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Green Supply Chain Study

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Green Supply Chain Study Powered By Docstoc
					                             May 2008
             Sponsored by:
                               Conducted by:   In conjunction with:




                                                              1
APRIL 2008
                               Study Sponsors




As a leader in sustainability initiatives, CSC co-sponsored The Green Supply Chain Study.
We invested in this study to give supply chain executives a view into what strategic green
supply chain initiatives are being implemented, or planned, by their peers and to help them
better understand the impact of implementing such initiatives.

Visit www.csc.com to learn more about corporate sustainability initiatives.
                            Key Study Objectives
•   Document corporate sustainability plans in place and senior level commitment.

•   Identify the most important environmental issues for supply chain professionals.

•   Identify supply chain green actions currently implemented or planned in
    manufacturing, warehousing, and/or distribution.

•   Determine ROI on green investments and ROI measurement methods.

•   Determine level of green collaboration with extended supply chain partners.

•   Gauge adherence to government regulations.

•   Identify greatest obstacles re. implementing sustainable business practices.




                                                                                       3
                             Survey Methodology



•   Survey sent to print and e-mail readers of LM and SCMR Magazines in February
    2008. CSC featured the survey tool on its home page www.csc.com during the
    month of March, and sent the instrument to its clients and prospects through a
    special “green” mailer featuring a recycled and reusable tote.

•   250 usable responses received

•   All respondents are involved in the corporate policy-making for supply chain
    strategy planning and initiatives.




                                                                                   4
                                  Summary of Findings



•   More than one-half of respondents have a documented corporate sustainability plan.

•   Just over one-half have a senior executive with designated responsibility for their
    organization’s sustainability initiatives, most often a vice president.

•   In regard to sustainability-related focus groups, more than a third are involved in the EPA’s
    SmartWay Transport. More than a quarter or more of respondents report their organization
    is actively involved in the Green Suppliers Network, and/or Carbon Disclosure Project.

•   Nearly two-thirds of respondents believe the most important environmental issue facing their
    organization today is waste disposal and recycling, followed by conserving natural
    resources, green house gas emissions, and “green” consumer buying preferences.

•   More than one-quarter of respondents are currently implementing sustainable supply chain
    initiatives, one-half are evaluating these initiatives, and one-fifth have no current initiatives
    nor any plans at present.


                                                                                                        5
                         Summary of Findings (continued)

     Sustainability Plans Already Implemented:


•   Changes already implemented to make organization more environmentally sound:

     –   Distribution Centric (Top 3)
           • Implementing order consolidation (decreasing unused space on trucks)
           • Using reusable containers/storage equipment
           • Selection of recyclable packaging materials

     –   Transportation Centric (Top 3)
           • Route optimization (reducing empty miles)
           • Reducing truck idle time
           • Increasing cube utilization

     –   Manufacturing Centric (Top 3)
           • Recycling programs for raw materials
           • Recycling programs for reusable component parts
           • Including recycling in new product design




                                                                                    6
                           Summary of Findings (continued)

    Sustainability Plans To Be Implemented Over the Next Year:

•    Changes company will be undertaking over next year to make organization more
     environmentally sound:

      –   Distribution Centric (Top 3)
            • Reduction in packaging usage through order cubing
            • Selection of recyclable packaging materials
            • Reducing energy consumption through addition of solar panels, green roofing options and
                skylights

      –   Transportation Centric (Top 3)
            • Replacing diesel-powered trucks with alternative fuels
            • Migration to more aerodynamic trucks
            • Implementation of alternative power sources for refrigerated trailers

      –   Manufacturing Centric (Top 3)
            • Including disassembly in new product design
            • Increasing product robustness in product design
            • Recycling programs for reusable component parts and/or including recycling in new product
              design



                                                                                                          7
                         Summary of Findings (continued)

Overall Sustainability Plans Implemented/Will Be Implemented Over the Next Year:


•   Companies are more apt to focus on transportation/distribution centric areas than
    manufacturing areas. Companies either have implemented or will be implementing the
    following:

     –   Distribution Centric (Top 3)
           • Selection of recyclable packaging materials
           • Using reusable containers/storage equipment
           • Implementing order consolidation (decreasing unused space on trucks)

     –   Transportation Centric (Top 3)
           • Route optimization (reducing empty miles)
           • Reducing truck idle time
           • Increasing cube utilization of equipment

     –   Manufacturing Centric (Top 3)
           • Recycling programs for raw materials
           • Recycling programs for reusable component parts and/or including recycling in new product
             design
           • Including recycling in new product design
                                                                                                         8
                        Summary of Findings (continued)

     Among Those Currently Implementing Sustainability Plans:

•   Three-fifths of respondents (60%) have a way of measuring their return on investment for
    their “green” initiatives, most commonly through cost reduction.

