Supply Chain Management
A SPECIAL REPORT
THE IRISH TIMES irishtimes.com Editor: Madeleine Lyons Phone: 01 675 8000 Fax: 01 675 8037 email: specialreports@irishtimes.com FRIDAY, MARCH 26, 2010
Driving the enterprise to stay out in front
Aside from cutting costs, supply chain
management can also increase revenue and
attract customers, writes Peter Cluskey
L
EADING companies con- ation can really be turned around.
stantly reassess how they And supply chain management
do business and where has a central role to play in
they can find a competi- achieving this.”
tive edge. That’s doubly Broadly speaking, SCM is about
true since the collapse of the efficiency and therefore cost.
global financial system – with the Sweeney defines it as “the manage-
harsh lesson that efficiency is ment of supply chain processes
often the difference between suc- with a view to optimising total
cess and failure. supply chain investment and cost,
As even market leaders grapple and meeting or exceeding cus-
with seismic changes in terms of tomer service requirements in tar-
financial volatility, shifting demo- geted markets or segments”.
graphics and evolving consump- In an Irish context, meeting all
tion patterns, the drive to future- the elements of Sweeney’s defini-
proof has become the holy grail of tion successfully is particularly
business. Supply chain manage- important for two key reasons:
ment (SCM) has emerged as per- firstly, Ireland is one of the most
haps the most effective means of open economies in the world; sec-
staying ahead. ondly, Ireland is at a disadvantage
“While many western markets when it comes to transport costs
are ageing, the reverse is true in as a result of its geographical loca-
emerging markets such as Brazil, tion on the periphery of Europe.
India and China,” says Martin These factors, says Sweeney,
Christopher, emeritus professor of have “sharpened the focus of deci-
marketing and logistics at Cran- sion-makers on the need for
field School of Management in the robust approaches to supply chain
UK and author of Logistics and design and management.” Or as
Supply Chain Management: Cre- Prof Martin Christopher famously
ating Value-Adding Networks. put it: “Supply chains compete . . .
“The combined impact of alter- not companies.”
ed population densities, the growth And yet, as we’ve seen with the
of discretionary spending power in shock to Toyota’s worldwide domi-
the world’s emerging markets, and nance in the automotive sector in
rising transport and energy costs recent months, even global leaders
mean the centre of gravity of in SCM and innovation can lose
existing supply chains is changing the plot – and become so
dramatically. impressed by their own success Toyota workers at its Takaoka plant, Japan, in 2005: Toyota broke its own rules by becoming increasingly dependent on ‘unfamiliar suppliers’ Photograph: Junko Kimura/Getty Images
“As a result, companies that the customer slips down the order
aspire to be leaders in tomorrow’s of priorities. The attitude of companies chain holistically, as an end-to-end whose Irish clients include house- versation about cost because it will contracts for shipping, air freight wholly owned subsidiary of DCC –
markets need to start now – today James Womack, one of the towards their supply chains has process, you can substantially hold names from the car, retail, be irrelevant. So quality of service and trucking companies, even for agrees with Darcy that the move to
– to scope out the supply chain authors of The Machine That changed enormously, says Armin reduce the cost base of the organi- beverage and DIY sectors. undoubtedly comes first.” an experienced company with a China and the Far East remains
strategies that will work in a mar- Changed the World, which looks in Samali, senior executive leading sation – as well as potentially “Fundamentally, it’s about In terms of the move towards global reach such as DSV. both noticeable and significant.
ketplace that may be vastly dif- detail at Toyota’s innovations in the Supply Chain Practice at improving its customer service. quality of service,” he says. outsourcing to China and the Far And despite a new environ- “I would say that apart from
ferent from the one they serve manufacturing, traces the origin Accenture Ireland. “What’s needed is full visibility: “Unless we’re delivering and East, it’s a trend that remains mental emphasis on “near very bulky commodities, such as
today.” of the company’s current travails “Companies used to look at the what does the customer require? picking products to a very high strong, Darcy acknowledges. That sourcing” to Eastern European packaging, or perhaps customised
Closer to home, Edward back to 2002 – the point at which supply chain predominantly from On that basis, how much inventory level of efficiency – 99.9 per cent long supply chain, he says, poses countries, for instance, Rose McCa- commodities with a very quick
Sweeney of the National Institute it set itself the target of raising its an efficiency point of view,” he do I need to keep? On that basis, and, in fact, 100 per cent for some “a daily challenge” in terms of rthy, supply chain director at SCM time requirement, typically eve-
for Transport and Logistics at DIT global market share from 11 per says. “Now they look at it as a how much do I need to customers – there won’t be a con- putting in place the appropriate company SerCom Solutions – a ryone is forced east in the end.”
puts that urgency in the context of cent to 15 per cent. mechanism to grow revenue, manufacture? On that basis, what
the economic maelstrom in which That target, he maintains, was increase competitiveness and do I need to order from my sup-
Ireland has found itself for the “totally irrelevant to the cus- attract customers – in addition to pliers. If all that is visible across
past two years. tomer” and “just driven by ego”. reducing costs. the organisation, it can become a
“Recent months have shown And interestingly, such rapid “For example, if you’re a sales real competitive advantage.”
some modest signs of economic expansion, he says, “meant person, all you care about is how The savings to companies who
recovery and a return of business working with a lot of unfamiliar much you sell; not how much it outsource their supply chains can
confidence,” Sweeney says. “How- suppliers who didn’t have a deep costs to manufacture what you sell. be substantial, though they vary
ever, after the serious contraction understanding of the Toyota cul- If you’re in manufacturing, you enormously, typically from 10 per
of recent years, there is still a long ture”. only care about manufacturing at cent to 40 per cent – depending on
way to go before sustainable eco- Essentially, Toyota broke its the lowest cost; not that you may what’s being outsourced.
nomic growth becomes a reality. own SCM rules by becoming be making lots of inventory that But while cost and the capacity
“Stabilising the exchequer increasingly dependent on sup- will end up sitting on a shelf. So the to innovate are important ele-
finances and creating a func- pliers with whom it did not have key performance indicators for ments in convincing a company to
tioning banking sector are crucial decades-long relationships and by how individual functions are meas- outsource, what’s paramount is
in this regard. However, it is only not having enough senior engi- ured can create a very sub-opti- quality of service, says Sean Darcy,
through a return to successful neers to monitor how effectively mised process for an organisation. managing director of global trans-
export-driven growth that the situ- those suppliers were working. “But if you look at this supply port and logistics company DSV,
Why companies can no longer
survive without this technology
Sophisticated supply ing the skills learned over the last
20 years in analysing sales data
development is a challenge, partic-
ularly for SMEs,” he says.
chain technology is and applying that to the supply “Armed with this knowledge,
chain transactions data, identifying matching appropriate technolog-
no longer a luxury – it opportunities for optimisation and ical solutions with the operational
is a necessity, writes reconfiguration. This leads to anal-
ysis of areas such as reverse logis-
priorities of companies is the key.
