Sustainability involves business activities that provide present benefits to the organization without compromising the needs of future generations and introduced a concept of TBL (Triple Bottom Line). TBL was originally coined in 1987 by Bruntland Commission in Europe and was popularized by environmental activist John Elkington, the founder of a British consultancy called Sustainability in 1994. TBL links organization’s ability to keep operating successfully (economically) with two other key measures, environmental and social. The three measures together create a sustainable business model, which means that in order for a business to be successful over time, it must reinvest its profit for growth of its customer market and also must reinvest & track its contributions and impact on the environment and social capital as well.

Sustainability approach (once integrated in business model & key decisions making processes) will results in proactive consideration of economic, social & environment aspects into key decision making processes. To gain competitive advantages in global market, TBL concept must be integrated in the business model right from the start rather than adding just as an afterthought. This involves creating a business plan that reflects the organization’s commitment and clearly defines organization’s mission, vision, marketing, operations, pricing and growth strategies and must explain how it will integrate environmental & social elements into its business strategy. These strategies should cascade into planning, goal setting, and key processes and decision making processes. Some of the key decisions (that not only reduce environment damage, but also reduce expenses and cut unwanted cost along the supply chain) are

  • Product Design – Design team will collaborate with production team, supply chain & logistics team, key suppliers, partners and customers to

    • design products to reduce use of material (material efficiency) while meeting functional & regulatory compliance(early involvement of suppliers leads to better design of components with less cost & improved performance)

    • design for manufacturing & assembly to simplify and streamlined process flows, to reduce rejections/scrap/repair, energy consumption per unit produced, reduce waste material, etc.

    • increase operating life of products (can be increased by simply applying software patches), design that increase component re suability, product’s re manufacturability

    • design for supply chain & logistics to optimize storage & transportation cost

    • minimize/eliminate the use of toxic/hazardous components

    • Design for reverse logistics, Reusability, recyclability, disposability (in responsible landfill) of products and components

  • Selection of supplier’s while considering energy consumptions, carbon footprint, impact on environment & society in addition to functionality & landed cost.

  • Consideration of regulatory compliance and…. Which will minimize/eliminate the possibility of fines due to inadvertently not following regulatory compliance & reputation damage (such as ROHS & WEEE standards in Europe)

  • proactively implementation of initiatives to reduce carbon foot prints, safety consideration for customer, employee and society, etc.

  • effective campaign management to influence demands to synchronize supply, which ensures lesser inventories and reduced waste, inventory write offs, scrap, and material to be disposed in responsible landfills

  • continuous reduction of energy consumption per unit produced by improving asset performance, optimizing cycle time, training operators, improving safety, improving process capability, optimizing cycle time, implementing lean manufacturing to reduce waste, scrap, etc.

  • Plant location & warehouse locations decision while considering waste disposal, use of natural resources, pollution due to plant operations and its impact on society

  • Warehousing decisions will consider use of exiting or rent facilities that are more environments friendly

  • Selection of appropriate transportation mode and carrier to reduce carbon footprints

  • Use of recyclable packaging material. Proper storage of toxic, hazardous and dangerous material to prevent risks/loss, etc.

  • Network design to minimize impact of inbound and outbound transportation on environment, society while balancing customer service levels.

  • Reverse logistics decisions – process for gathering products (from customer end) for repair, recycle, reuse and disposal. Customers nowadays prefer to buy products from the organizations that also provide services for collecting products from customer site/collection centres for proper disposal (after completion of product’s life cycle) which not only improves market share but also improves reputation.

While such decisions helps organizations to build more greener, competitive, compliant and yet more profitable supply chains globally, a true commitment to social responsibility can significantly influence a variety of factors such as competitive advantage, organization’s global & local reputation, employee morale & commitment, relationship with customer, suppliers, partners, community, society and other companies. It will lead to building more loyal and lifetime customers which improves revenue, and profitability of supply chains.

Sustainability reporting has emerged as an important tool within overall supply chain. Global Reporting Initiatives (GRI) is the world’s most widely used sustainability reporting framework & guidelines when it comes to measure overall sustainability. The framework & guidelines enable organizations to prepare & publish their sustainability reports as per global standards, which will add to competitive advantage, will outperform competitors, and will helps in acquiring more market by continuously monitoring & improving its performance.

 

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Neeraj Mathur

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