•   The top two “soft” benefits gained from “green” initiatives investment:

     –   Improved public relations
     –   Improved customer satisfaction

•   A majority of respondents are currently collaborating with their extended supply chain with
    the definition and implementation of their sustainability efforts, most commonly involving
    active discussions regarding collaborating to reduce impact on the environment.




                                                                                                  9
                          Summary of Findings (continued)
    Among Those Currently Evaluating Sustainability Plan

•    Among those evaluating sustainability plans over the coming year, the focus will be heavier
     on distribution centric areas and transportation than manufacturing areas.

•    Average timetable for implementation is one year.

•    Functional areas to be evaluated or established over next months/years:

      –   Distribution Centric (Top 3)
            • Using reusable containers/storage equipment
            • Selection of recyclable packaging materials
            • Reduction in packaging usage through order cubing

      –   Transportation Centric (Top 3)
            • Route optimization (reducing empty miles)
            • Increasing cube utilization of equipment
            • Reducing truck idle time

      –   Manufacturing Centric (Top 3)
            • Recycling programs for reusable component parts
            • Recycling programs for raw materials
            • Including recycling in new product design

                                                                                               10
                        Summary of Findings (continued)

      All Respondents

•   Nearly two-fifths of respondents report their organization adheres to governmental
    regulations regarding waste disposal or green house gas emissions.

•   Close to two-thirds of respondents report the greatest barrier their organization faces with
    regard to implementing sustainable business practices is cost justification, followed by
    conflicting priorities.

•   Survey respondents hold a variety of job functions, most often mentioned are either supply
    chain management and/or logistics/transportation roles. Almost half are located in a
    corporate headquarter location.

•   Average size of their warehouse/DC operation is 616,000 square feet.

•   Respondents work in a variety of industries.



                                                                                                   11
Q. Do you have a documented corporate sustainability plan?


        Have
    sustainability
      plan, 52%




                                             Do not have
                                            sustainability
                                              plan, 48%




                                                             12
Q. Do you have a senior executive with designated responsibility for your
                organization’s sustainability initiatives?



   Have executive
      with this
     designated
 responsibility, 48%




                                                          Do not have an
                                                          executive in this
                                                             role, 52%




                                                                              13
      Q. Please indicate the title of the senior executive with designated
          responsibility for your organization’s sustainability initiative.


         29%
30%




20%                  16%

                                10%
10%                                          8%           7%         7%
                                                                                  4%       3%

0%
         Vice      Director   President   Executive   Senior Vice   COO        Manager     CEO
       President                            Vice       President
                                          President

                                                                      Other:         12%
                                                                      Don’t know: 5%             14
              Q. Is your organization actively involved in any of the
                  following sustainability-related focus groups?




40%         36%
                            31%

30%                                            25%



20%
                                                                      11%
                                                                                            7%
10%



0%
      EPA SmartWay   Green Suppliers   Carbon Disclosure   Association for Retail   EPA Green Chill
        Transport       Network             Project           Environments



                                                                         Other:       26%
                                                                                                      15
       Q. What do you believe are the most important environmental
                 issues facing your organization today?


70%            64%


60%
                                    47%
50%                                                     41%
                                                                            38%
40%

30%

20%

10%

0%
      Waste disposal and   Conserving natural   Green house gas    "Green" consumer
          recycling           resources            emissions       buying preferences




                                                                  Other:      3%
                                                                                        16
           Q. Which of the following best describes your
       organization’s approach to evaluating and implementing
                 sustainable supply chain initiatives?



   Currently
evaluating, 49%
                                                           Currently
                                                         implementing,
                                                             29%




                                         No current
                                    initiatives and no
                                    plans at present,
                                            21%



                                                                         17
                 Q. What is your timetable for implementation?


50%
                                                            41%

        Mean:         1 year
40%


30%                                   23%


20%             15%



10%                                                                               5%



0%
      Within the next 6    Between 6 months and   Within 1 - 2 years   In more than 2 years
          months                  1 year




                   Base -Among Those Currently Evaluating Plan
                                                                                              18
Q. Which supply chain functional areas have you implemented changes and which will you
be undertaking over the next year to make your organization more environmentally sound?