To reap the maximum benefits of
Barry McCall tics, optimum warehouse locations technology, it needs to be imple-
and load sharing, even with com- mented as part of the wider stra-
petitors,” adds McGee. tegic supply chain re-engineering
M
“Organisations have invested in process, rather than in the tactical
OST COMPANIES of any technology solutions to analyse and piecemeal fashion which was
reasonable size now have their sales data,” he says. “They often the case historically.”
quite sophisticated enter- now need to take those tools and Technological developments
prise resource planning (ERP) sys- techniques and apply them to the also have benefits for consumers.
tems in place. This powerful tech- raw data coming off their supply Edward Sweeney of the According to David McGee, sustain-
nology allows a company to con- chain ERP system. The resulting National Institute for ability in terms of a more opti-
trol, with a single system, almost insight can lead to changes in cost Transport and Logistics mised supply chain means less
all aspects of production, along and overall efficiency.” trucks, less fuel consumption, less
with the background support “SAP is a fabulous system and says. “The rapid advancement in pollution, less energy and better
activity such as accounts, payroll, we work with our customers to cus- capabilities and affordability of availability of products. “Whether
sales and procurement. The chief tomise its outputs to make the once expensive and leading-edge in the physical or online world, con-
benefits are increased efficiency information that flows from it technologies makes the latest tech- sumers benefit through enhanced
and reduced wastage resulting in easier for them to use when man- nology innovations relevant to all product availability, certainty of
increased productivity and aging the supply chain,” says industries . . . Supply chain manage- supply, increased range availability
profitability. Sercom Solutions group head of ment-related technology can bring and reduced environmental
However, there are now moves business development Kevin significant benefits across indus- impact,” he says.
to extend these systems to cover all Vaughan. tries, and support Ireland’s move Dave Kirwan agrees. “New tech-
aspects of the supply chain from “We take the information feeds towards greater competitiveness.” nologies are beginning to shift
suppliers of raw materials and com- from the system and this will tell us According to Edward Sweeney power away from producers
ponents to the distribution channel what products are moving and of the National Institute for Trans- toward consumers, and to trans-
and on to the end customer. what ones aren’t. [This] gives every- port and Logistics: “The most sig- form supply chains into demand
“Almost all retailers, distribu- one full visibility of what is hap- nificant developments have been chains,” he says. “Organisations
tors and logistics companies pening at all times. For example, in the area of extended enterprise are more demand-driven than
already have the base ERP system the supplier will know instantly systems which attempt to support ever. Businesses operate now in a
in place – that is the engine that is when their customer takes delivery the inter-firm integration of supply much more complex ecosystem,
making everything happen,” says of an order.” chain processes. where customers, suppliers, com-
PwC director David McGee. “The “New technologies are perpetu- “The biggest challenge relates petitors and other producers are
next technological stage is twofold ally defining the way supply chains to a recognition that relatively increasingly interconnected and
– using the technology to further evolve and organisations need to advanced technology has become a interdependent.”
optimise the supply chain itself and understand how technological given, and that creating innovative New technologies, he says,
then using data mining techniques innovations enable business proc- ICT strategies and implementing reduce the cost of products and
to optimise the route network.” esses,” says Dave Kirwan of Accen- them superbly is where the poten- services through improved supply
Optimising the systems will ture Ireland. “Because data is at tial lies.” chain performance and efficiency
involve incorporating new technol- the core of these processes, supply The essence of SCM lies in the gains. This contributes to improv-
ogies such as voice picking, auto- chain professionals must be able to integration of supply chain proc- ed response times to changes in
mated warehouses, GPS tracking analyse it, interpret it and act on esses and data, says Sweeney, and consumer tastes and needs; helps
and radio frequency identification it.” ICT has a key role to play as a facili- new consumers enter the global
(RFID). These technologies will Technology is no longer a bar- tator of this integration. “Keeping marketplace; helps gather market
allow a warehouse to be fully auto- rier to improving supply chains, he abreast of the latest technological information to support tailormade
mated with a person using voice products and services; and reduces
commands to get products from
shelves with microchips on each
New technologies are beginning to shift production and delivery cycles,
improving store stock replenish-
pack to let the machinery know it is power away from producers toward ment.
getting the right product or part. “Consumers get what they want,
“Data techniques means apply- consumers, and to transform supply chains when they want it,” he says.
2 THE IRISH TIMES Friday, March 26, 2010
SupplyChain Management A SPECIAL REPORT
China in
ough assessments of selection cri-
teria should be applied in order to
find the correct supplier who can
comply with the quality needs of
customers based outside China,
says Vaughan.
our hands
“Quality will be very much evi-
dent in the better companies when
visiting and auditing the factory,”
he says. “Compliance to ISO stand-
ards, defined inspection criteria,
inspection results available for
review and a sense of awareness
that quality is enshrined as part of
Kevin Vaughan of SerCom the company culture will be evi-
China may be overshadowing Irish and European supply chain management (SCM)
dent.”
Vaughan also advises Irish com-
manufacturers but it also presents opportunities services, established an office in panies to see for themselves the
China four years ago to effectively product being manufactured.
for supply chain managers, writes Barry McCall source and evaluate local suppliers “When starting to work with new
and trading partners on behalf of suppliers in China, you should
its customers. The SerCom office always insist on being in the fac-
T
is located in Shenzhen in the tory when product is being manu-
HE SCALE of the Chi- per hour in in Ireland. Some Guangdong province. Shenzhen factured for the end customer,” he
nese economy and its workers in higher-value sectors was China’s first Special Economic says. “Depending on the product,
manufacturing sector is such as microelectronics get paid Zone and has many investment further inspection should be com-
staggering. The country’s more, but still well below Euro- and tax benefits, similar to the pleted when the product is deliv-
gross domestic product pean averages. Shannon Free Zone. ered in Europe. Ongoing inspec-
for 2009 was ¤3.6 trillion having This certainly poses a threat to The Shenzen office evaluates tion must be maintained on a reg-
increased 8.7 per cent during the manufacturing in Ireland. Edward suppliers and products to ensure ular basis to ensure consistency
year. To put this in context, that Sweeney, director of learning with the right product gets to the cus- and reliability of the product being
growth figure for 2009 is more the National Institute for Trans- tomer on time. This can involve delivered.”
