Sustainable
Development in the Supply Chain Industry
The Gordon Institute
of Business Science held a conference on Sustainable Supply Chain
with Economic Value. Sponsored by the Transnet Programme in
Sustainable Development; industry heads in supply chain and academia
were invited to attend and address the fundamentals, purpose and
functionality of sustainable development in supply chain.
Sustainable
development is the principle for global development in economic,
social and environmental sectors; meeting the socio-economic needs of
the present without compromising the ability of future generations to
meet their own needs. It emphasises the use of natural resources for
development without compromising the environment and the earth’s
ecological system.
The key purpose of
the conference was to address the matter of sustainable development
in the supply chain industry. Delegates were taken through the
theories of sustainable development and challenged within their
organisations to report on and consider the further application of
this newly developing theory.
Sustainable
development may be regarded by some as a “green” conservationist
movement pushed forward by tree-huggers. In essence this may be
correct but it should rather be seen as a move by those who are aware
of their moral and social responsibility to ensure that industry does
not ultimately deplete all the earth’s natural resources, leaving
nothing for future generations to live on, develop and enjoy.
Sustainable
development holds within it three critical elements in the global
development of sustainability; these are the social, environmental
and economic impacts of industrialisation.
It challenges
industries to map out initiatives and processes that do not harmfully
impact these elements.
Socially, the vision
for sustainable development is one that does not seek economic growth
at the detriment of the world’s most valuable resource; its people.
The global challenge is to ensure that all people have access to the
world’s resources and developmental systems to better their social
position. Poverty eradication is of the upmost importance in the move
for sustainability.
Economically the
system strives to help and ensure industries continue to grow and
develop, without massive and harmful environmental impact and minus
the total depletion of natural resources. It seeks to raise awareness
that there is not an unlimited pool of resources; over consumption
will result in complete exhaustion, resulting in the uncertainty of
what future generation will have to develop their world.
Environmentally the
goal is to reverse and avert all harmful impacts to the environment
that global industrialisation has had to date. To allow for all
stakeholders in global development to take responsibility for the
future development of the world; while maintaining and preserving its
natural resources for future generations.
The process and
impact of sustainability does not seek to eliminate global
development of industries, but rather to further raise awareness and
bring about change in industrial methods that can; and have
previously brought about damage to the earth and its inhabitants.
The case for supply
chain sustainability was set by Gordon Institute of Business Science
Lecturer, Lew Roberts. He set the view of sustainability as a
philosophy of designing objects with regard to the environment to
eliminate negative effects.
Within the supply
chain the key move is to eliminate the carbon footprint set by the
transportation industry. As industries grow, so does this footprint;
his proposition on this is introduce hybrid power vehicles in the
transportation industry, reduce costs of logistics by eliminating
waste and becoming more economical by seeking and advancing the
development of alternate energies. He cited an example of such
efforts by shoe manufacturer Timberland that exports up to 25 million
shoes globally; they initiated a redesign of their shoe boxes which
reduced the use of more environmentally conscious materials resulting
in a 15% reduction in manufacturing costs; amounting to a huge saving
and reduced environmental impact. Global courier DHL's promotes the
use of route optimisation that reduces in mileage and fuel
consumption.
Sustainable design
as a reaction to a global crisis and fundamentally seeks to raise
knowledge and awareness on the issue of the worlds depleting
resources, challenging its people to strive towards conserving these
resources and deterring industrialisation and consumerism at all
costs as it inevitably benefits none. As an isolated degrading
ecological system would inevitably have an impact on all inhabitants
of the earth.
Keynote
Address on Global Organisational Efforts in Sustainability
Keynote speakers
attended to address their organisational implementation of
sustainable development principles. These delegates included; Ravi
Pillay the Corporate Affairs Director of Nestle South Africa, Cobus
Rossouw the Chief Integration Officer of Imperial Logistics, Gary
Joseph the Chief Executive Officer of South African Supplier
Diversity Council, Boudewijn Goossens the Executive Director of
Fairtrade Label in South Africa and Phillip Griffith the Supply Chain
Leader of General Electric Africa.
Ravi Pillay of
Nestle shared how the organisation has grass-root operations that
address social and environmental factors in sustainable development.
Nestle has operated in South Africa for ninety-six years with over
4000 employees; worldwide the organisation has over 330 000 employees
and 443 factories in over 81 countries.
In South Africa
factories are located in small towns to be closer to raw material
thus reducing on the environmental drawbacks of logistics.
They implement a
business process that creates a shared value with all business
partners in sustainability to protect the future through compliance
of regulations that implement and practice these principles. Their
three focus areas in sustainability are in the areas of nutrition,
water and rural development.
Efforts in
developing sustainability through their supply chain include; the
assistance of local farmers with agricultural services that develop
environmentally sustainable farms, establishment and implementation
of strategies in pricing and logistics, cocoa farming that reduces
the water absorption of the plant through GMO technology. Other local
efforts are shown with their move of headquarters from an older
building in Randburg to a new greener one in Bryanston which saw
electricity consumption reduce by 50% in kilowatt usage.
