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Why the green movement hasn’t translated well for SCM

by Scott Wallask

January 11, 2011

By Scott Wallask, SAP Experts

Within the past week, I got a snapshot of environmentally-friendly green initiatives, and all I saw was conflict.

On the one hand, I heard about SAP, which has been successful in cutting carbon emissions across its global operations, to the tune of $120 million in savings in 2009, according to an article on Technology Review’s website.

But in contrast stand the results of last year's “Eighth Annual Global Survey of Supply Chain Progress,” which reported that respondents are skeptical about green SCM efforts.

“Green supply chain initiatives continued to show lukewarm results, with the positive improvements reported mainly by supply chain leaders,” according to an executive summary of the survey, which was jointly conducted by CSC, Supply Chain Management Review, and Michigan State University, with assistance by the Council of Supply Chain Management Pro fessionals and Supply Chain Europe magazine. 

“When we asked if green had produced possible savings or quantifiable savings, we … received low results, with 39 percent reporting none yet and another 34 percent indicating only 1 to 5 percent [savings],” the executive summary stated.

The survey doesn’t dig into why the green movement hasn’t taken off in SCM, but I can think of aspects that may be a part of the problem:

  • Going green is akin to modifying your diet: You’re never sure how happy you’ll be with the change. Yes, there are some great success stories – as SAP shows – but for other companies, going green costs a lot of money just to get things started. That financial fact is a deterrent in a recession.
  • At its core, SCM professionals want to move a product or order down the line in the most efficient way possible. That objective can be at odds with the green movement, because even at their simplest, environmentally-friendly goals take extra time to achieve.
  • These days, will companies work with a supplier who champions green causes or with a supplier that offers a lower price? I don’t know the answer to that question for any given individual company, but I do know the debate occurs often.

Some will argue that going green isn’t about money, but rather about improving the planet. However, for many companies – whether they be giants like SAP or the many small businesses that dot the map -- going green is a corporate decision, and as with any boardroom initiative, environmentally-friendly objectives first need to make a successful business case.

Until return on investment for green goals can be proven with greater consistency, results like those from the "Eighth Annual Global Survey of Supply Chain Progress” shouldn’t come as a surprise.

Follow Scott on Twitter @SCMexpert

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