than twice Ireland’s total GDP. port and Logistics (NITL), agrees. hundreds of hours searching for He remains positive about
In terms of trade, the EU China and other relatively low-cost suppliers, visiting selected sup- China and what it can offer Irish
remained China’s biggest partner locations represent a threat to tra- pliers and finally auditing factories companies. “I would encourage
with a total of around ¤260 billion ditional manufacturing activity before sample product is ordered Irish-based manufacturers to see
in business done during the year; and jobs in Ireland and elsewhere for testing and proof of compli- China not as a threat but as an
the US is second with trade of in the developed and, therefore, ance to the customer specification. opportunity. This, no doubt, will
¤213 billion. relatively high-cost world,” he “Experience shows that a take a change of mindset and may
Of most concern to European says. “The reality is that there are number of Chinese companies involve significant changes for
manufacturers, however, is the now few products which it makes may have a very impressive web- existing operations.
low-cost manufacturing base sense to manufacture in Ireland. site and rapid response to que- “But our developing links with
China offers due to its low hourly “Exceptions to this may be prod- ries,” says Sercom group head of China can only bode well and it is
wage rates. While some claims are ucts which are capital intensive business development Kevin by finding out what is going on
wildly exaggerated, such as those rather than labour intensive, Vaughan. “However, when one there and opening our minds to
which contend workers are paid as where labour costs represent a rel- visits the factory you might find a the potential opportunities to
little as $30 per month, the fact atively small proportion of overall basic assembly house where the trade and collaboration that we
remains that wage rates are very supply chain costs. Intel in micro- parts are bought in on an order-by- can transform doom into boom.”
low compared to European levels. processors for example,” he says. order basis. The company would Given Sercom’s success there, it
In a recent study of the Asian “Industries that are highly regu- have no leverage with the compo- is clear China represents a real
textile industry, American consul- lated such as pharmaceuticals, nent supplier and this will lead to opportunity for Irish companies to
tancy Jassin-O’Rourke Group medical devices, biotech and so An employee at a textile factory exceptions],” he adds. petition from locations so far away. is the obvious advantage but estab- intermittent supply. Also, some enhance their competitiveness by
found Chinese garment workers on, and where there is a reluctance in Suining, Sichuan province, Sweeney also says sectors such There is a flip-side. “China is lishing a foothold in the world’s factories will not comply with an using it as a base for manufac-
are paid $0.86 (63 cent) per hour. to move a significant amount of China: ‘Always insist on being as the food industry that are both a threat and an opportunity,” most populous nation is often a ethics policy which would govern turing operations or as a source of
This is quite high by Asian stand- activity to locations where the reg- in the factory when product is dependent on local raw materials he says. “The opportunities are major source of new revenues.” age of employees, working condi- products and components for sub-
ards but is miniscule compared to ulatory environment may not be being manufactured for the end and where shelf-life is short are many and potentially lucrative. SerCom Solutions, a leading tions and so on.” sequent use and assembly here in
the national minimum wage ¤8.65 regulator-friendly, [are further customer’ Photograph: Reuters also relatively immune from com- Access to low-cost manufacturing Irish specialist in the provision of Painstaking efforts and thor- Ireland.
Trust is the key to successful SCM relationships
“
In today’s economic climate, trust between The quality of checking the product right at the
factory’s back door. Using our SAP
companies and their outsource partners is more the relationship operating system, we manage the
logistics right to the customer’s
important than ever, writes Peter Cluskey between the two sides warehouse – indeed, onto the
determines how well shelves.”
Doing that successfully means a
they deal with adversity relationship of trust develops natu-
T
rally. “We have to show we have
HERE'S AN old saying in Research by the National Insti- the procurement skills to manage
business: if either side has to tute for Transport & Logistics all of that. But we’ve also been
refer to the contract, the deal (NITL) at DIT shows that in terms innovative in that we now fund all
is already dead in the water. It’s as of SCM excellence, four funda- of that activity along the chain as
true of supply chain management mental elements are regarded as a successful relationship is the well.
(SCM) as it is of any other complex critical by most companies when it ability of the provider to guarantee “Previously, companies buying
business-to-business relationship. comes to trusting their outsource quality of service – which is products in Asia, for example,
Because what makes SCM work partners: achieved through “the quality of would typically pay 30 per cent
is that key word: “relationship”. “Identification and measure- your people, the training that you upfront and the final 70 per cent
The commitment from each side ment of customer service because give them, and the effectiveness of when the product left the factory.
that it will treat the other as an customer service essentially sets your IT swill probably become At SerCom Solutions, we now fund
equal, and trust in its profession- the spec for supply chain design. more and more important for the all of that activity – so our cus-
alism, in the corporate drive to “Integration of supply chain next year or so.” tomer only pays when the product
improve efficiency and generate activities and information because Kevin Vaughan, business devel- reaches the warehouse.
savings. many supply chain NVAs [non opment director at SerCom Solu- “It is a balance sheet opportu-
And yet increasingly – particu- value-adding activities] are caused tions, agrees a high-quality and nity,” adds Vaughan, “and in the
larly since the near-collapse of the by fragmented supply chain config- comprehensive service is all-impor- current climate there aren’t many
global financial system in 2008 – urations. tant. companies with the financial
the hard economics of survival are “Treatment of supply chain “That’s always our aim,” he strength to offer that kind of
making themselves felt in this sym- management and logistics as a says. “Starting with sourcing the service. For us, it’s a key differenti-
biotic relationship as well. senior management function product, placing purchase orders, ator – and certainly a key element
“Given what’s happened to the because SCM is a strategic activity. analysing forecast information, in developing successful long-term
global economy, a lot of companies “Establishment and measure- doing audits at the factory and partnerships with our clients.”
“
have been under enormous margin ment of supply chain key perform-
pressure,” says Rose McCarthy,
supply chain director with SerCom
ance indicators (KPIs) because
what gets measured gets done.
Outsourcing to Case study Mazda and DSV
Solutions – a wholly-owned subsid- “Certainly, if you don’t have us allows a
iary of DCC – which acts as a global senior executive understanding WHEN HENRY Ford started his “The decision to source from Dublin, are delivered by DSV vans
outsourcing partner to many of the and buy-in, you’re always going to company to direct its motor company at the turn of the Belgium was in keeping with by lunchtime on Wednesday.
world’s leading information and
communications technology (ICT)
have difficulties,” agrees Armin
Samali, senior executive leading
resources to where the 20th century, it was the very
model of what would today be
trends in the automotive industry,”
says Sean Darcy, managing
“The parts destined for dealers
in the other 25 counties are
companies. the Supply Chain Practice at money is. That’s where described as a vertically integrated director of DSV Ireland, which has delivered during the rest of DSV is a global supplier of transport and logistics services.
