Greening the supply chain

Product strategy director for Oracle supply chain management, Rich Kroes talks about the benefits of building a greener supply chain...

Q: How big a role does supply chain management play in enterprise environmental policy?
A: When you think about the impact companies have on the environment, much of it has to do with the products that they make or handle. It really starts at the beginning of their value chain with how a company’s products are sourced, produced, fulfilled, serviced, and ultimately how they are disposed of at the end of the life of those products. There are many factors that come into play for companies to become greener but clearly their supply chain is a key one.

Q: What are the characteristics of a green supply chain?
A: If you analyse the process of managing your impact across the chain, companies need to take a comprehensive and holistic look at each of those activities for opportunities to improve them, to reduce their impact from an environmental perspective. In some cases that may mean product re-design. In other cases it may mean the introduction of new metrics and optimising around those across your entire value chain.

Q: How is Oracle supporting the greening of supply chains?
A: Two key areas are information and efficiency. Each of these will play a key role in enabling companies to manage, execute and measure their green initiatives. Manual and disjointed processes that you often see in place in companies today are not going to be able to scale across enterprises and they also won’t be able to meet increasingly stringent compliance directives. So enterprise application software is going to have to play a role here.

Q: What software applications are important when it comes to the greening of supply chains?
A: One of the key applications is transportation management. Transportation causes about a third of the world’s CO2 emissions so companies can leverage transportation management tools to optimise the routing of their transportation networks, to consolidate loads and reduce empty backhauls.

They can also optimise based on transportation mode selection, where possible – for example rail and sea transport have a much lower environmental impact than road or air transport do. This helps reduce emissions and fuel consumption as well as costs.

Another key application is product lifecycle management – in particular product governance and compliance. It’s critical to design your products with the environment in mind, and in many cases ensuring that the products are going to comply to any applicable regulations. Correcting or mitigating those issues with products later on in their lifecycle is always much more costly than designing it right from the start.

Enterprise asset management is also getting increasing attention. Large machinery is extremely energy-intensive, and running machinery more optimally not only makes environmental sense but also financial sense. More and more companies are turning to more predictive, intelligence, sensor-based maintenance programmes rather than the traditional time interval maintenance programmes. Managing your assets more intelligently not only ensures you detect issues when they arise, it also avoids the costs of having the machinery running sub-optimally and also extends the useful life of the machine. One thing that spans across all of these applications is business intelligence. It’s critical that companies identify their key environmental metrics and are able to measure and report on them. As the saying goes, you can’t improve what you can’t measure, so companies are increasingly going to have to identify these metrics and be able to aggregate them effi ciently and eff ectively across their company.

Q: Are there financial benefits to be reaped from greening the supply chain?
A: These green initiatives really need to make financial sense for companies. Ultimately businesses are around to generate profi t. But the reason we are seeing so many companies starting to embrace this theme is companies recognise the opportunity here to save costs and build brand equity in many cases. They’re also coming to the realisation that they need to be well positioned to meet an increasing array of regulations in order to maintain their competitive positioning.

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