May 28, 2010

New Supply Chain Mandates (Pepsi, P&G, IBM, others)

A few days ago I posted a blog about Pepsi's work with suppliers on new low-carbon fertilizers for Tropicana orange juice.

But there have been other major announcements lately about new supply chain demands as well. My monthly e-letter came out this week and covers Pepsi briefly, but also a few other stories from IBM, P&B, and Kaiser Permanente (some of which i'll delve into in more detail soon).

The full e-letter is here, but below is the opening...

For the last few years, if you said "greening the supply chain," a lot might come to mind, but most of it was about Wal-Mart. The pressure the retail giant has put on its 100,000 suppliers is now legendary (in the sustainability world).

Of course other companies have had programs for years, but often were behind the scenes. No longer. Just in the last month, we’ve seen some important, large-scale announcements that I wanted to review here briefly. Companies such as IBM, P&G, Pepsi, Ikea, Ford, and Kaiser Permanente are setting new, tougher standards. In some cases, they’re getting directly involved in how suppliers operate and how they make their products.

To understand a couple of these initiatives better, I spoke to key executives to get the scoop on what they're trying to do.

The overarching theme of these new initiatives, as I see it, is transparency. It's all about gathering, publicizing, and acting on lifecycle data. But in the trenches things have gotten much more tactical. The age of gathering green metrics – and acting on what we learn from them – is definitely upon us.

What's also interesting to me is that the Wal-Mart focus has been most relevant to consumer products, food, and a few other sectors. Now, with companies like IBM, Ford, and Kaiser Permanente raising the bar, other large value chains will feel the pinch as well. It's rippling through every sector and every company of any size.

To get my head around the recent announcements, I put them in a few big categories, in roughly ascending order of impact and change demanded:

- Asking for data and filling out scorecards to rate suppliers
- Setting standards for how suppliers manage environmental issues (this is about both systems and capabilities development)
- Driving operational and product changes in supplier companies

[see the rest here, and sign up for my monthly e-letter at my site]

Comments

On May 28, 2010 10:13 PM, Michael Jordan said:

Timely note, Andrew. A colleague and I were part of the year-plus collaborative effort that developed the P&G supplier scorecard. Transparency is important and the supply chain effort goes even further -- to encourage innovation that will benefit consumers. It's a great end-to-end story.

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