Cobus Rossouw of
Imperial Logistics addressed the company's direct role in
sustainability in supply chain which they tackle through working with
suppliers in transport optimisation. This is done by reducing the
number of vehicles on the road and increasing mileage of each active
vehicle. Their challenge is that they own only half of their vehicle
fleet and thus seek to engage business partners in their efforts in
sustainability.
Gary Joseph's
position challenged the socio-economic aspect in the complexity of
supply chain. His address raised the issues of marginalisation in the
supply chain industry which inhibits newcomers to the industry. He
challenged industry leaders to help sustain local markets by
eliminating social challenges through integration and incorporation,
and the building of new Black Economic Empowerment business partners.
Boudewijn Goossens
spoke of how the Fairtrade label has been operating globally in
sustainability since 1988 grossing over U$5 billion in retail sales.
Their key products are coffee, cotton, cacao, tea, bananas and sugar.
In South Africa Fairtrade has been in operation since 2010,
partnering with companies such as; Distell, Woolworths, Cadbury and
Puma.
With over fifty wine
grape farmers they have a vital role in the improvement of the lives
of small-trade farmers. Fairtrade has a global leading sustainable
development initiative operating through product certification that
enforces socio-economic and environmental standards. This is
maintained through audits of business partners processes.
The social impact
provides good working and living conditions, environmental
management, workers rights respected through a life development
premium in which suppliers give back to the working community a sum
of money averaging R100 000 per farm; often used for community
development programmes such as improved housing and education.
Their direct
engagement with businesses is by trader certification; retailers
offer and promote their products, manufactures procure Fairtrade
ingredients, farmers and cooperatives supply certified products.
Phillip Griffith
Supply Chain Leader of General Electric Africa addressed his
organisations efforts in Sustainable development in Supply Chain.
General Electric has over 300 000 employees around the world, in 2012
they grossed revenues of over U$160 billion worldwide, of which more
than half was profited from outside of the United States. The company
is currently seeking Sub-Saharan growth. Its challenges are in
manufacturing energy efficient automotives, jet engines and turbines
and compliance of sustainable development initiatives with business
partners.
Their initiatives
are enforced through political pressure; lobbying by GE Pack to
advocate legislation that pushes for total industry sustainability.
The challenge according to Griffith is, “you can't force
legislation”. Through their processes they call for all business
partners to engage in environmentally sustainable processes as they
“require all businesses to strive to meet global standards”. Not
all business and industry partners score well in having business
practices that enforce sustainability; GE does not disassociate with
them but rather actively engages in improving their processes and
position thus raising their overall score on sustainability.
Vulnerabilities
and Prospects of Sustainability
The challenges of
Sustainable development in South Africa are multi-faceted. These
include; a lack of overall knowledge and understanding of what
sustainable development is and strives for and corruption within the
supply chain industry.
Adam Raman a senior
lecturer at Kingston University in the United Kingdom regards the
issues with sustainable development as; a problem with the adoption
of theoretical perspectives, a disconnected network in the supply
chain, and the fact that there are few success stories to show its
benefits. He regards the reasons for this as theories on
sustainability being too static, not dynamic, having closed
methodologies and relative stakeholders knowledge of theory being
limited.
What he advises it
that stakeholders should implement a service dominant logic –
regard everything as service including goods, to alter their myopic
view of sustainability being limited to manufacturing processes.
His challenge for
this is to advocate a new global theoretical perspective: proposing a
new definition and understanding of sustainability being issues
relating to extreme social, economic and environmental change and
sustainable development as the actions undertaken responding to these
issues.
Pressure advocating
for change would emanate from one’s own actions and feelings in
moral perspectives; this would drive a change in consumer related
behaviour, thus changing supplier behaviours in the manufacturing
process of goods. The view that all actors are stakeholders,
including the supplier and consumer.
He proposes a
“Corporate Social Responsibility” model that holds ethics as
potential leading to change, sustainability the issue and corporate
social responsibility as actions undertaken to initiate progress. He
asserts that sustainability is important for an organisations image
and overall market capitalisation.
To address issues
there needs to be a re-education of consumers and a change of habits.
Business to
business, there needs to be a development of new products and
processes lowering environment impact.
Supply chain
networks need to be broken to establish new sustainability ties;
organisations are to no longer be treated as single entities but as
collective interacting network that can affect global change.
With the issue of
corruption, Imperial Logistics tackles these challenges by allowing
relative stakeholders to be informed of alternate methods of trade
that are sustainable and by effective internal audits to deter any
corruption.
Nestle South Africa
has a rigorous supplier code of conduct that upholds transparency is
all steps of trade.
Gary Joseph of the
South African Supplier Diversity Council advises organisations not to
overlook minor irregularities in internal audits and promotes a
change of attitude within the methods that business is conducted.
Fairtrade bases its
business model on trust; thus it holds strict audits to ensure
transparency. This is “key for Fairtrade otherwise we can’t
exist” says Goossens, the Executive Director.