        78%                                    Distribution Centric
80%

                       67%                                                    Implemented
70%
                                       63%                                    Will be undertaking

60%
                                                        52%
                                                                        46%
50%
                                                                                        42%
                                                                                                      40%
40%                                                           35%
                                              32%                                                                    31% 30%
                                                                                                            28%
30%                          25%                                                              25%
                                                                              21%

20%
              12%

10%


 0%
      Implementing    Using recycling    Selection of   Reduction in    Water          Reducing fork Replacing gas- Reducing energy
      order           containers/storage recyclable     packaging       conservation   truck hours   powered fork      consumption
      consolidation   equipment          packaging      usage through                                lifts with fuel
                                         materials      order cubing                                 efficient options



                                   Base: Among those currently implementing plan                                              19
Q. Which supply chain functional areas have you implemented changes and which will
       you be undertaking over the next year to make your organization more
                                                        environmentally sound?

              69%                                    Transportation Centric
  70%
                                     60%
                                                           58%                                                                Implemented
  60%                                                                            54%                                          Will be undertaking

  50%

                                                                                                             39%                                         40%
  40%

                                                                                                                                    30%
  30%                                       26%                                                    25%
                      23%                                                                23%
                                                                  21%
                                                                                                                          18%
  20%                                                                                                                                            16%


  10%



  0%
          Route optimization   Reducing truck idle      Increasing cube       Contracting with       Migration to more   Implementation of       Replacing diesel-
        (reducing empty miles)        time         utilization of equipment providers/carriers that aerodynamic trucks    alternative power     powered trucks with
                                                                           support green initiatives                   sources for refrigerated   alternative fuels
                                                                                                                                trailers



                                                 Base: Among those currently implementing plan                                                                        20
Q. Which supply chain functional areas have you implemented changes and which will
you be undertaking over the next year to make your organization more environmentally
                                       sound?

                                               Manufacturing Centric
70%          63%
                                                                                           Implemented
60%                                                                                        Will be undertaking
                                          49%
50%

                                                                     36%
40%                                                                                                   33%

30%                                                                                                                                22%
                                                                                                              19%                          21%
                                                  18%                         18%
20%
                      11%

10%


0%
      Recycling programs for raw     Recycling programs for   Including recycling in new    Increasing product robustness Including disassembly in new
               materials           reusable component parts         product design                in product design               product design




                                           Base: Among those currently implementing plan                                                                 21
 NET: Respondents who have implemented/will be undertaking these changes

                                                            Distribution Centric
               87%                   84%
90%                                                       81%
                                                                                 78%
80%

70%                                                                                                  62%                   62%                     61%
                                                                                                                                                                         55%
60%

50%

40%

30%

20%

10%

0%
          Selection of         Using reusable     Implementing order       Reduction in        Replacing gas-       Water conservation     Reducing fork truck     Reducing energy
      recyclable packaging   containers/storage      consolidation       packaging usage    powered fork lifts with    through native            hours           consumption through
            materials            equipment        (decreasingunused    through order cubing fuel efficient options landscaping, low flow                            addition of solar
                                                   space on trucks)                                                     fixtures, etc.                           panels, green roofing
                                                                                                                                                                 options and skylights


                                                     Base: Among those currently implementing plan                                                                                 22
 NET: Respondents who have implemented/will be undertaking these changes

                                                       Transportation Centric

90%             84%
                                        78%
                                                                74%
80%                                                                                       71%

70%
                                                                                                                55%
60%
                                                                                                                                     49%
50%                                                                                                                                                         42%

40%

30%

20%

10%

0%
        Route optimization     Reducing truck idle        Increasing cube        Contracting with        Migration to more    Replacing diesel-    Implementation of
      (reducing empty miles)         time            utilization of equipment providers/carriers that   aerodynamic trucks   powered trucks with    alternative power
                                                                                  support green                                alternative fuels sources for refrigerated
                                                                                    initiatives                                                           trailers




                                                     Base: Among those currently implementing plan                                                                          23
NET: Respondents who have implemented/will be undertaking these changes

                                                 Manufacturing Centric
                     68%
  70%                                            62%


  60%
                                                                             49%
                                                                                                            48%
  50%
                                                                                                                                         39%

  40%


  30%


  20%


  10%


  0%
        Recycling programs for raw     Recycling programs for   Including recycling in new   Increasing product robustness Including disassembly in new
                 materials           reusable component parts         product design               in product design               product design




                                         Base: Among those currently implementing plan                                                                    24
          Implemented or Will be Undertaking – Summary


                   97%                           96%
100%

90%                                                                           74%
80%

70%

60%

50%

40%

30%

20%

10%

 0%
       Transportation Centric         Distribution Centric        Manufacturing Centric




                         Base: Among those currently implementing plan                    25
         Q. Do you have a way of measuring your return on
              investment for your “green” initiatives?




