SCM Pulse recently tipped me off to a fascinating research note by ARC Advisory Group Director, Adrian Gonzalez. The note introduces the notion that many "green" supply chain "initiatives have negative side effects, even if the net results are positive." Poking fun at the title of An Inconvenient Truth, written by private jet-setting Al Gore -- in their own minds, Class A celebrities, even left wingers, are automatically exempt from the environmental damage a Gulfstream causes -- Gonzalez refers to these effects as the "inconvenient truths" of the green supply chain. What's an example of one? Take the case of compact fluorescent lights or CFLs, for short, Gonzalez suggests. While it's true these bulbs save energy, did you know they also contain trace amounts of mercury? "I can't recall a single article shedding light (no pun intended) on how these bulbs contain mercury or how consumers shouldn't throw them away in the garbage, or what to do if you break one at home, as happened to me (see EPA site for what to do)," Gonzalez writes.
Clearly, being green is not as simple as it sounds. And from a Spend Management perspective, the question marks stand out even more. Consider the case of packaging. Gonzalez suggests that bubble-wrap -- which can serve as a replacement for other types of packaging material -- takes up less space and has a lower carbon footprint, so to speak, during production. But it's not easy to recycle like other types of packaging (and hence, usually ends up in the garbage). Like a global sourcing decision which is not made on a total cost basis, it can be easy to look at a green initiative's environmental impact without thinking through the net implications.
In reality, companies should never look at sustainable and green procurement initiatives as check-the-box items. Consider the environmental impact of moving spend to a supplier in a developing country who has invested in the latest approaches to reduce their environmental footprint while also cutting costs (e.g., a truly lean environment built within a facility designed to maximize the use of every conceivable square foot of inventory-less space). Excellent, you might say. But perhaps this supplier -- whose processes use a large amount of energy -- is dependent on electric supply from an inefficient, 1970s coal burning power plant with a questionable environmental track record. In making this switch, have you really reduced your supply chain's carbon footprint? Perhaps one certification process will say yes. But another, which takes into account the source of power, will provide conflicting evidence. An inconvenient truth, indeed.
- Jason Busch