We've been writing and speaking about green developments in the supply chain world for a few years. In the beginning, the theme centered on the transition of green from a curiosity embraced by wackos and malnourished tree-huggers into a mainstream movement that both CEOs and CFOs could and did get behind.
Then, we examined the question of if ? and how ? economic hard times were affecting green programs. The conclusion, as illustrated by our Georgia Tech audience, was that progressive organizations were continuing to move ahead, while the short-term thinkers were pulling in their horns. (Not so curiously, the same companies that are continuing green commitments are often also those that continue to invest in people development, despite a tough economy.)
The most important positive development in today's world of green is the concept of green supply chains. Not long ago, individual companies ? early green adopters ? made much of their accomplishments. An auto assembly plant with virtually no landfill output; a parcel delivery behemoth with innovative routing techniques to reduce fuel consumption; numerous plants and distribution centers with advanced lighting systems, activated by motion detection, experimentation with hybrid delivery truck fleets ? the list goes on and on.
But today, in the supply chain world, it?s not enough to get smug about your own progress and accomplishments in the realm of green. Your green is nearly worthless if your upstream suppliers aren?t equally green. And, you?re both in trouble if the ultimate downstream customer doesn't care.
As we've often said, our world is populated by competing supply chains. So, to be sustainably green, the entire supply chain needs to be pursuing green objectives in sync with one another. In fact, the Council of Supply Chain Management Professionals (CSCMP) defines sustainable supply chains in those terms.
Others are catching on. Inbound Logistics magazine just published a list of green supply chain partners. They may not have gone quite far enough, but they're going in the right direction. And they've enlisted their printer and their suppliers to join in the elimination of waste in their own supply chain. Eyefortransport has issued a Carbon & Sustainability Report to go along with their Sustainable Supply Chain Summit. The report isn't focused on what a company ought to do, but on what supply chains need to do.
Like it or not, Wal-Mart has taken a huge step in requiring its suppliers to meet green criteria. Where Wal-Mart goes, others are almost forced to follow, of course. And, many Wal-Mart suppliers are also part of other retailers? supply chains, which will help to ?green? them, as well.
We think the emergence of this issue is a huge net positive; we also think it will tax business relationships, as supply chain partners figure out how to link their individual green initiatives. It may also be stimulating greenwash claims by those who?d rather talk the talk than walk the walk.
The Mantras
In the early days - those long-ago peace, love and tie-dyed T-shirt days the call to action (or inaction, as appropriate) was Reduce, Reuse, Recycle! That's still a good starting point in green thinking. The issues get more complicated, though, as we examine alternatives. Perhaps Replace has become the fourth Green R. Replace, by the way, only sometimes assists the Reduce imperative.
We are continuously searching for alternatives in power - wind, solar, hydro. These alternatives get directed toward home, office, and operating facilities, prospectively affecting power consumption in all segments of the economy.
Choices, at least in concept, for fuel all have advocates hybrid, electric, hydrogen, bio. Sometimes we fear that the proponents of each get over-fixated on their favorite as a singular solution, and fail to consider roles for each in periods of transition toward whatever the ultimate solution may prove to be.
The search for replacements is certainly not limited to vehicle power. We are continuously looking at less hazardous and more natural cleaning products, less-polluting fertilizers, less-toxic pesticides, and so on.
And, power options for movement are not limited to highway vehicles. In distribution operations, CNG, LP, and other alternatives are emerging for lift trucks, which have already benefited from newer quick-charge battery technology for the electric versions.
There are a number of other "re" factors that support the core mantras, many closely related to operations in the costly "re"-verse logistics component of supply chain management. They include, repair, recovery, refurbishment, re-purposing, re-channeling, and repositioning.
Recovery is particularly tricky, with some directed at extracting materials of value from what would otherwise be trash, and some focused on removing and safely handling more toxic substances. These are not mutually exclusive categories.
On the subject of potentially dangerous materials, a reality, at least in the near term, is that what are called hazardous materials (HazMat) will be with us for quite a while as ingredients, as manufactured products, as cleaning and maintenance agents, as pesticides and herbicides/fungicides, and as waste, either byproduct or trash. We have seen a sea change in how these are handled, stored, transported, and disposed of and are likely to see even more guidance and regulation in this area.
An Inconvenient Distraction
The past few years have seen an acidic, even vitriolic, debate about global warming. Is it real? Is it man-made? Is it an illusion? Was Mount St. Helens worse than any fluorocarbon pollution? All of that is irrelevant. And, it's making us take our eyes off the ball.
Both sides of the argument are not above manipulating facts, data, and anecdotal evidence to suit their political positions. Those of us trying to draw a bead on reality tend to get cynical whenever either side goes public with the latest misinformation. Most of the combatants are sincere even the politicians and talk show hosts and many are honest. But we can't afford to wait while they slug it out to get busy with the real work at hand.
Our real interest in the greening of our personal and corporate lives lies in simple stewardship of our resources, and in creating sustainable levels of heat, light and power for future generations.
Take My Hybrid, Please . . .
It's not easy to know whether our well-intentioned green efforts are actually net green, on either corporate or personal bases. Seat-of-the-pants analysis and conventional wisdom are not reliable guides in this area.