   Have way of
measuring ROI for
 green initiatives,
      60%




                                                          Do not have way of
                                                           measuring ROI,
                                                                 40%




                      Base: Among those currently implementing plan            26
                Q. Please describe how you are gauging your ROI.


            88%
90%

80%

70%

60%

                            44%
50%
                                            35%
40%

30%
                                                           19%
                                                                        14%
20%
                                                                                    9%
10%

0%
      Cost reduction   Gross margin   Revenue Gain      GMROI      Earnings per   Other
                       improvement                   improvement    share gain



                               Base: Among those currently implementing plan              27
             Q. What “soft” benefits do you see as important as a
                return on your “green” initiatives investment?


           76%              74%
80%

70%
                                                    58%
60%                                                                       51%

50%

40%

30%

20%
                                                                                       7%
10%

0%
      Improved PR   Improved customer   Self regulation may help   Supports brand   Other
                       satisfaction     avoid forced government
                                                regulation




                          Base: Among those currently implementing plan                     28
        Q. Are you currently collaborating with your extended supply
chain (suppliers and/or customers) with the definition and implementation of
                         your sustainability efforts?




       Currently
  collaborating with
   extended supply
      chain, 84%




                                                                   Not currently
                                                                collaborating with
                                                                 extended supply
                                                                    chain, 16%




                       Base: Among those currently implementing plan                 29
                                Q. Please describe the level of collaboration.


                     83%
90%

80%
                                                       61%
70%

60%

50%                                                                                    37%

40%

30%

20%
                                                                                                           2%
10%

0%
       Active discussions regarding    Sharing sustainability policies   Enforcing supplier specific   Other
      collaborating to reduce impact                                       mandates for change
              on environment




                                              Base: Among those currently implementing plan                     30
Q. Does your organization adhere to any governmental regulations regarding
              waste disposal or green house gas emissions?




    Organization
  adheres to gov't.
  regulations, 38%




                                                            Organization
                                                          does not adhere
                                                           to regulations,
                                                                62%




                            Base - All Respondents
                                                                             31
 Q. Does your organization adhere to any governmental regulations regarding
         waste disposal or green house gas emissions? (continued)



                                                                  47%
50%




40%




30%

                                                                             21%
              18%
20%

                                  11%


10%
                                                 3%



0%
      Environmental/EPA   Numerous/Various     ISO             Others   Don't know




                                             Base - All Respondents
                                                                                     32
Q. What are the greatest barriers your organization faces with regard to
            implementing sustainable business practices?



70%            64%


60%                                  53%


50%


40%
                                                            29%
30%

                                                                                 17%
20%

                                                                                               6%
10%


0%
      Cost justification   Conflicting priorities   Inadequate systems   Executive support   Other



                                          Base - All Respondents
                                                                                                     33
                    Q. Which of the following functional areas will you be evaluating or
                              establishing over the coming months/years?



                                                        Distribution Centric
60%         54%
                             52%

50%
                                                40%                 40%

40%


30%
                                                                                     20%                19%
                                                                                                                        16%              16%
20%


10%


0%
         Using          Selection of       Implementing        Reduction in     Replacing             Water           Reducing    Reducing energy
       reusable         recyclable      order consolidation     packaging     gas-powered          conservation      fork truck     consumption
      containers/       packaging      (decreasing unused     usage through   fork lifts with     through native       hours      through addition
        storage          materials       space on trucks)      order cubing   fuel efficient       landscaping,                    of solar panels,
      equipment                                                                  options        low flow fixtures,                  green roofing
                                                                                                       etc.                          options and
                                                                                                                                       skylights




                                                      Base: Among those currently evaluating plan                                       34
            Q. Which of the following functional areas will you be evaluating or
                      establishing over the coming months/years?