“For companies in that position, Accenture Ireland. business – all the elements in its its headquarters in Naas, Co Wednesday and through the night
managing volatility across a whole “There also has to be a common the opportunity lies supply chain united through their Kildare. – to secure lock-ups to which we DSV has offices in more than 60 countries all over the world. Together with our partners
range of components and commod- expectation between the company common owner. “Fundamentally, the Irish car have the access codes – until nine and agents, we offer services in more than 110 countries, making DSV a truly global player.
ities can be very resource draining and the supplier of the supply The Ford philosophy at the time market is still small by European o’clock on Thursday morning, so
– not least because the systems chain management services, a was simple: you have to own it to standards and a lot of the major the parts are there when the By our professional and advantageous overall solutions, the 21,300 DSV employees recorded
their suppliers operate are some- clear understanding of what is control it. As a result, the manufacturers have UK or dealerships open.” a worldwide annual revenue of 4.8 billion euro for 2009.
times not the most up-to-date or going to be outsourced and how it’s company mined its own iron ore to continental European warehouses This is a supply chain which
dynamic. going to be run – something that’s build the chassis and, believe it or and see a value in consolidating all DSV operates for Mazda on a daily DSV operates under three divisions providing a full range of end-to-end transport and logistics services:
“So by using a company like particularly important if it’s the But it’s the quality of the rela- not, ran its own sheep farms to their volumes into one point, basis, and so problems are rare.
ours, they can concentrate their company’s first, culture-changing, tionship between the two sides produce the wool for the mainly in the Benelux countries.” “The single biggest difficulty we’ve Road: DSV provides full and part-loads, dry & refrigerated cargo, as well as groupage services across
resources on the high-dollar items, experience of outsourcing.” which determines, in the end, how upholstery. Every day, the Mazda supply encountered in the past few years Europe. With strategically located hubs all over Europe, we are able to meet our customers
the ones that need a lot of micro- Integration, too, is challenging. well they deal with adversity. No longer. To use the jargon of chain works like this: the network was the bad weather at the start needs for service and timely transportation.
management perhaps, and leave “When you have part of your “There’s a whole spectrum of rela- supply chain management (SCM), of dealers across the 26 counties of January, when snow meant we Air/Sea: A growing global air and sea network handling in excess of 500,000 TEU’s seafreight and
the rest to us. We may end up man- supply chain outsourced, it tionships, from very transactional “vertical disintegration” has place their orders for parts – had to reduce deliveries, which 115,000 tons of airfreight
aging far more parts than they do becomes hugely important that ones to real partnerships, where become the order of the day, with everything from engines and was unfortunate. Solutions: Providing a full range of engineered solutions to maximise competitive advantage in a
internally, but what we manage the two organisations are well inte- the sides sit down, discuss any chal- companies increasingly gearboxes to bumpers and “But this system works very demanding global economy for our customers.
may only amount to, say, 5 per grated in terms of technology, lenges and work together to over- outsourcing non-core functions in headlamps – directly with the well. It’s backboned by people
cent of their spend. data, information and transpar- come them. The real partnerships order to share risk and become Mazda warehouse in Belgium. who are very experienced at what
“So essentially outsourcing to ency – and sometimes if the tech- typically last – while the others can more responsive to market And every day, a truck run by they do, and it’s a model that’s
us allows a company to direct its nology doesn’t work, it’s going to easily turn sour.” volatility. DSV Ireland collects around 1,000 motivated by the expectations of
resources to where the money is. cause friction, and perhaps the ina- For Sean Darcy, managing Take, for instance, Mazda, the parts – roughly half a 13.6-metre Mazda dealers and their
That’s where the opportunity lies. bility of the supplier to provide the director of global transport and Japanese car manufacturer with trailer-full – directly from that customers. There’s no room for
And they trust us with that.” service to the customer.” logistics company DSV, the key to whom Ford has had a strategic Belgian warehouse and transports error; it has got to work each and
relationship since 1979 – and them to the DSV warehouse in every day.
which has been doing business in Naas. “And don’t forget how
Ireland even longer, since 1974. “If you take the Monday cycle,” well-practiced we are at this.
Supply Chain Management Postgraduate Mazda imports its car parts to says Darcy, “the shipment arrives Including Mazda and all the other
Ireland through global transport in Naas the following Wednesday car manufacturers we work with,
Programmes, Dublin Institute of Technology and logistics company DSV, which morning. We’ve been pre-advised we control around 52 per cent of
has its corporate head office in of its contents by our Belgian all the parts delivered to Irish car
Copenhagen, has 21,300 office, so we know exactly what’s dealerships.” • The DSV group is recognised as a respected and attractive logistics partner for
Supply Chain Management (SCM) is concerned with the strategic management employees in more than 60 on board for Mazda. Despite the sheer volume, that customers requiring superior supply chain execution within selected industry segments.
of the total supply chain from the sourcing of raw materials through to the final countries and provides services in “We then separate out the business accounts for only These segments include Automotive, DIY, Chemical, Retail, and Pharmaceutical.
consumer. As such, it represents a major opportunity for business improvement. 50 more – with worldwide Mazda parts, which have been between 3 and 4 per cent of DSV’s • DSV Road Limited operates groupage and full load trailer services to/from all
revenue of ¤4.8 billion in 2009. pre-labelled for individual dealers turnover. “We try desperately hard European countries.
It is particularly important in an Irish context because of the open nature of our economy, Multinational companies tend across the 26 counties. The parts, not to have too large a financial • DSV Road operates its own in house "Cold Chain" which offers temperature controlled
the challenges posed by relative geographical peripherality and the potential benefits in to be notoriously shy about letting destined for Mazda dealers in exposure to any one industry services within Europe.
terms of cost and customer service. outsiders peek under the bonnet, sector. That’s a constant priority • DSV operates Air and Sea services worldwide. DSV has it's own network of offices throughout
so to speak, at the workings of for us.”
“
The National Institute for Transport and Logistics (NITL) at DIT offers its prestigious The Far East and USA which can provide value added services to our customers. From the Far
their supply chains. But Mazda’s In general, says Edward
East, DSV has fixed allotments every week including Peak season which enables us to
Masters programmes in SCM in two modes: relationship with DSV gives a
It’s a model Sweeney of the National Institute
guarantee space on ocean vessels to our customers.
fascinating insight into how for Transport & Logistics at DIT,
• DSV has offices and warehouses in Naas, Belfast, Derry, Shannon and Cork.
• MSc in Supply Chain Management – Full-time (1 year) (DT351) smoothly an outsourced chain can that’s the motor industry has been good
run when the relationship at building relationships between Contact us:
• Executive MSc in Supply Chain Management – between client and provider works motivated by the manufacturers and outsource
DSV Road Limited: Niall Caulfield Sales Director
Part-time (up to 3 years) (DT352) Commencing April 2010.
exactly as it should.
