Inaugural speech "Green Supply Chain Management, Marketing Tool or Revolution?"

Green Supply Chain Management, Marketing Tool or Revolution?

Françoise van den Broek

Published on the occasion of the inaugural speech

related to the lectureship Logistics & Sustainability

Published on the occasion of the inaugural speech

related to the lectureship Logistics & Sustainability

F.N. van den Broek-Serlé, MSc, CEMS MIM, MTL

Breda | Zoetermeer, the Netherlands, January 2010

This report has been financed by NEA Transport research and training Ltd. and NHTV Breda University of Applied Sciences, Academy for Urban Development, Logistics & Mobility

Quoting of figures and/or text is permitted only when the source is clearly mentioned.

Green Supply Chain Management, Marketing Tool or Revolution?

Françoise van den Broek

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Introduction

Whatever magazine you open nowadays, you cannot miss the articles on sustain-ability, be it editorials in popular magazines or professional journals. Today’s economic, social and regulatory dynamics are putting real pressures on companies to be both lean and green in their product sourcing, logistics, distribution and operational practices.

If you think your business is too small or too service-based to benefit from going green, or you’re waiting for the hype about green and sustainability to die down, then you’re missing an opportunity to chart an upward course for your company. The green movement has been transformed from a cause to save our environment into a fully-fledged, vetted economy.

Environmental responsibility has moved from a trend to a business imperative, it helps companies to achieve their business goals. Over the past few years sustain-ability has steadily been moving from the periphery to the heart of business. Companies are adopting sustainability practices for a host of reasons depending on the industries and geographies in which they operate.

Three dimensions of sustainability

Source: IUCN 2006

EconomicsustainabilityCrowthDevelopmentProductivityTrickle-down

HUMAN WELL BEING

SocialsustainabilityCultural identityEmpowermentAccessibilityStabilityEquity

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Environmental sustainabilityEco-system integrityCarrying capacityBiodiversity

Contents

1 | Introduction

2 | The evolution of supply chain management and trends influencing future concepts2.1 Introduction2.2 The ‘dark side’ of globalisation2.3 Cost, service level and sustainability2.4 Sustainability changes shape over time2.5 Sustainability will become one of the prime drivers of the supply chain agenda2.6 Green issues increasingly important but not yet core part of corporate strategy

3 | Why consider going ‘green’?3.1 Introduction3.2 Regulations 3.2.1 Dutch government 3.2.2 European Union 3.2.3 China’s regulations push market developments 3.2.4 Abu Dhabi and Dubai are taking the energy lead3.3 Implementing green efforts at an early stage 3.4 Hurdles in the process of going green3.5 Level of awareness is rising3.6 Revenue opportunities: new product development and green marketing or should we call it ‘green washing’?3.7 Does ‘going green’ generate turnover?3.8 Rewards of going green are both tangible and intangible3.9 Five stages towards sustainability

4 | How companies deal with sustainability within the supply chain4.1 Introduction4.2 Isolated approaches still dominate4.3 ‘Greening’ gains importance in all sectors4.4 Dutch companies accepting the green challenge 4.4.1 Manufacturers 4.4.2 Transport and logistics

5 | Impact of sustainability on the logistics programs at the NHTV Academy for Urban Development, Logistics & Mobility5.1 Introduction5.2 How will the lectureship contribute to the logistics programs of NHTV Academy for Urban Development, Logistics & Mobility?

6 | Conclusions

References

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The evolution of supply chain management and trends influencing future concepts

2.1 IntroductionRapid changes in the business environment, including increased internationalisation and global competition, but also social and environmental trends, such as climate change, population growth and aging, wealth accumulation and distribution, nutrition, health and education, affect companies’ supply chains in various ways, resulting in new and evolving requirements on supply chain design. Prominent features of leading green supply chains include an emphasis on life cycle costing, asset efficiency, and waste reduction and service innovation and recycling. Executed effectively, GrSCM stimulates product and service innovation, improves asset utilization, and deepens customer relationships and service levels through a shared focus on reducing waste and cost.

