Thursday, 20 August 2009

How green is your supply chain?

The Business Performance Management (BPM) forum has carried out an online survey aimed at measuring how companies are managing the complexities of supply chain demands, distribution costs and environmental concerns. It's certainly going to be a complex challenge in the coming years.

The full report is here, but among the findings gleaned from the 125 responses was that a multitude of factors are putting pressure on executives responsible for managing the value chain, including the economic situation and corporate and industry environmental concerns.

In terms of managing the issues, the lack of transparency into the operations of complex supply chains may be hampering performance. In all, 60% of companies have none, very low or marginal visibility across all tiers and levels of their supply and value chain. Survey respondents identified the top business benefits of greater visibility as cost savings, better customer support, and environmental compliance, so this lack of visibility could be putting companies at a competitive disadvantage.

The survey also identified a need among supply chain professionals for better standards and key performance indicators for measuring sustainability levels of their supply chain partners. Two thirds or more don’t have goals or scorecards to measure supplier sustainability but see the need for adopting a standardized scoring system.

The respondents are expecting customers to put more green pressure on their providers. A total of 76% said their customers have not yet asked them to measure or reveal their carbon footprint, but two thirds expect to be asked in the next year

And finally, only 20% currently use a single, hosted platform that integrates all of their value chain network. Of those that do, 58% have seen an impact on value chain performance.

Clearly there is a need for better supply chain management software and suppliers are working on more comprehensive solutions that more closely address sustainability issues. It's a complex problem, though, with some sticky issues around the extent of company responsibility, product life cycle emissions, double counting, etc, so there is no quick and easy answer. IT solutions (and services) will continue to evolve in the coming years to match the environmental and sustainability demands.

© The Green IT Review

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