Broken supply chains hamper green efforts

Poor communication between different departments and partners are hampering efforts to cut the carbon emissions of many firms' global supply chains.

That is the view of Dave Food, supply chain director in the UK for business software giant Oracle. He argued that while sustainability initiatives provide a great opportunity for firms to optimise their supply chains to cut costs and carbon emissions, many are failing to deliver the expected benefits because of their "siloed approach" to supply chain management.

"The problem with supply chains is that many are still organised in silos and if you cut carbon in one of these areas you can end up increasing emissions in another area," he said. "We are all aware of the idea that you can cut emissions from flights by importing flowers from the Netherlands instead of Africa, for example, but now studies have shown African flowers have a lower overall carbon footprint as they do not require heated glasshouses."

He added that such examples were relatively widespread, with similar attempts to cut packaging or slow down supply chains occasionally leading to a net increase in emissions as a result of more products arriving damaged.

Food argued that initiatives designed to cut supply chain emissions provided the perfect opportunity for firms to develop "the cross-functional approach to supply chain management that has been part of management theory since the eighties," but warned that many firms were missing out on this opportunity because of their failure to understand and manage the environmental impact of their entire supply chain.

A recent, small survey of 56 UK supply chain managers commissioned by Oracle and released last month confirmed that supply chain oversight remains limited, with almost half of respondents claiming they only receive data from the parts of the supply chain directly managed by their business.

The survey also revealed that supply chain professionals are under growing pressure to deliver cuts in emissions, with three quarters claiming their firms had sustainability policies in place.

Food argued that to deliver on these policies, firms needed to attain a better overview of their supply chains and increase communication between the different silos, such as design, manufacture, transport, distribution and retail.

He also claimed that while only a small proportion of firms were willing to collaborate closely with partners and even competitors, those firms showing the greatest commitment to curbing emissions were beginning to display a greater enthusiasm for co-operation.

"One of the most interesting trends we predict is for the emergence of shared distribution centres," he said. "It can only work where firms do not see supply chains as part of their competitive advantage, but there is an efficiency argument for working with those beyond your own company, and that includes competitors, to share your distribution network."