Some examples to show the impact on supply chains 1:> Wal-Mart, which in 2005 launched a sweeping business sustainability strategy, recently set the goal of a 5% reduction in packaging by 2013. The retail giant expects the cut in packaging will save 667,000 metric tons of carbon dioxide from entering the atmosphere. Moreover, the company anticipates $3.4 billion in direct savings and roughly $11 billion in savings across the supply chain;> Nestlé employs an ongoing, company-wide sustainability program that has generated significant environmental and financial benefits. The company has applied the strategy to its use of product packaging by initiating an integrated approach that favours source reduction, re-use, recycling, and energy recovery. In particular, the company’s packaging material savings between 1991 and 2006 led to $510 million in savings, worldwide, according to Nestlé’s corporate website;> Heineken committed to reduce fuel and electricity use through its “Aware of Energy” program. The company said in its 2006 sustainability report that it aimed to reduce fuel and electricity costs by 15% between 2002 and 2010. At the time of the Diamond report, Heineken had achieved savings of 6%—even after the acquisition of new breweries.

2.2 The ‘dark side’ of globalisationDue to globalisation, supply chains have grown more lengthy and complex. It has become harder for companies to maintain the same oversight and control that they traditionally had. A side effect of globalisation has been for some companies that operations were shifted to locations with weaker environmental protection. In some cases, this has resulted in costly product recalls of contaminated goods, damage to workers’ health and pollution of public drinking water. Companies need

1 Diamond Management & Technology Consultants, Insight “The case for a ‘green’ supply chain: Turning mandate into opportunity”, 2008

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But what exactly is sustainability? How does it effect the business and supply chain design? Can a company aim to achieve competitive advantages through the implementation of sustainable business practice and if yes, how? Why should you be part of it too? Just a few questions popping up, that are challenging to address on behalf of the lectureship Logistics & Sustainability at NHTV, Breda University of Applied Sciences, Academy for Urban Transport, Logistics and Mobility financed by NEA Transport research and training Ltd. in the Netherlands.

For many people, sustainability is about reducing carbon footprint, complemented by minimizing waste and conserving water through innovation, communication and best practices. The term, as it relates to business, means: conducting business to meet human needs without rapidly depleting resources, degrading the environment, or compromising nature conservation efforts. In this publication the terms ‘sustainable’ and ‘green’ will be used interchangeably.

Definition of Green Supply Chain Management (GrSCM)Integrating environmental thinking into supply chain management, including product design, material sourcing and selection, manufacturing processes, delivery of the final product to the consumers, and end-of-life management of the product after its useful life.Source: Srivastava, 2007

GrSCM improves operations by employing an environmental solution:> improves agility – GrSCM helps to mitigate risk and speeds up innovations;> increases adaptability – green supply chain analysis often leads to innovative processes and continuous improvements;> promotes alignment – GrSCM involves negotiating policies with suppliers and customers, which results in better alignment of business processes and principles. Core focus of the lectureship will be on the necessity of ‘green’ and on green operations (network design and reverse logistics, transportation, green manu- facturing and re-manufacturing and waste management).

The purpose of this publication is to answer the question “How can sustainability be integrated in the supply chain and throughout the company as it will entail new strategies and a transformation of organisational structure, culture and behaviour (not to say a green revolution) to thrive, not just survive, in a complex and fast- changing landscape?”. The next chapter will elaborate on the evolution of supply chain management and trends influencing future concepts. Chapter three will answer the question why ‘going green’ is important. The fourth chapter will elaborate on how companies deal with sustainability within the supply chain. Chapter five will show the impact the lectureship will have on the logistics programs of NHTV‘s Academy for Urban Development, Logistics & Mobility and chapter six will draw some major conclusions.

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2.4 Sustainability changes shape over timeThe concept of sustainability is not new, but has changed shape over the past forty years. According to the International Institute for Sustainable Development, the term first originated in 1962 with “the gradual merging of the environmental movement and the post-World War II international development community 2.”

Unlike the environmental movement a generation ago, sustainability today carries a strong connotation of win-win benefits, efficiency, high performance, long-term thinking and ‘getting it’. Despite the current recession, leading corporations across all industry sectors will increasingly make supply chain sustainability an integral element of their strategy, from product development to manufacturing and the supply chain to marketing and communications.

2.5 Sustainability will become one of the prime drivers of the supply chain agendaSeveral trends will influence the design of the future supply chain:External forces:> economic trends, like new markets (emerging countries Brazil, Russia, India, China and Africa) and changes in the balance between global and local sourcing;> ecological trends: sustainability and scarcity of natural resources 3; > demographic trends: urbanisation, greying and labour scarcity;> new technologies and information management;> regulatory trends.Industry trends:> consumer behaviour;> supply chain redesign;> need for transparency of information flows.