For the past three years, Mazda
expectations of Mazda suppliers. “The key thing is that
they’ve been doing it for a long Direct: 045 444821 - Mob: 087 260 1947 Niall.caulfield@ie.dsv.com
For further information please contact:
has been sourcing parts for dealers and their time, longer than most other
DSV Solutions Limited: Sean Darcy Managing Director
Ireland from its own high-tech sectors. They know what works
Antonio DeLinares central warehouse in Belgium – customers. There’s no and what doesn't, and they learn Direct: 045 444817 - Mob: 087 255 2468 sean.darcy@ie.dsv.com
T: (01) 402 4023
National Institute for E: Antonio.deLinares@dit.ie
located there because of its
proximity to the ports of Antwerp,
room for error; it has from each other. On the other
hand - as we’ve seen with Toyota - DSV Air & Sea Limited: Martin Slott Managing Director
Transport and Logistics
and particularly Rotterdam, the got to work each and if you stop learning, you can still Direct: 061 44 7221 - Mob: 087 203 7366 martin.slott@ie.dsv.com
major international crossroads have big problems.”
through which parts pass. every day Peter Cluskey DSV, Tougher Business Park, Ladytown, Naas, Co Kildare
Tel : 045 444777 / Fax: 045 444799 Email : info@ie.dsv.com / www.dsv.com/ie
Friday, March 26, 2010 THE IRISH TIMES 3
R3
A SPECIAL REPORT SupplyChain Management
Managing
Larger ships typically need deeper
berths but “you can’t dredge for
greater depth right up against old
quay walls, as you’d run the risk of
the old walls collapsing out,” says
Seamus McLoughlin, head of
the freight
operations at Dublin Port. Instead,
using deep foundations, a new
quay wall is constructed outside
the old, and the quay is extended
slightly. Deep dredging can then
take place.
An alternative super-port is
escape
envisaged at Bremore, a greenfield
site just north of Balbriggan, in a
proposal by Drogheda Port and
property development company
Treasury Holdings.
However, there remains signifi-
cant under-used capacity at a
number of existing ports, with
“
Changing economic and environmental concerns What is now
are leading to new thinking about the way we emerging is
appraise transport projects, writes James Nix a complex picture
of overcapacity in
P
ROJECTED changes in rested on the continuation of some sectors with
population and eco- year-on-year growth – these falls
nomic output are the are significant. a paradoxical need
key factors which have
shaped transport invest-
For the fourth river crossing
under the Shannon at Limerick –
for further investment
ment in the Republic to date. due to open later this year – the in other areas
During the boom, the rise in trans- National Roads Authority (NRA)
port movements tracked economic envisaged traffic growth of more Belview, just east of Waterford
growth up and up. The question than 10 per cent during 2010. City, a case in point. It has long
now is: should we plan on eco- Under the public private partner- enjoyed the best rail facilities of
nomic growth climbing back to ship contract used on this project, any Irish port, and is also set to
levels seen during the Celtic Tiger? the taxpayer, through the NRA, benefit from the recent opening of
Or will Ireland remain at roughly will need to make additional pay- the M9.
the same level of economic activity ments to the tunnel operator if Just as with proposed roads, An
over the next decade, while higher- traffic falls short of projected Bord Pleanála has significant
than-expected emigration leaves levels. A similar arrangement is in influence on port development.
us with a broadly stable place on the M3, also due for com- The absence of a rail link was a key
population? pletion shortly. reason for the board’s decision in
Unfortunately, there appears to Following a long sequence of mid-2008 to refuse the Port of
be no reliable compass guide. The approvals, An Bord Pleanála has Cork planning permission for a
Economic and Social Research recently requested the NRA to new facility at Ringaskiddy. A
Institute predicted in late 2007 undertake redesign on two road An Iarnród Éireann container train travelling from Ballina to Dublin Port passes through Drumcondra in Dublin. Photograph: Mark Healy public consultation process to
that Ireland’s economy would projects. In February, the select an alternate location has
expand by 3 to 4 per cent in 2009; planning appeals board asked for a passengers, both are running at existing terminal. under review by the Department with increased fuel costs and is expected to start shortly with been ongoing since the start of
instead, it contracted 9 per cent. “more modest” proposal in around half capacity. Dublin New thinking is emerging which of Finance). For Britain and higher prices on emissions rail can completion due in the autumn. February and one of the sites
Ten months ago, the ESRI foresaw relation to a planned 19km dual airport is expected to handle just may reshape the way we appraise Northern Ireland, the high future be expected to grow. A number of Knott also refers to the surge in under consideration, Marino
growth rates of more than 5 per carriageway in Co Mayo, citing over 19 million passengers in 2010, transport projects. Last year, the price placed on carbon is set to freight forwarders are already business through Ballina rail Point, is rail connected.
cent for the years 2011 to 2015, environmental grounds. Environ- with broadly similar numbers UK government raised its shadow prompt a migration away from embracing the mode. depot, fast becoming a “dry port” Overcapacity in our infrastruc-
projections that now appear mental reasons were also behind expected for both 2011 and 2012. A price on carbon dioxide, and man- energy-intensive road and air “There’s strong demand to rail for the northwest. Knott sees a ture is becoming an issue as projec-
unlikely to be realised. the board’s refusal of a 15km roads second terminal at the airport is dated that this figure be used in cal- projects, but it remains to be seen containers from Dublin to Cork, blind spot in the failure to invest in tions for economic growth and
What is now emerging in the proposal in Co Donegal in late due to open this November. culating the future costs and bene- if Ireland will embrace the same but it’s impossible due to the rail connectivity, and is adamant population rise have not trans-
transport sector is a complex 2009. Concerns regarding But overcapacity concerns led fits of proposed projects. The mes- approach. disconnection of the Cork rail such investment will serve Ire- lated into reality. Estimates for
picture of overcapacity in some overcapacity led the Green Party the chief executive of the Dublin sage here is that energy-intensive In its Smarter Travel policy depot in 2008,” notes Howard land’s exporters well into the long these variables in coming years
sectors with a paradoxical need for to secure a commitment to review Airport Authority, Declan Collier, transport links will be expensive in document published in early Knott, who heads up the Rail term. “During the cold snap there are uncertain. What appears more
further investment in other areas road-building in the revised to raise the prospect of moth- the long term, and therefore, gov- 2009, the Department of Trans- Freight Group, a coalition mainly were difficulties moving produce certain is that fuel prices will rise
as new considerations – principally Programme for Government. Cov- balling the existing terminal once ernments should be slower to fund port set a target of 50,000 fewer comprised of logistics companies, by road,” he says, “but the freight as oil scarcity and legislation to
energy cost and higher carbon ering 94 projects, this review has the new building is in operation. their construction now. journeys to work by car each year which was formed in early 2009. trains ran on time.” reduce emissions come to the fore.