For example, is it really a good green thing to pollute air and water somewhere, and consume who knows how much fossil-fuel generated power in sophisticated battery manufacture. Then, the battery gets shipped to Japan, and enters another power-consuming manufacturing and assembly process. Next, the finished product, including the well-traveled battery, gets shipped to the US, where someone can feel really, really good about driving a highly responsible hybrid vehicle to Whole Foods and getting his or her groceries packed in a re-usable insulated bag. (Full disclosure: we drive hybrid automobiles, and sometimes shop at Whole Foods.)
As our thinking moves from hybrid solutions to all-electric transportation, the awkward question arises of how much coal-generated, or nuclear-generated, or whatever-generated power will be needed to allow plugging these things into the wall socket at night without bringing down the entire power grid.
Unthinkably Rethinking
Cost structures are shifting in a resource-constrained supply chain world. Sometimes motivated by high fossil fuel prices and an uncertain future in both cost and availability, and sometimes considering the ? at least initially costs of alternatives, companies are taking harder looks at once-standard practices.
Consider this: a number of companies are beginning to think that the sacred cow of same day/next day delivery might make excellent hamburger. ""When it absolutely, positively has to be there overnight" might pass out of our litany of catch-phrases. Where this was once the hallmark of fast, efficient, supply chains, it may now be a cost and resource burden that does not add net value.
How things can change . . .
On The Downside
Perhaps it was inevitable. The pressure to be green, the expectations of trading partners ? and end customers for more green business behavior, may be driving those who either can?t, don?t know how to, or choose not to, walk the walk to invest loads of energy into talking the talk.
Enter "greenwashing."
Whitewashing was once an honorable practice, providing a clean finish to rough surfaces at very low cost. In time, it was used in applications in which we would apply paint today. Think Tom Sawyer and the fence. Later, it came to mean a glossing over, a covering up, to disguise the truth of a matter. It is in that sense that we use "greenwashing"" today.
The practice of greenwashing, and the hunt to expose it, are global conditions.. Australia, the United Kingdom, continental Europe (at least so-called Old Europe). That's not surprising. We need only to look at the European Union and a few others to sense the direction that the green movement is going, and government's role in it.
We don't hear much out of China, India, or Russia, though. Hmmm.
TerraChoice, an environmental marketing firm, has released startling studies indicating enormous percentages of green claims were really greenwashing, and has postulated seven (deadly) sins of greenwashing. They are:
- Sin of the Hidden Trade-Off: e.g., claiming energy efficiency while containing hazardous materials, or claiming ?sustainably harvested? without mentioning the thousands of miles of transport required to get the product to market
- Sin of No Proof: e.g., ?certification? without documentation
- Sin of Vagueness: e.g., a claim of ?100% natural? when some naturally-occurring substances are in fact hazardous, or claiming ?recycled content? without specifying how much or whether it?s pre- or post-consumer recycling
- Sin of Irrelevance: e.g., touting freedom from CFCs, which have been banned for over twenty years
- Sin of Lying: e.g., falsely claiming certification/recognition by accredited standards organizations
- Sin of Lesser of Two Evils: e.g., earth-friendly pesticides or organic cigarettes
- Sin of Worshiping False Labels: e.g., implying through language or images endorsement by a third-party when no endorsement exists
In addition, the manipulation of language can prop up some greenwashing. Think ?clean coal? or labeling any paper product as biodegradable. Or the Clear Skies Initiative, which weakens air pollution regulation. Then, there are the bottled water giants who tout using less plastic in specially-shaped bottles, 80% of which wind up in landfills anyway. Or those companies that promote electronic billing and payment to save paper, and turn around to deluge us with direct mail solicitations.
Images are also used often, with pictures of trees and meadows on products that are being made from the same old materials in the same old way.
A couple of trends are evident in all this. One is that oversight is growing and tightening, from governments and responsible NGOs both. Another is that consumers are better-educated in the green arena, and a growing backlash is a possibility.
One can't help but wonder how much progress might be made in green initiatives if all the time and effort going into greenwashing were to be redirected.
What About Cap And Trade?
More tricky waters to navigate. The objective is laudable - reducing pollutants. There are previews of government-managed approaches in Europe, and hints of the future in the US Clean Air Act.
In short, there will be limitations on how much pollutant may be emitted, with penalties for exceeding the cap. Those falling short of the cap, i.e., doing better, will have credits equal to the difference between the cap and the actual. Those credits may then be sold to companies exceeding the caps, which presumes that the price paid for the credit will be less than the penalties.
Opponents of the approach worry about a handful of issues. One is that a market in credits may attract speculators and marketplace excesses. Another is that valuing credits can pose thorny questions for public accountants, and create opportunities for error or manipulation.
A general concern, especially in the short run, is that prices for energy from traditional sources are likely to increase, perhaps by a lot, posing genuine hardship for lower-income consumers. That relates to another concern, the "whiplash" effect of implementing cap and trade too quickly with overly aggressive short-term targets, which could easily disrupt recovery in an already-fragile economy.
For Supply Chains And Their Components, This Means?
Not only are resources and attention to green opportunities necessary for those who are part of a green supply chain, even greater levels of attention and analysis are demanded to make sure that all the players ? upstream and downstream ? are green in fact, and not greenwashing. Adding the pressures of likely energy cost increases and the need to manage both emission controls and cap and trade credits puts another layer of complexity ? and frustration on supply chains.
At a time when resources and cash may be in short supply, this will certainly add to organizational stress, as well as demand new levels of transparency and communications in business relationships.
It sees to us that a framework of organized and focused business relationship management is a critical success factor in the brave new world of green supply chains.