The following supply chain solution areas have been defined in Capgemini’s “The future supply chain 2016” in order to deal with existing trends and those anticipated for the coming decade: > in-store logistics: includes in-store visibility, shelf-ready products, shopper interaction;> collaborative physical logistics: shared transport, shared warehouse, shared infrastructure;> reverse logistics: product recycling, packaging recycling, returnable assets;> demand fluctuation management: joint planning, execution and monitoring;> identification and labelling;> efficient assets: alternative forms of energy, efficient/aerodynamic vehicles, switching modes, green buildings;> Joint Scorecard and Business Plan.

For these reasons environmental compatibility, increased flexibility and robustness are emerging as important targets of today’s and tomorrow’s supply chains. For instance, the growing population of young people in many developing nations

2 Accenture, “Sustainability and its impact on the corporate agenda”, 20093 NEA Transport research and training, “New energy for the traffic and transport sector?”, 2010

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to be aware of this, partly because of the risk of damaging their reputation, but also because local standards are likely to rise sharply in the coming years.

2.3 Cost, service level and sustainabilityTraditional supply chain strategies balance cost efficiency and service level (on-shelf availability). Consumers, rising energy and other commodity costs and legislation have pushed companies to re-design their supply chain networks in order to mitigate negative environmental impacts. Sustainability is a third lever that addresses cost, service levels and environmental and social impact.

Source: www.greenlogistics.org

New factors are becoming increasingly critical, such as availability of natural resources, traffic congestion in urban areas, energy consumption, CO2 emissions and the permanent rise of transport costs. Companies must develop new relationships with their suppliers to influence them effectively. Suppliers can gain first-mover advantage in some cases by making the shift to more sustainable production and influencing their customers.

Some companies, such as The Body Shop are founded on sustainable principles, and sustainability is already built into major functions, including the supply chain. Other companies are innovating products and services, such as low-temperature washing powders, higher concentrations and thus smaller packaging materials, that utilize their current infrastructure and require minimal additional investment. Also logistics service providers are moving green, in order to gain competitive advantages.

EconomyGrowthEfficiencyEmploymentCompetitivenessChoice

SocietySafetyHealthAccessEquity

EnvironmentClimate changeAir qualityNoiseLand useBiodiversityWaste

SUSTAINABLE SUppLy CHAIN

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Prof. Dr. ir. A.J.M. Vermunt revealed in his thesis named “Wegen naar logistieke dienstverlening” a relationship between factors evolving over time, based on research earlier executed by Ted Kumpe. At first, companies could distinguish themselves by being efficient, through demanding a competitive price. As more companies started to become efficient, quality also became more important, leading to the fact that also reliability became an important aspect. The next point became customer service in order to stand out on competition, not only price, but also reliability and responsiveness to customer’s demands are leading. The means a company has in order to distinguish itself from the competition evolve over time. It is assumed that in the near future, when sustainability becomes more and more important, environmental thinking and acting upon it, will be the most important aspects to be market leader. To an increasing degree, consumers are willing to wait longer and even pay more for a more sustainable product or service.

* Reliability: time, place, quantity, quality** Responsiveness: lead time, flexibility and contact frequency

Environmental thinking Innovation Innovation **Responsiveness Responsiveness Responsiveness *Reliability Reliability Reliability Reliability Aspect Price Price Price Price Price Factor Efficiency Quality Customer service Creativity Sustainability

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4 Capgemini, Georgia Institute of Technology, Oracle and DHL, “13th Third Party Logistics Study”, 20085 Eyefortransport, 2007

presents new labour and consumer markets; conversely, the shrinking population of young people in many developed nations is causing some markets to dwindle. These demand adapted supply chain models and additional key performance indicators (KPIs).

2.6 Green issues increasingly important but not yet core part of corporate strategyAccording to an Eyefortransport survey published in November 2007, green issues have already started to play an important role in companies’ overall business strategy. 67% of executives questioned in Europe believed that green issues are important to their company’s strategy, a significant proportion of executives in the United States, 59%, and Asia, 57%, viewed green as an integral part of their long-term strategy.

The outcomes of the “2008 Third-party logistics survey” regarding (1) ROI (Return on Investment), (2) green as a factor in selecting 3PLs (third-party Logistics service Providers), and (3) changing transportation modes, reveal mixed opinions: Around one-half benefits from green initiatives while the other half are either unsure or even pessimistic. Clearly, there is widespread uncertainty about how to move forward with green supply chain initiatives. Doing nothing is not an option. Green initiatives should clear three hurdles: they must be acceptable financially, environmentally, and socially 4.

