduce carbon footprints and cut costs.
Ritter explained, "The coming
years will see a new era for industry collaboration, which will become an important factor for
future success. In many cases, this will require companies to rethink their areas of competitive
advantage. Some business areas that are now considered to be core differentiators may well become
candidates for non-competitive collaboration with competitors, such as replenishment in inner
cities. In addition, industry collaboration will be essential to encourage governments to enact
more appropriate regulations."
"Regulations, as well as resource scarcity, climate change,
security, require new thinking, new approaches and new collaboration on infrastructures," said José
Luis Duran, chairman of the management board, Carrefour Group, and GCI co-chairman.
supply chain models use on-shelf availability and cost efficiency as the top measures of
effectiveness. While these are still important, the paradigm has shifted. With consumers shopping
24 hours a day online, on-shelf availability and delivery models need to be updated. Consumers are
also helping to drive the push toward sustainability. The growing consumer awareness of climate
change and dwindling natural resources is changing the way people shop and determine what products
Companies working in collaboration with each other would see, the report projects,
reductions in transportation costs and lead time, a growth in on-shelf availability and lower
carbon emissions. Collaboration would also positively impact the environment, shrinking companies'
carbon footprints and energy costs.
"While individual examples of these concepts already
exist, the key to their broader implementation across the industry will be improved collaboration,"
said Xavier Derycke, director of Flux Groupe, Carrefour, and co-chairman of the study's work team.
"Improving such collaboration demands new ways of working together in the physical supply chain, a
framework for which has been developed by GCI and continues to evolve."
With just over
half the world's population living in urban areas, the report divides supply chain end-users into
urban and non-urban, each with its own challenges. Growing traffic congestion is a one major
difficulty in urban areas. Traffic congestion could be addressed with shared city replenishment
hubs, communal warehouses and shared transportation to reduce vehicles on the road, energy
consumption, and carbon emissions.
Non-urban areas could be served with regional
consolidation centers where products from multiple companies are docked and distributed.
The "Future Supply Chain 2016" report grew out of an earlier report by the GCI entitled "2016:
The Future Value Chain."
Organizations taking part in the Future Supply Chain Project
included AIM/ECR Europe, Black & Decker, British American Tobacco, Capgemini. Carrefour,
Colgate-Palmolive, Crown Europe, Freudenberg Household Products, GlaxoSmithKline, Groupe Danone,
GS1US, Johnson & Johnson, Kellogg Europe, Kraft Foods, Loblaw Companies Ltd, L'Oreal, MGL METRO
Group Logistics GmbH, Nestlé, Philips, Procter & Gamble, Reckitt Benckiser, Royal Ahold, Sara Lee
International, SCA Packaging, Symrise, Unilever, and Wal-Mart Stores.
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