levies – come to the fore. yet to start. This suggestion has been chal- In its central estimate, the UK from 2010 to 2020, and pledged As well as pressing for the recon- Dublin Port is Ireland’s main
During 2009, freight by road Overcapacity is already lenged, however. While the second expects the cost of emitting one significant investment in walking, nection of Cork, the group has port. Consistent with experience ■ James Nix is co-ordinator for
and rail each fell by 12 per cent, apparent in aviation, which saw terminal would make for a more tonne of carbon to rise to ¤227 cycling and bus networks. On the sought an investment at Dublin across the sector, its tonnage is transport and planning policy at the
while car traffic on national routes 12-13 per cent falls in traffic during pleasant travelling experience for (£200) by 2050. Under the rules question of freight, however, Port to take rail tracks underneath back to levels seen in 2004 and Irish Environmental Network
declined by 1-3 per cent. Viewed 2009. While Cork and Shannon passengers, it is designed to cater for cost-benefit appraisal in Smarter Travel is less detailed. the cranes, allowing containers to 2005. But how is Dublin Port (www.ien.ie), the network of
against the road plans formulated airports can each cater for for just 15m passengers a year, Ireland, the comparable cost is Rail freight currently plays a be exchanged directly between the positioned if there is an increase in national environmental organisa-
between 2002 and 2008 – which between five and six million compared to 23.5m million in the ¤39 per tonne (a figure currently small part in the supply chain. But ship and cargo train. This project ship size over coming years? tions
Get a firm grip on all the links in your supply chain
Senior management
need to understand the
importance of supply
I T IS not just people working in
logistics or procurement depart-
ments who need to understand
and be educated in the principals
of good supply chain management
Accenture Ireland, the need for
this is all the more pressing
because of the current business
environment and the impact the
supply chain can have on the
ible, and to differentiate them-
selves to survive and succeed,” he
says.“The power of supply chain
management isn’t just about opera-
tional effectiveness and efficiency,
enhanced customer service, and
cost leadership through the optimi-
sation of supply chain costs and the
elimination of non-value adding
activities.
ketplace and can therefore grow
sales more quickly and demon-
strate higher levels of profitability.
However, sustainable products
and services must be backed by
munities.”
And there is evidence that Irish
firms are beginning to appreciate
the importance of professional
supply chain management.
chain management to (SCM). There is also a critical need
to make senior management
bottom line.
“Market turmoil; changing eco-
it’s also about supporting the
overall strategic objectives of the
He also points to a growing
focus on green issues, increasingly
strong corporate assurance princi-
ples to underwrite the integrity of
“NITL’s experience is that demand
for vocationally-oriented educa-
their business, writes aware of the importance of the nomic landscape; unpredictable company. Senior management sophisticated markets and more the brand. Procurement functions tion of a high academic standard is
supply chain and what it means to fuel and commodity prices; rapid need to be aware of the discerning customers as other fac- of companies worldwide should be increasing despite the recent eco-
Barry McCall their business in areas such as cost, changes in consumer behaviour importance of the supply chain to tors in this change. moving beyond cost, quality and nomic turbulence,” says Edward
environmental impact, ethical and demand; increased awareness, identify a greater number of Armin Samali agrees that green delivery criteria by delivering a Sweeney. “Demand for pro-
sourcing, customer relationships focus and legislation on environ- opportunities to innovate and issues are becoming increasingly process of purchasing goods and grammes that are flexible, relevant
and so on. mental and sustainability agenda; improve performance. By seeing important. “Despite the present services that takes into account the and internationally-focused such
According to Armin Samali, and continued globalisation are the interconnections among all the downturn and persistent focus on long term social, economic and as NITL’s Executive Masters in
senior executive and head of driving organisations to become elements of the chain, they are less cost reduction, the issue of environ- environmental impact that such SCM is expected to remain
supply chain management at more agile, responsive, and flex- likely to sub-optimise the whole by mental responsibility hasn’t gone purchasing has on people and com- strong.”
optimising one of the parts and in a away,” he says. “Again and again,
better place to achieve high-level we hear of a continued boardroom
goals.” focus on the carbon agenda. Yet at
Samali’s point is borne out by Armin Samali of Accenture the exact same time as economic
“
recent Accenture research which conditions are forcing organisa-
has found a strong and consistent
relationship between supply chain
The power of tions to justify the expenditure and
effort on the most tangible and
and financial performance. Compa- supply chain immediate of returns, recent
nies which were seen as supply
management isn’t just Accenture supply chain mastery accelerated supply value
chain leaders showed a market cap- research has found that many busi-
italisation compound average about operational nesses are unable to quantify the
growth rate of between 7 per cent
and 26 per cent higher than the effectiveness and
savings achieved through carbon
initiatives.” ACCELERATING SAVINGS
industry average. This has resulted in problems
Edward Sweeney, director of efficiency, it’s also about for many of those organisations. REDUCING RISK
learning with the National Insti-
tute for Transport and Logistics
supporting the overall “These organisations are turning
to traditional cost-reduction initia-
(NITL), believes that there is also a strategic objectives tives rather than holistic business
need for supply chain managers to cases that include a ‘de-carbonisa- “Supplierforce procurement
be more involved in the overall of the company tion’ agenda – and here lies services and technology
business. “Supply chain managers danger,” Samali warns. “A prop-
need to have a broad under- operational ‘box-moving’ activity erly-managed green initiative have combined to deliver
standing of the business and stra- to one which is knowledge-inten- often finds new and substantial over €2.5million in savings“
tegic landscape, combined with a sive and which requires a wide cost reduction opportunities, as
detailed knowledge of supply chain range of new competencies.” well as helping to achieve the International Facilities Management provider
operational planning and control Sweeney cites a number of organisation’s corporate social
issues – the so-called ‘T-shaped’ driving factors behind this shift, responsibility goals. From Accen-
profile,” he says. “They also need including the internationalisation ture’s experience we have seen IS YOUR BUSINESS:
to have a balanced understanding of business and the concomitant that supply chain masters choose • Under pressure to realise savings?
of management and technological development of global supply pragmatic initiatives which simul-
issues so that both the ‘hard-wir- chain architectures; the taneously improve cost effective- • Highly dependent upon a small group
ing’ and ‘soft-wiring’ of supply outsourcing of key supply chain ness and reduce supply chain envi- of critical suppliers?