Despite its growing prominence, sustainability is not yet a widespread core part of most companies’ strategies today. And it is not a prime driver of the supply chain agendas, as will be shown in more detail in the next chapter. According to GTM Research, sustainability lies in the middle of the pack of supply chain priorities today, behind cost cutting. Also within the Netherlands, the focus is strongly on reducing the carbon footprint and not self-evident in an integral approach on greening the total supply chain. In a way, this is understandable as a starting point, as it is estimated that today up to 75% of a company’s carbon footprint results from transportation and logistics 5.

Current Supply Chain KpIs Sustainability KpIsAvailability to consumer CO2 emissions(out-of-stock) Cost reduction Traffic congestion Financial KPIs:> Return on Investment (ROI)> Inventory turns Energy and other natural resources consumptionTraceability Reusable packagingFill rate Co-modal transport

3 | Why consider going ‘green’?

3.1 IntroductionConsumers say they increasingly prefer to purchase products that are free of toxins, produced with a minimum of pollution, and with a minimal environmental impact. But in many cases a significant gulf exists between consumers’ green claims and their actual purchasing power, mainly driven by the price difference of ‘green’ products. Companies that successfully adopt a ‘green’ policy can generate profits, provide positive social impact, and reduce environmental impact.

Growing pressure from non-governmental organisations (NGOs) and activists. Greenpeace for instance publishes a digital ‘Guide to Greener electronics’. The guide ranks the 18 top manufacturers of personal computers, mobile phones, TVs and games consoles according to their policies on toxic chemicals, recycling and climate change.

The media notices companies that show their green stripes. Positive publicity for going green is not reserved for large companies. Companies taking voluntary steps to become greener will gain visibility, earn credibility, and develop a reputation for leadership.

Employee loyalty and retention are less tangible, but equally important benefits to going green. A sincere sustainability strategy will help your company attract top talent.

Last but not least, many supply chains have already been affected by physical and economic impacts of the changing climate and growing demand from Asia. These include global shortages of water, grain, timber, and metals. Improving all forms of resource efficiency lessens exposure to these risks.

3.2 RegulationsNational and global regulation on sustainability can create a positive platform for change by reducing business uncertainty and creating new market opportunities. Proactively partnering with policy-makers, stakeholders and industry rivals in shaping regulation and policy solutions that benefit business and society will increasingly be a feature of smart strategy.

3.2.1 Dutch governmentThe challenge to the Dutch government is to shape environmental policy in such a way that it is possible to combine economic growth with decreasing the environmental burden, as these are also expressed in the objective formulated in Lisbon for economic development in Europe (‘Clean, clever competitive’).

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of other Directives, like the EU Energy Performance of Buildings Directive will just as well influence sustainable business thinking throughout the supply chain.

3.2.3 China’s regulations push market developmentsThe Chinese electric bike market has expanded more rapidly than any other mode in the last five to seven years, from nearly 40,000 produced in 1998 to over 10 million in 2005.

E-bikes, though they floundered twice in the 80s and early 90s, experienced extraordinary growth in the late 90s to the present due to a combination of economic, technical, and political factors, summarized below:1 E-bike technology, specifically motors and batteries, improved significantly during the late 1990s. Simple technology, a vast supplier base, and weak intellectual property protection made it easier for e-bike makers to enter the industry, increasing competition and driving prices down;2 Due to improving economic conditions nationally, incomes of urban households and the share spent on transportation both rose considerably;3 As e-bike prices decreased, gasoline prices rose and electricity prices in rural areas dropped, making e-bikes more competitive economically with alternatives like gasoline-powered scooters;4 National and local government policy motivated by energy and air quality issues created favourable conditions for e-bike growth;5 National e-bike standards with loop-holes and flexible guidelines created a rich opportunity for manufacturers to create e-bikes that appealed to more users, namely, scooter-style electric bikes.

The history of e-bikes provides an important lesson on the powerful impact of regulatory policy, given the evolution of technology to a market acceptable product. In several cities, like the surroundings of Guilin and Yangshuo, the Li River Delta with its mountains, only e-bikes are permitted. While technological progress was required to meet the customer demands for economics and performance, the regulatory environment provided strong impetus for the market to grow and for further investment in technology evolution. Without this, the e-bike market would not have emerged.

In September 2009 the Dutch Minister Eurlings of Transport, Public Works and Water Management paid a working visit to China and participated in a round table confe-rence ‘Sustainable development of ports and waterways’. China is not only investing heavily in infrastructure, transport and logistics but at the same time has a strong drive to tackle the safety and environmental problems it is facing. The Yangtze River, the logistical backbone of Shanghai, will be developed as a ‘green waterway’, meaning far reaching actions in respect to emissions, pollution and dumping of waste materials. Furthermore, Mr. Yang Zan, Deputy DG, Water Transport Bureau, Ministry of Transport announced during the working visit round table that in the future, Chinese ports will only allow for electrical transport and handling equipment.

