SCDigest Editorial Staff

SCDigest Editor, Dan Gilmore, Says:

As we go further along, we’re going to have to increasingly make some trade-offs. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

Hi, this is Dan Gilmore, editor of Supply Chain Digest.  I’m here to speak a little bit about some topics around the green supply chain. 

Of course, we’re all in favor of a green earth and a good environment.  I think if we want this to really sustain itself as a movement, we’re going to have to get to a little deeper level of thinking than I think what we’ve done so far – particularly around how decisions are going to be made.  I think we’ve skimmed off the cream, if you will, particularly with the period of very high oil and energy prices.  It was pretty easy to find some projects that would make sense economically regardless of whether they were green or not because of this high price of energy. 

Now, at least for awhile, that situation has changed dramatically. So, as we go further along, we’re going to have to increasingly make some trade-offs; what the framework we’re going to deploy to make those decisions and who is going to make those decisions I think is very unclear. 

As a matter of fact, I’ve asked a number of executives, including some VPs of Sustainability, about this question and, to be honest with you, I’ve had a bit of a hard time really getting any answers.  I’m going to give you just a specific example I’ve been using.

I have a friend that sells industrial adhesives and, of course, they’re working on some more environmentally-friendly products.  But it could be that those more green adhesives are going to have a couple of down sides to them.  For example, perhaps the green adhesive might be a little bit more expensive per pound, which is how that stuff is priced in the marketplace – maybe or maybe not – but, certainly what is possible is that it may be even the equivalent cost per pound, but maybe I have to run the manufacturing line that’s using that adhesive a little bit slower. Maybe just fractionally so, but a little bit slower because the performance of that more green adhesive isn’t quite as good.

(Supply Chain Trends and Issues Article - Continued Below)

So, the question first off is: how would a company balance those trade-offs between a true economic cost for going more green, versus the traditional product?  And then second, who in the organization would actually make that decision?  Is a decision like that - a trade-off that has to be made - is that the purchasing manager’s decision?  Are they going to have a framework or set of guidelines that is successfully utilized to make that kind of trade-off?

Is it going to be something that’s going to have to get pushed up the ladder, or are companies going to form committees to do this?  So, I think these are the questions as the green movement and the green supply chain really gets to the next level of sophistication that companies are going to need to ask themselves and to develop.  And I think that it’s very important that they start to do that now.  We’re taking the easy stuff today, but when the trade-offs get hard, that’s where we’re going to need a new level of thinking about how corporations are going to make those green decisions.