Monday, January 03, 2011

Greener Supply Chains Ahead for 2011 - But Just Barely

Every year for the last few years at the start of the year I have had a look at the overall prognosis for change in the global supply chain model.  The past couple of years have been rather discouraging.  As prices for oil and gas have come down, companies have had little interest in greening the supply chain. High transport costs have been among the biggest contributors to green supply chain initiatives and so lower transport have reduced investments in those areas.

Coming in 2011, things look more favorable, primarily due to rising gas prices.  In addition to rising gas prices that will once again get companies to look carefully at their far flung global supply chains, there are several trends that are growing in importance that will also help green the supply chain:

  • Focus on packaging waste.  This is an increasing trend in Europe where companies are required to use minimally effective packages to protect product.  In the US, Amazon has had some luck as well with their Frustration-Free packaging, though the impact so far has been small.
  • Growth of eCommerce.  Buying online is, on the whole, more efficient and "greener" to the supply chain than buying in stores.  The online purchase eliminates stores, overhead, shipping to and from stores as well as customers driving to stores.  While packages are delivered on a one-off basis, parcel companies handle that in a very efficient manner - much more so than individuals driving to and from stores.
  • Increased Focus on Buying Locally.  A trend and one limited to Europe and the US so far, but one that could have some impact on the supply chain as it extends globally.
  • Increased Focus On Used / Recycled Products as A Green Alternative.  There's a growing recognition that new products - cars, computers, houses - no matter how sustainably designed and built, carry a much bigger foot-print

Overall, 2011 looks good for supply chains - at least from a greening standpoint.  The single biggest driver will be the cost of oil, but at least that is headed in the right direction.

Does your supply chain need a twelve step program towards greener operations?  No apologies are needed, just download the slightly tongue-in-cheek primer I prepared two years ago with my colleague at IBM.

Download 1: The Long Form White Paper
Download 2: The Slick Visual Version

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