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The Dutch government wants to make the Netherlands one of the cleanest and most efficient energy countries in Europe. By the year 2020, the Netherlands aims to reduce greenhouse gas emissions by 30% compared to 1990 levels, increase the proportion of renewable energy to 20% and improve energy savings by 2% percent each year. This applies not just to road traffic, but also to inland navigation, maritime shipping and aviation. To achieve these targets, the program ‘Clean and Efficient: New energy for climate policy’ (‘Werkprogramma Schoon en Zuining’) was introdu-ced in September 2007. This program refers, for instance, to measures for traffic and transport which encompass stimulating efficient vehicles (greening the tax system), efficient driving habits, stimulating more efficient transport modalities, and cleaner fuels for both the business sector and the private sector 6.

A further aim is to be the logistics hub of Europe with the seaports of Rotterdam and Amsterdam as well as Amsterdam Schiphol Airport as junctions in the global network (more details on their current programs in the next chapter). Therefore, the Dutch government has an integrated approach to the transport and logistics network.

3.2.2 European UnionThe EU has also implemented several measures to make transport greener and more sustainable. To intensify its efforts, the European Commission presented two different initiatives. The first focuses on making the polluter pay through internalising the external costs of transport. This means that individual modes of transport must pay for ‘hidden’ costs generated by their contribution to air pollution, noise, climate change, congestion and accidents in road transport. The second initiative includes a package of regulatory instruments combined with infrastructure and technological measures.

Co-modality (the optimised use of all modes of transport) is another item high on the European Commission’s agenda. Choosing the mode that is most efficient in both economic and in sustainability terms can create a high level of mobility and at the same time protect the environment. With the Marco Polo II program, the EU aims to shift a substantial part of the expected increase in road freight traffic to more sustainable forms of transport, such as shipping or rail, or to a combination of modes of transport in which road travel is as short as possible.

According to an EEA Report the occupancy rate of different transport modes can, in many cases, be a significant factor in the resulting relative emissions of greenhouse gases compared to the specific efficiency of modes. In addition to technological improvements, policies to ensure better capacity utilisation within each mode may result in substantial additional reductions of emissions of CO2 7.

Furthermore, the members of the European Union (EU), have committed themselves also to develop, implement and enforce legislation that makes producers responsible for the collection, treatment, recycling and environmentally safe disposal of all electrical and electronic equipment (WEEE/2002/96/EC, 2002). The implementation

6 www.vrom.nl7 European Environment Agency, Report No 1, “Climate for a transport change”, 2008

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In addition to own efforts, companies increasingly expect partners such as suppliers and logistic service providers (LSPs) to get engaged in finding and implementing environmentally compatible solutions.

3.4 Hurdles in the process of going greenCurrent and future goals of companies regarding environmentally compatible logistics are 11:> reduction/avoidance of transport;> increased capacity utilisation in transportation;> increased employment of mass transportation, if suitable;> recycling/reusable packaging;> reduction of the use of resources (water and energy);> compliance with ISO’s environmental standards.

Despite the diversity of the mentioned goals it becomes clear that most of them represent isolated single solutions. In many companies, the path towards green supply chains has not yet been determined. Among other things, this is caused by the non-existence of diverse external and internal basic conditions. To companies it seems to be unclear what the precise legal requirements and standards will be. Furthermore, in many cases tools and methods for the creation of green supply chains seem to be only partially known, are not mature enough or are just not available.

Only 12% of companies rated green issues among their top three supply chain priorities according to a survey executed by Ernst & Young 12. According to a study 13

by the Business Performance Management (BPM) Forum and E2open the global business community have been slow to address issues when it comes to sustainable supply chain management, despite the enthusiasm regarding sustainability expressed by these organisations. Operations, logistics and supply chain executives lack the understanding of how to go green and remain green across complex, global, multi-tiered supply and distribution networks. Some of the major findings of this study are 14:> nearly two-thirds have marginal or no visibility across all tiers and levels of their value chain;> 78% of companies rate the level of synergy and accountability in their global trading network as suboptimal;> 42% of companies surveyed have yet to even consider carbon footprint or greenhouse gas emissions across their entire extended supply chain. 76% of respondents say their customers have not requested information on carbon and emissions containment, but two-thirds expect customers to demand this in the next year;> Only 20% of respondents utilized the advantages provided by a centralized eHub.