Failures of
sustainability according to Raman further include a lack of network
connection; stakeholders and sole interests being the bottom line.
“Diffusion and adoption inertia due to imbalance between
destruction of strong ties in established networks and creation of
weak ties as well as strong ties in new ones.”
Deterrents of
sustainable development that were highlighted are consumerism; living
in a societies that drive consumerism; resulting in industries being
driven by purchasing power. Consumers wanting bargains at all costs
drives demand for more goods this lowers labourer and farm worker
wages. Consumers are advised to take more responsibility of their
actions within these processes.
Within
organisations, the short-lived tenures of CEO's pushes each to view
only short term financial goals thus not placing an importance on
sustainability of organisational actions and processes.
Prospects are now
seen as the increased spread of the knowledge of the theory, global
initiatives by stakeholders in development such as donor agencies
imposing sustainability regulations and the change in social habits.
Boudewijn Goossens
of Fairtrade regards “consumer driven change most important. Change
in South Africa is slow; slowly but surely people are waking up and
wanting sustainably developed products”.
The biggest drivers
of sustainability are morally conscious consumers, according to Ravi
Pillay of Nestle.
For supply chain
stakeholders and clients, change is driven by people within
organisations.
Phillip Griffith of
General Electric which has made major moves and strives for
sustainability believes it should be incorporated in marketing more
and that “good entrepreneurs listen”, thus an all round
initiative for sustainability is possible and inevitable in the event
that the desire and move for change is properly vocalised.
Sustainable
Development and Supply Chain in a Changing World
Abrie de Swardt of
Abrie de Swardt and Associates, a logistics and supply chain
management thought leader, is an advocate of “Green Logistics”
which seeks to highlight an imbalance between supply and demand for
sustainability. He regards sustainability as an act that broadens the
concept of performance. Eliminating previous notions that focused
solely on the economical but now incorporating social and
environmental aspects equally and holistically, as they are
interdependent.
His initiative
emphasises the move forward as one in which industry heads and
individuals are socially and morally conscious of the worlds
dwindling resources and environmental condition. These moves can have
a positive economic impact and have been seen in the creation of new
fields and environmentally friendly industrial initiatives.
Such can be seen in
the development of alternate energy sources; the spread of solar
power technologies, bio fuels and wind turbine development.
In South Africa this
view can be pushed in the supply chain industry through logistics; as
13% of total carbon emissions arise from the transportation industry.
Collectively, he views that all logistical stakeholders should work
on understanding and acknowledging their role in sustainability,
route optimisation, social responsibility and unity in action.
Sustainability should be a lifestyle not a competitive advantage.
Christine Mondor, a
lecturer from Carnegie Mellon University in the United States spoke
of sustainability in supply chain design. She highlighted that value
and sustainability can be found in unexpected places.
Architecture as an
agent in the supply chain industry also plays a valuable role in the
promotion of sustainability.
The David L Lawrence
Convention Centre in Pittsburgh was the focal point of her
presentation. Built in 2004 at a cost of US$375 million, it receives
five-hundred thousand annual visitors and was designed with a “Green”
sustainable concept.
The building is
regarded as an important benchmark for sustainability in
construction. In comparison to its competitors has set a new standard
for sustainability, encouraging “greening” operations in
development thus promoting the transference of sustainability. This
transference moves from the guest to supplier in supply chain.
Its key sustainable
features include natural ventilation, daylighting and 40% less steel
used in construction. Natural ventilation has saved energy to power
fifty-one Pittsburgh homes annually.
Water efficiency
minimises demand, matches water to usage and treats black water on
site.
The indoor
environment maximises satisfaction of users with the design holding a
biophilic advantage; holding within it harmonious river views,
maintaining natural warm and outdoor air. Daylighting; which saves
significant energy is also used in the design that boasts large
windows allowing the natural flow of light.
Conventions are a
billion dollar industry: with that there is a push to reduce overall
consumption in the building, reuse and recycle, as the convention
industry produces massive waste streams.
It receives 25% of
its revenue from “Green Seeking” events that have so far equalled
to revenue of over U$144 million.
Mondor highlights
that there is a gap between sustainable building design and
construction and the convention centre stands as a benchmark for
sustainability and profitability.
Closer to home
greening construction moves can be seen in developments such as The
Pick and Pay Falls Roodepoort store, a R160 million development. The
flagship store, set on 10,000 square metres in Little Falls
Johannesburg is an innovative Green concept store by Atterbury
Properties and Pick and Pay.
The store was
constructed in 2012 and brought with it a pioneering sustainable
development node. It makes use of daylight harvesting, allowing for
maximum use of natural light in the building design. Rainwater
harvesting, grey water use and water-wise planting, featured along
with environmentally friendly, energy efficient lighting and LED
lighting in the car park.
Global initiatives,
moves and actions such as these depict shifts in the thoughts and
structures of development striving for sustainability.
What sustainable
development requires of us is to see the world as an interconnected
system that cannot function if all components are not fully active as
decisions made now will effect generations to come.
Yes I said it...