Supply Chains and Information: You can Ask, But They Dont Always Tell

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Supply Chains and InformationYou can Ask,But
They Dont Always Tell

• Michael S. Brown, Ph.D.
• Brown and Wilmanns Environmental, LLC
• April 2007

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• "Our task must be to free ourselves... by
  widening our circle of compassion to embrace all
  living creatures and the whole of nature in its
  beauty...We shall require a substantially new
  manner of thinking if mankind is to survive.
• Albert Einstein

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Introduction

• A little background on myself
• Supply chains and organizational CSR efforts
• Practical metrics and the need for information
• Getting information from suppliers
• Final thoughts

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My Background

• UC Santa Cruz undergraduate degree in Politics
• Graduate degrees in City and Regional Planning
  from Cornell University
• Emphasis on environmental and occupational health
  and environmental policy
• Research on public policy, science and technology
  issues
• Worked in academia, government, industry
• Consulting practice focuses on business, but also
  includes government and nonprofit clients
• Case Studies Editor for Journal of Industrial
  Ecology, active in nonprofit environmental/politic
  al groups

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When the World was Simple.

• The mantra of supply chain management
• Price
• Quality
• Delivery

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In a World of Corporate Social Responsibility.

• Organizational responsibility extends deep into
  the supply chain
• Labor rights issues
• Fair trade issues
• Life cycle assessment
• Global Reporting Initiative
• Design for environment/extended producer
  responsibility

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Who Would have Thunk.
TIFFANY CO.S EFFORTS TO HAVE MORE CONTROL
OVER ITS SOURCING OF ROUGH DIAMONDS, IMPLEMENTING
A CHAIN OF CUSTODIES THAT MEETS ISO STANDARDS,
AND APPLICATION OF ENVIRONMENTAL/SOCIAL
STANDARDS TO POLISHING FACTORIES OFFERS ONE
POSSIBLE MODEL OF WHAT MAJOR DIAMOND JEWELLER
RETAILERS AND MANUFACTURERS SHOULD DO.
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Where Does that Leave Supply Chain Management?

• Price
• Quality
• Delivery
• Social Responsibility
• What do organizations need to know about
  suppliers businesses to fulfill goals and
  obligations?

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Organizational Goals and Obligations Regarding
Supply Chain Information

• Internal uses
• Do the right thing
• Track efficiency, costs, compliance
• Set goals and monitor progress
• Management decision making
• External uses
• Marketing
• Satisfy stakeholders
• Investor relations

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What Could You Know?

• Numbers
• Energy use, water use, emissions, violations
• Policies
• Environmental, social
• Actions
• Training, EMS
• Compliance with supplier, independent, internal,
  etc. standards

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Numbers and Other Metrics

• Things that are already in number form
• Many companies dont currently count them
• Need systems
• Its expensive to translate bills (energy, water,
  waste, etc.) into trackable data
• Most companies do not document other important
  things
• Activities, policies/implementation
• Compliance

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Getting Someone Elses Data

• Costs of getting data
• Monetary cost to suppliers
• Cost to the relationship
• Organizational cost
• Value of data
• Does the value of the data justify the costs
• If costs are fixed, how can value by maximized
• If costs are variable, how can costs be minimized
  for value delivered

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Cost-Value Proposition

• Philosophical divide between counting negatives
  and documenting progress towards a positive goal
• Stakeholders primary interest in less bad stuff
• Organizations struggling to define positive/
  sustainability goals
• Collecting the least information that
• Satisfies stakeholders
• Sufficient for good business decisions

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Suppliers and Customers

• Direct and indirect control of data
• Control is a relative term
• Auto manufacturers and Tier 1 suppliers
• Niche company buying product package
• Whats in the supply cycle chain
• Suppliers dont necessarily know what is in their
  products, especially if they are a distributor
• If you dont know, you cant ask
• Trade secrets

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Information Hierarchy

• Info you need to run your business
• Info you need to manage your impacts
• Info you need to satisfy stakeholders
• Nice to know I think

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Methods of Getting Data

• Informal requests
• Auditing
• Internal staff
• NGOs
• Third party auditors
• Supply chain surveys
• Use of industry-wide data
• Mandatory requirements

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Important Issues

• Budget for supply chain information
• If you cannot explain exactly how you will use
  information, dont collect it, dont count it,
  and dont talk about it
• Whatever you count, use!
• If purposes change or metrics arent as useful as
  needed, change what youre doing

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Some Examples of Supply Chain Information Uses

• Aveda
• Nike
• Patagonia

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Aveda

• Plant-based hair and skin care products
• Distributes through the salon and spa industry,
  company retail stores
• Aveda-owned institutes for training students in
  hair and skin care and enviro
• First privately held company to sign CERES
  Principles
• Now a subsidiary of Estee Lauder Corp.

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New Ingredients, New Challenges

• Ingredients from traditional communities and
  newly developed sourcing
• Sandalwood from Australia's aboriginal Kutkabubba
  community replacing Indian sandalwood
• S. African rose geranium
• Bulgarian rose and lavender
• Babassu from the Maranhão region in Brazils
  eastern Amazon
• Morikue from Tambopata region of Peru
• Uruku from the Yanawana people of Brazil

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Nike

• Committed to sustainability as corporate ethos
• Through the adoption of sustainable business
  practices Nike is committed to securing
  intergenerational quality of life, restoring the
  environment and increasing value for our
  customers, shareholders and business partners.

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Nike Actions

• Natural Step training
• Organic cotton blend program gt 1 million lbs/yr
• Clean dyeing and finishing program
• Integration of closed loop systems in product
  design
• Short-term--Reuse-a-Shoe program
• Long-term--bring shoes back to new shoe materials

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Innovative Approaches

• Project to compare environmental performance of
  raw materials
• Starting with natural origin fibers will include
  polymers
• How do you evaluate new materials?
• Supply chain issues
• Making decisions based on whats important rather
  than what information is available

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1990s Supplier Survey to Assess Environmental
Impact

• Survey
• Ask and ye shall maybe receive
• One-to-one requests
• Importance of relationship to each company
• Personal relationship with supplier
• Upstream requests
• Successful requests limited to smaller companies
• DuPont could care less

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2006 Simplified LCA of PET Recycling Loop

• Key supplier provided data
• Assumptions about other parts of supply chain

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Final Thoughts

• What does sustainability look like in an
  information poor environment?
• Is satisficing (Herbert Simon) good enough?
• Do we really need perfect information to
  green supply chains?

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Trivia Question

• Rachel Carsons best-selling book is Silent
  Spring, but what was her first best-seller?

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The Answer

• The Sea Around Us (1951)

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