11 Center of Innovation for Transport and Logistics at the Berlin Institute of Technology “Global Logistics 2015+”, 200912 Ernst & Young, “Green for go. Supply chain sustainability”, 200813 The study is titled “Acceleration of ECO-Operation: Achieving Success & Sustainability in the Supply Chain”14 www.greeneconomypost.com

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3.2.4 Abu Dhabi and Dubai are taking the energy leadIt sounds like the start of a fairytale: In the heart of Abu Dhabi work has started on the most ambitious sustainable development in the world today. Masdar City, is to become the world’s first carbon-neutral, zero-waste city, designed to be a pedes-trian-friendly environment. Its aim is to become the silicon valley for clean, green and alternative energy. Masdar City will be built on six and a half square kilometres and will grow eventually to house 1,500 businesses, 40,000 residents and 50,000 commuters, home of the Masdar Institute of Science and Technology (MIST) and the International Renewable Energy Agency (IRENA). A city where current and future technologies will be funded, researched developed, tested and implemented. Masdar is a wholly owned subsidiary of the Mubadala Development Company, the Abu Dhabi government’s investment vehicle 8. A Dutch company, 2getthere, will provide fossil-free vehicles for the first phase of the city 9.

In Dubai, a similar initiative has been launched. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai has announced that Dubai is looking at energy conservation and solar and wind schemes to help meet its electricity needs. The sheikh said that around 14% of peak electricity needs could be saved by 2015 through a demand management program. ENPARK, the Energy and Environment Park is a model sustainable community and a Free Zone spanning over 8 million square feet of office, research centre, residential, educatio-nal and leisure facilities located in Dubai, United Arab Emirates. ENPARK is a special destination for clean energy and environmental technology companies to operate and a fully-integrated knowledge community that includes programs, services, partnerships and amenities to support the success of environment companies and their employees. ENPARK’s ambition is to offer a world class sustainable lifestyle and build a sustainable culture 10.

3.3 Implementing green efforts at an early stageA recent study conducted by the Center of Innovation for Transport and Logistics at the Berlin Institute of Technology “Global Logistics 2015+”, showed that the majority of the respondents expect that the absence of ecologically sustainable logistics will lead to financially tangible disadvantages. However, in most companies, efforts for implementing green logistics are still at an early stage. The majority has not yet assessed the environmental compatibility of their logistics (and even less of their supply chain) nor have they established concrete future targets or comprehen-sive actions in this matter, which is often caused by an absence of instruments, methods or standards. Among various means towards environmentally compatible logistics, the largest growth will be encountered by the measuring and monitoring of environmental impacts of logistics (e.g. for monetary costs and damage to human health or natural environment and CO2-emissions). Further strategies that will display strong growth are environmentally friendly sourcing, transportation and packaging. Despite the growing importance of environmentally compatible logistics, only limited funds are available for its financing in most companies, so the study showed.

8 www.masdarcity.ae9 www.hollandtrade.com10 www.enpark.ae

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There is no easy way to quantify the cost of going green. According to a paper written by the Rotterdam School of Management 18 only a limited number of initiatives for environmentally-friendly production have proved to be profitable. Literature and practice suggests that substantial improvement in the environment is only possible with substantial investments that brings no or negative financial returns (Walley and Whitehead, 1994). The adoption of cleaner solutions is generally bounded by an increase in costs. Companies should look at the cost of sustainability initiatives as an investment and should look for good trade-offs between environ-mental impact and costs. The Return on Investment (ROI) of going green can be more sales, increased market share, enhanced visibility, happier employees, and a better brand. And, according to Anna Clark, President of EarthPeople, “cleaner air, a healthier climate, and a better future for your kids are not bad benefits either”.

63% of the respondents in the E&Y Green for Go survey see sustainability as an opportunity for revenue growth. According to a recent survey performed by Deloitte 19, ‘cost savings’ and ‘competitive advantage’ were identified as the top two business drivers for GrSCM, reinforcing the view that supply chain efficiency and innovation, consistent with sustainability goals, should be the primary aims of green supply chain initiatives. Yet a surprisingly high number of participants acknowledged that GrSCM measures to date are not expected to generate positive ROI for at least three years (30%) – if at all (22%).

Furthermore, companies increasingly expect LSPs to enhance the greenness of existing services and to outline and offer further methods of resolution in their customer’s logistics. It is expected that in many cases LSPs will have to provide the service costs neutrally and finance higher efforts through internal savings, for instance, generated by higher energy efficiency.

