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Sustainability. The Commercial Imperative.
by
David Kinnear – Sr. Adviser on Sustainability, Global Sourcing & Chair Elect of The Global Sourcing Council
At the risk of being radical, I invite you to forget much of what you heard about “green” and “sustainability” in the last 1-5 years versus what you may have felt in the last 3-6 months. This game is changing; this market is moving. The reason why is critical for businesses to understand and act upon, now. Make no mistake, this is a 2011 issue.
Sustainability is a path and an approach, not a destination or a simple report. It will become an inherent part of business – more seamlessly integrated than much of the technology we use today. This view is supported by the necessity for Sustainability as a discipline when we look at the world of global sourcing. If the world is really just one large supply chain, what we’re doing now is time-critical. For centuries, companies have hedged the risks associated with the supplies they use – sourcing from multiple vendors and locations, for example. Now, we’re emerging into an era where the world is the competitive landscape and raw material is increasingly accounted for. The game changes. It’s not enough to own the supply; it’s time to change the dependency. And this is where Sustainability comes in.
It’s all about definition – and the differentiation, competitive advantage that Sustainability can deliver on several levels. It’s why the client and provider community has so much to do and so much opportunity ahead. The fundamental reason why things are changing is the markedly growing perception and understanding about what Sustainability actually is, what it should deliver – and how critical that is to both the present and future competitive state of most businesses. So let’s recap for a second…
Along with a long list of other outcomes & benefits, Sustainability should enable the organization to achieve the following critical goals – each of which has clear, quantifiable, commercial value – not the fluffy stuff you may have heard about:
Clear, differentiating competitive advantage in a global marketplace for goods and services
Material, quantifiable cost and risk reductions – delivered by data tools to manage cost drivers such as energy
Break-throughs in operating efficiency & a new level of engagement with both internal employee and external stakeholder audiences
To date, aside being “green”, many have only really looked at the compliance aspects. Grab the data, throw it into a report. If you’re only looking at the compliance issue, that’s fine. You’re in good company. Perhaps 75-85% of companies will address this, for now, simply as a compliance issue with some modest benefits. But that’s not to say that the appetite for more won’t grow.
It’s the 15-25% of companies, especially the major enterprises and household brands, that will take Sustainability to the transformative level, leveraging information tools and behavioral science – given the scale and complexity of their organizations and the opportunity to benefit from this change in approach.
2011 will be the year of the supply chain on both a corporate and macro global level. The response to the supply chain issue reflects the strategy of the organization toward self-preservation and growth in an era of potential uncertainty. Those that move swiftly and with confidence will, in this writer’s view, garner the benefits.