chain relationships can be functions such as manufacturing ronmental impacts. Typical • Experiencing losses through supplier failure?
achieved.” and distribution and the related cost-and-carbon reduction tactics
In this context, the importance development of “virtual” supply include route optimisation to • Lacking the Supplier Relationship Management
of education and training cannot chains; and the emergence of SCM improve load factors, reduced (SRM) capabilities to deliver savings and mitigate
be overstated, says Sweeney. “In as a source of strategic leverage in empty-running, and seeking out supply risk?
essence, SCM has itself, from the point of new operating synergies.”
shifted from view of But such holistic approaches do
being a differentiation require buy-in at all levels of an
mainly through organisation. This is particularly Supplierforce offers:
so in the case of sustainable e-Sourcing Accelerator SRM Accelerator
sourcing. “Sustainable sourcing is
another facet of corporate respon- • e-Auctions • Supplier Information
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4 THE IRISH TIMES Friday, March 26, 2010
SupplyChain Management A SPECIAL REPORT
The carbon factor
The obligation to lower reducing emissions is mandated,
either by legislation, or by
carbon emissions is reporting requirements from
investors. An example of this
obvious but calculating would be the extension of the EU
the importance of Emissions Trading Scheme to
European airlines, which will
carbon in supply and
moves to centre stage
bring a direct legislative and cost
burden on firms. But carbon is
demand is challenging, also becoming a competitive issue
writes Peter McGuire – we have seen Walmart state that
carbon will be one factor under
consideration when making sup-
plier decisions – and there has
C
been an upswing in requests from
ARBON HAS long been customers for carbon-emissions
intimately bound with data in the transport sector.
supply chains. Every tan- Overall, firms are looking for the
gible purchase made, best balance of cost, service and
whether by a private sustainability in their investments,
consumer or a company, expends rather than just cost and service.”
energy. The product has to be The demand for information
farmed or manufactured, pack- about carbon emissions will grow
aged, transported, and ultimately in coming years. O’Connor and
disposed of. PwC have been helping Bord Bia,
Without carbon emissions, of the Irish Food Board, to under-
course, there would never have stand the impact of sustainability
been an industrial revolution, nor on the food industry now and into
would the complex and intercon- the future.
nected supply chains that enable “It’s an extremely complex
our civilisation have emerged. But area,” he says. “We might assume,
now – despite the failure of global for example, that a cucumber
governments to agree on a deal in wrapped in plastic is more environ-
Copenhagen – there is an agreed mentally damaging than an
need to urgently decrease carbon unwrapped one, but a cucumber
emissions in order to prevent run- with packaging might last longer,
away climate change and, poten- reducing food waste and lessening
tially, an economic catastrophe its carbon footprint. Getting these
dwarfing the worst we’ve seen in complexities across to consumers
recent years. in a message on a tiny label is very
A recent Accenture survey difficult.”
found that 90 per cent of 11,000 Higher prices for carbon are
customers worldwide would be coming, O’Connor believes, and
willing to switch to a new product this will ultimately force supply
if they knew that it had a minimal chain managers to reduce the
climate change impact. But as the carbon emissions in moving a
recession bites deep into people’s trends already seen in other areas, broader strategic responses. Tele- product. The logo contains infor- decides what’s on the shelf, and holders: employees, owners, sup- way.” product or service from first sup-
incomes, are consumers saying such as nutritional information, coms firm Vodafone has worked mation on the amount of carbon they’re keeping an eye on what the pliers, society and government, According to Hanifan, there is plier to final consumer. Soon, he
one thing and doing another? sustainability of source, and the on potential opportunities to use each packet uses from seed to consumer wants: to buy local and customers, and shareholders. also a growing awareness of a says, every individual will measure
Gary Hanifan, senior executive recyclability of packaging.” mobile technology as an enabler of store and through to disposal, and ethically produced products. The “The reality is that organisations direct business rationale for their carbon footprint and will be
in Accenture’s supply-chain man- Big and small companies have change. has driven Walkers towards a whole concept of sustainability is today impact on the planet in curbing corporate emissions. incentivised on that basis.
agement division, believes that many motivations to change the Global transport and distribu- more sustainable energy model. about more than carbon: it’s about every way, from how they employ “Firstly, carbon emissions are “This is what will be required
price – and other factors such as amount of carbon used in the tion company TNT is building a Bartley O’Connor, head of sus- not damaging the planet or people to how they treat the local largely equivalent to energy con- for the planet. We have to move
quality, convenience and availa- supply chain, says Hanafin: “One large-fleet of revenue earning bat- tainability and climate change at harming workers. Does a company environment. Sustainable develop- sumption, so there is often a towards a low-carbon world and
bility – clearly remain the main is the environmental imperative; tery-run vehicles. Tesco has rolled PricewaterhouseCoopers, believes pay its producers a fair wage for ment movement is about money win-win on carbon reduction and the only way is to put a high value
drivers of consumer preference. scientific and governmental con- out a sequence of transport mode that suppliers and retailers must the raw materials in chocolate? Do making being done in the right cost. For some industries, on it.”
“However, there is evidence that sensus has suggested that we are switches, including moving from ultimately stop charging a pre- they use child labour?”
this is evolving. Consumer aware-
ness and concern about carbon
on an unsustainable trajectory,
particularly on carbon emissions,
road to rail for Scottish store deliv-
eries, road to sea for bulk liquid
mium for environmentally sustain-
able products. Instead, he says,
The global economic system has
for many years focused on deliv- World Economic Forum Carbon Reporting Guidelines
has already led some retailers to and many firms are keen to make a imports, and electric vehicles for they need to build the cost into ering value to shareholders. Until
apply carbon labels to a growing step-change in their environ- urban home delivery. Retail giant their business; one UK company, recently, the environmental, social RECENTLY, THE World Economic Forum’s (WEF) request from the main players in the industry for a
section of their product range – for mental impacts as a result.” Walmart, one of the world’s Respectful, produces free-range and cultural impacts of corpora- Logistics and Transport Industry Group outlined solution, and so we would hope they would drive
example, Tesco and Boots work Several companies have taken largest corporations, recently eggs for Asda and has removed tions’ activities were largely standard guidelines for calculating consignment through," explains Gary Hanifan of consultancy firm
with Carbon Trust – and this tentative steps in this direction, announced a new set of pro- costs from the production process excluded from the equation, with level carbon emissions from logistics and shipping Accenture, which helped establish the guidelines.
begins to replicate some of the ranging from tactical initiatives to grammes and goals for reducing by using renewable energy. global companies from Nike to operations. The WEF is an international organisation that
“ story behind Walmart’s war on emissions
the greenhouse gas emissions of “Consumer awareness is Coca-Cola and Walmart pre- Member firms of the WEF have agreed to pilot the brings together world business leaders,
The reality is that organisations impact on its extended supply chain.