Although final customers are the main driver for a company going green, passing on additional costs to customers is not considered a viable option for the financing, since they would not be willing to assume these extra expenses. The shippers, who maintain a very strong negotiating position, as being the ones who have the power in many supply chains, are mainly interested in pricing at the level of procurement. Due to the very small margins the transportation sector has to operate with and the fact that sustainable business in practice is not rewarded by shippers, any attempt to present sustainability-related efforts as a competitive advantage, seems to be perceived as futile and possibly even as a waste of investment.

A first step towards integrating sustainability better in the transport and logistics sector would be for companies to start monitoring and reporting on key environmen-tal and social performance indicators. This is necessary in order to gain insight into the current environmental and social impact and to make improvements without large initial investments 20, where possible.

18 Quariguasi Frota Neto, J., J. Bloemhof, J. van Nunen, E. Van Heck, “Designing and evaluating sustainable logistics networks”,

International Journal of Production Economics, 200819 Deloitte, “Green means go. Green supply chain management: opportunity today, imperative tomorrow”, 200820 Based on NEA’s own research and PricewaterhouseCoopers, Transportation & Logistics, “Moving green.

Sustainability – insight into the Transportation and Logistics sector”, 2009

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3.5 Level of awareness is rising On the other hand, 85% of respondents in the BPM and E2open survey say they are actively involved in new programs that drive operational efficiency, corporate social responsibility (CSR) and cost-savings across supply and demand chains. Therefore, let’s not over dramatise. The level of awareness is rising and there is an appreciation of the opportunities it offers within the supply chain. Coupled, however, with concerns over the cost and complexity of addressing it.

Many transportation companies and LSPs are able to enumerate day-to-day costs such as road charges, waste charges, waiting time of trucks in traffic hold-ups and fuel consumption. Although sustainability is not the main driver for this, they are very well used to optimising the efficiency of their transports, by, for example, improving the capacity utilisation and avoiding empty runs.

The most popular measures are those which typically require a relatively low investment and lead to a reduction in costs 15. They included working with targets for the loading degree and to create a more efficient transport of goods and to stimulate behaviour that will lead to higher fuel-efficiency and a lower environmental impact. The implementation of, in particular, the first measure is however frustrated by regulations limiting the hours for deliveries. Due to these regulations, it has become extremely difficult to really take logistical efficiency to a new level. After all, if the time-frame for deliveries is limited, more trucks will need to be deployed at the same time in order to make the same amount of deliveries within that time-frame.

3.6 Revenue opportunities: new product development and green marketing or should we call it ‘green washing’?Four of the top five expected benefits generated by green activities are external market-oriented benefits. The top two benefits that rate either most important or important are enhanced public relations (50 out 57 mentions) and enhanced brand image (49 out of 57 mentions). The third is reduced energy costs (49 out of 57 mentions) followed by increased consumer loyalty and revenues (44 and 45 mentions, respectively) 16.

Some ‘pessimists’ are of the opinion that companies gain ISO accreditations for marketing purposes, just to tick a box on a supplier questionnaire or to include in a tender.

3.7 Does ‘going green’ generate turnover?Difficulties are not only seen in the lack of comprehensive strategies, but also in assessing related financial impacts. Many companies are not yet able to quantify the costs that could be avoided or would arise due to a switch to a green supply chain approach, nor are they able to determine how additional costs could be funded. If companies do have a budget, only limited funds seem to be available and the funding is mostly tied to single solutions/projects, instead of serving long-term strategies 17.

15 PricewaterhouseCoopers, Transportation & Logistics, “Moving green. Sustainability – insight into the Transportation

and Logistics sector”, 200916 Florida International University, College of Business Administration, Ryder Center for Supply Chain Management,

“The state of Green Supply Chain Management. Survey Results”, 200817 Center of Innovation for Transport and Logistics at the Berlin Institute of Technology “Global Logistics 2015+”, 2009

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In spite of the payoffs that some big businesses have received from going green, many companies still view a sustainability commitment through the lens of compliance. When companies progress beyond compliance and extend their sustainability actions strategically, they become more nimble, and better equipped to meet the rapidly changing demands of the marketplace.

Looking at the analysis by industry, the Florida International University College of Business Administration revealed that the Manufacturing & Retail sector is more advanced than the Transportation & Logistics sector when it comes to ‘green’ activities. 85’% of the companies in the Transportation & Logistics sector are either in the early stage or do not have a green strategy yet, while about 60% of the companies in the Manufacturing & Retail sector are already past the early stage. This data suggests, along with other research findings, that Transportation & Logistics service companies are generally getting ‘pulled into’ green activities by their customers, namely Manufacturers & Retailers.