                                           Transportation Centric
              66%
70%

60%
                               51%
50%
                                               41%
                                                                38%
40%

30%

20%
                                                                                     7%                 6%
10%                                                                                                                      5%


0%
           Route          Increasing       Reducing      Contracting with        Replacing       Implementation     Migration to
        optimization    cube utilization   truck idle   providers/carriers   diesel-powered       of alternative       more
      (reducing empty    of equipment         time         that support         trucks with      power sources      aerodynamic
           miles)                                        green initiatives   alternative fuels   for refrigerated      trucks
                                                                                                      trailers




                                           Base: Among those currently evaluating plan                                             35
           Q. Which of the following functional areas will you be evaluating or
                     establishing over the coming months/years?


                                            Manufacturing Centric

50%
                   41%
                                          37%
40%



30%
                                                                  22%
                                                                                          17%
20%

                                                                                                                    9%
10%



0%
       Recycling programs for Recycling programs for Including recycling in new   Increasing product    Including disassembly in
      reusable component parts    raw materials           product design        robustness in product      new product design
                                                                                        design




                                           Base: Among those currently evaluating plan                                         36
NET: Will Be Implementing/Establishing Over The Coming Years
                         - Summary



                   86%
                                                     80%
 90%

 80%

 70%                                                                              57%

 60%

 50%

 40%

 30%

 20%

 10%

  0%
        Distribution Centric             Transportation Centric       Manufacturing Centric




                               Base: Among those currently evaluating plan                    37
DEMOGRAPHICS




               38
 Q. Which of the following best describes your job function?


40%
           34%

                         30%
30%



                                        19%
20%


                                                       10%
10%
                                                                                               5%
                                                                       2%
                                                                                    1%

0%
        Supply      Logistics or     Corporate   Warehousing or      Plant       Plant       Other
        Chain      Transportation   Management    Distribution    Management   Engineering
      Management    Management                    Management




                                                                                                     39
                  Q. What is the primary activity at your location?



            48%
50%



40%



30%

                           19%
20%
                                            12%
                                                                                 10%
                                                              8%
10%
                                                                          2%

0%
       Corporate      Manufacturing     Stand-alone    Warehousing     Retail   Other
      headquarters                    warehouses/DCs    supporting
                                                       manufacturing
                                                                                        40
      Q. What is the total size of your warehouse/DC operations?


30%                                                                                                   27%
                 Mean:    616,000 sq. ft.

                                                  20%
20%
               15%                                                                     15%

                                                                     12%
                               10%
10%




0%
         Less than          50,000-           100,000-          250,000-          500,000-        1,000,000 +
        50,000 sq. ft.   99,000 sq. ft.     249,000 sq. ft.   499,000 sq. ft.   999,000 sq. ft.      sq. ft.




                                                                                                                41
                                   Q. In which industry is your company*?

15%
            13%



                         10%
10%                                  9%

                                                7%          7%

                                                                         5%            5%
5%                                                                                                   4%
                                                                                                                  3%              3%              3%




0%
      Transportation    Food &     Retail   Wholesale   Electrical/   Fabricated    Computer      Machinery     Chemicals       Medical/        Contract
         services      beverages   trade      trade-    electronic      metal       hardw are/                              pharmaceuticals   w arehousing
                                             durable    equipment      products      softw are
                                              goods


                                                                              *Chart shows industries in which 3% or more of companies cited
                                                                                                                                                     42
Q. In which industry is your company? (continued)

     Wholesale trade – non-durable goods   2%

     Paper                                 2%

     Printing & publishing                 2%

     Rubber & plastics                     2%

     Transportation equipment              2%

     Primary metals                        1%

     Furniture & fixtures                  1%

     Textiles & apparel                    1%

     Instruments                           1%

     Stone, clay, glass                    1%

     Other                                 17%

                                                    43
            “Greening” your supply chain
         can create new growth opportunities,
                 strengthen your brand,
       and position your company to become a
      leader in the 21st century global economy!




To learn more about CSC’s Supply Chain Practice and its Green initiatives,
please contact Brad Barton at bbarton@csc.com, or visit www.csc.com.

				
Global Supply Chain Council Global Supply Chain Council http://www.supplychains.com
About Founded in 2002, the Global Supply Chain Council is Asia’s leading professional organization serving a fast growing community of more than 60,000 executives and representing leading companies who view their value chains as a critical driver of shareholder value and competitiveness. As an independent professional organization, the Council’s mission is to stimulate the understanding and adoption of supply chain management by providing a range of services including websites, magazine, directory, newsletters, research, workgroups, conferences, maps, video programming among other services. Targeting manufacturers and retailers end-users on line, in print and in person, the Council delivers a unique combination of education and lead-generation sources that helps logistics service providers, consultants, and software vendors and equipment suppliers achieve their growth objectives.