In 2007, Walkers crisps, owned
growing and they want to do the
right thing,” he says. “To reach
senting clear targets for critics.
O’Connor believes the share-
guidelines during 2010. The organisation is also
involved in wider global discussions about placing
international politicians, and selected journalists
and academics. It is funded by 1,000 global
the planet in every way, from how they by PepsiCo, became the first com- those consumers, the producer holder focus is shifting, with a carbon footprint information on individual products. corporations who have played a key role in directing
pany in the world to display a has to get to the retailer, and that’s growing emphasis on both "Ultimately, the guidelines are the product of a global economic policy over nearly four decades.
employ people to how they treat the environment carbon logo on a consumer where the power lies. The retailer internal and external stake-
The
It might have one of
the worst reputations
in global commerce,
W ALMART’S CRITICS are
legion. The world’s largest
retailer has been accused
of violating labour laws, ruining
local businesses and reducing con-
suppliers to take a fresh approach
to sourcing, manufacturing, pack-
aging and transportation. Is the
much maligned hypermarket
turning an ethical corner?
great fanfare. Notably, representa-
tives from Oxfam flanked M&S
chief executive Stuart Rose as he
announced the company’s ulti-
mate goal of becoming the world’s
sions, and they have the financial
clout to dictate these terms, sup-
pliers will inevitably have to take
note. Large retail companies have
the power to set the agenda.”
it seems inevitable Walmart’s
move towards sustainability will
impact on the emissions coming
from some Chinese suppliers.
“China is not asleep to the implica-
tral issues in supply chains.
“At the moment, companies are
trying to survive the economic
crisis, while the Copenhagen cli-
mate-change conference last year
but the US retail giant sumer choice.
Earlier this month, Walmart
Sean Darcy, managing director
of global logistics company DSV,
most sustainable retailer by 2015.
Despite the recession, and polit-
Any costs related to making
products more energy-efficient –
tions and opportunities of a more
sustainable supply chain,” says
laid bare the difficulties in
securing a worldwide agreement
is staking its future on announced a set of programmes says major retailers such as Wal- ical setbacks at Copenhagen, con- redesigning packaging or using a O’Connor. “They’ve been focusing on environmental issues. When
and goals for reducing the green- mart and Tesco should set an sumers and legislators are different fertiliser – will be the heavily on clean technologies and things improve, this issue will be
drastically reducing house gas emissions of its example by reducing their carbon demanding both retailers and sup- responsibility of each supplier, not bringing solutions to some of the more firmly back on the agenda.
carbon emissions along extended supply chain by 20 mil-
lion metric tons by the end of
footprint. “Walmart is in such a
dominant position that there will
pliers reduce their environmental
impact. “Companies are reposi-
of Walmart.
Other retailers, such as Tesco,
world’s environmental problems.”
Darcy, however, says China’s
Companies will have to come up
with action plans to reduce CO2
its supply chain, writes 2015. It will do so by working with always be a lot of eyes on their tioning themselves,” says Bartley are likely to look at what Walmart internal market is growing and he emissions.”
its suppliers to reduce their green- supply chain. They know they have O’Connor, head of sustainability is doing and adopt similar prac- is uncertain as to how influential Large corporations such as Wal-
Peter Maguire house gas emissions, paying partic- to take positive steps.” and climate change at advisory tices. If Walmart stays true to its Walmart, despite its enormous mart have a role to play in tackling
ular attention to high-carbon Marks & Spencer led the way firm PricewaterhouseCoopers. word, even global behemoths such power, will be in directing Chinese the issue of global carbon emis-
items such as bread, milk, meat towards a sustainable model. In “They want to differentiate as Coca-Cola may have to change. policy. Nonetheless, he says carbon sions through a mix of voluntary
and clothing, and pressuring its 2007, Plan A was announced to themselves from their competitors Although the drinks giant has and sustainability will become cen- action and enforced legislation. Bartley O’Connor of PwC
and they know that a consumer made significant advances
faced with two similar or identical towards sustainability, it has been
products at around the same price criticised for failing to prevent
are more likely to go for the envi- human rights abuses of union
ronmentally friendly option. Most members in Colombia and for
retailers have begun the process of depleting water tables to the
change, although some are serious detriment of farmers in
making more noise than others.” India.
Walmart operates in the US, the Ultimately, companies such as
UK (as Asda), Japan (as Seiyu) and Walmart are looking at their
TURNING
India (as Best Price). The company bottom line and realising they can
has already taken internal steps save money by reducing the
towards sustainability, such as com- carbon emissions of their supply
mitting to 100 per cent renewable chain.
THE CORNER
energy and reducing its waste The costs involved in making
down to zero. more energy-efficient products
Now, it can use its market domi- will be borne by the supplier,
nance to effectively force suppliers rather than Walmart, whose
to reduce carbon from their pro- profits will be jealously guarded.
duction by favouring those pro- The company could potentially use
ducers with a lesser carbon foot- its cost savings to lower prices to
print.
“It can advise its suppliers on
the consumer, drawing further crit-
icism from smaller local busi-
A CONFERENCE FOR ALL
CHARTERED ACCOUNTANTS
steps to reduce its carbon foot- nesses that cannot compete.
print,” says O’Connor. “It’s more In 2007, Walmart’s then chief
carrot than stick at the moment, executive Lee Scott said the sus-
but if Walmart’s suppliers start tainability agenda offered one of
working with them on ideas,
they’ll build up a better relation-
this century’s greatest opportuni-
ties for competitive advantage. ANNUAL CONFERENCE 2010
ship in the long-term.” O’Connor says companies can save
Darcy agrees: “Suppliers and money by cutting carbon from 6th May - 7th May 2010
customers are looking to build their supply chains: “It takes waste
deeper and better relationships, out of the business. Companies Chartered Accountants House,
not just over one year but over 15 soon realise that by rationalising
to 20. The customer, in this case their logistics, they are improving 47-49 Pearse Street, Dublin 2
Walmart, is able to indicate what efficiency.”
they require from their supplier. If Walmart is the world’s largest Speakers include:
that’s a reduction in CO2 emis- purchaser of goods from China, so
An Taoiseach Brian Cowen TD
Dan OʼBrien, Senior Economist and Editor, Economist Intelligence Unit
Matt Cooper, Broadcaster and Journalist
Sean Fitzpatrick, Motivational speaker and former All Black
Conor Carmody, Chief Commercial Officer, eircom mobile
Niamh Brennan, Academic Director, Centre for Corporate Governance,
University College Dublin
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