There is no one-size-fits-all approach to sustainability, but here is a good plan of action:> Investigate where your company can conserve resources and compose a strategic sourcing and supplier engagement;> Engage your employees as champions of the effort;> Implement conservation measures throughout operations and facilities, improve efficiency of site operations and balance the economies of stock levels, service and order quantities;> Optimise network and transportation and provide integrated service management, returns, reverse logistics and parts management;> Communicate your green efforts to stakeholders;> Seek ways to integrate an overall strategic approach to sustainability in all areas of your company;> Support industry and community sustainability initiatives.

sustainable> 10%

eco-efficient < 15%

compliant > 40%

problemsolving

> 20%

not started /defensive > 15%

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21 Accenture, “Compatible aims: sustainability and high performance”, 200922 Deloitte, “Green means go. Green supply chain management: opportunity today, imperative tomorrow”, 2008

3.8 Rewards of going green are both tangible and intangibleCompanies that adopt a pro-environment policy will see numerous positive results, both tangible and intangible. Early adopters of environmental strategies and green supply chain initiatives:> mitigate business risks, by differentiating themselves from competitors, transforming their companies into industry leaders, building credibility with stakeholders and attracting investors;> reduce operating costs;> motivate better performing suppliers, become preferred vendors in green supply chains and attract consumers in the rapidly-growing green marketplace;> preserve business continuity, by attracting (the interest of) top job candidates, enhancing employee satisfaction and enhancing market access and degrees of business strategy freedom;> create significant competitive advantage by creating brand distinction and recognition;> earn publicity with the local, regional or even national media.

3.9 Five stages towards sustainabilitySupply chain executives understand the benefits of better managing collaboration and sustainability in the value chain — now they just have to make it happen. Companies today can be classified in one of five stages of green supply chain maturity. Those stages are 21 / 22:Not started and/or defensive companies are either wholly ignoring sustainability by not taking action to address it or, at best, are taking action solely to the low-hanging fruit of sustainability by disclosing their exposure to environmental and social risks to their suite of stakeholders. problem solving companies are going one step further - these companies have been gathering information, do not have a corporate sustainability statement or report, but have initiatives in progress.Compliant companies are adhering to current and emerging regulation to ensure that they avoid regulatory fines and the related damage to their reputation that such fines could cause. Eco-efficient companies are coordinating their sustainability efforts, across their functions, units and locations, at the enterprise level. They are wholly transparent to the market - even if it means shedding light on the areas in which they need to improve. These companies see sustainability as an opportunity for growth; to capture this growth, these companies are reframing existing products and introducing new products to appeal to the sustainability conscious consumer. Sustainable companies have gone one step further – they have redesigned their corporate vision to be based on sustainability and are actively re-engineering their processes and supply chains to eliminate energy, water and waste inefficiencies while adhering to the strictest ethical and moral standards possible.

Diamond Management & Technology Consultants developed a useful framework 23

that provides a structured approach that includes several of the necessary dimensions to plan and implement a successful green supply chain agenda.

Green Supply Chain Framework

Source: Diamond Management & Technology Consultants

In this framework the key to extracting business value lies in establishing a long-term green supply chain strategy that is aligned with corporate strategy and approached top-down – with strong sponsorship. It also requires a strong business case for the green supply chain that highlights a prioritised list of targeted opportunities and a phased adoption roadmap. Finally, the initiatives need to be integrated with other companywide projects to ensure that one does not compromise another.

In order to effectively implement a Green Supply Chain, the strategy should be embedded in the company’s Supply Chain and Operations organisation, as well as part of Marketing and Sales. Corporate Communications should be linked with sustainability initiatives to ensure that the impact of the initiative is being communi-cated to customers, shareholders, and the general public.

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pRoGRAM GoVERNANCE

BUSINESS CASE

VISIBLE LEADERSHIp

Succesful GreenSupply ChainImplementation

Dimensions of Green Supply Chain

organisationalFoundation for Green Supply Chain

SUSTAINABLE SUppLy CHAIN EFFICIENCIES

ENVIRoNMENTAL CoMpLIANCE

23 Diamond Management & Technology Consultants, “The case for a ‘green’ supply chain: Turning mandate into opportunity”, 2008

Op

erational

Alig

nment

Business

Cap

abilities

Business Partner

Co

llob

oratio

n

Metrics and

Measurem

ent

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4 | How companies deal with sustainability within the supply chain

4.1 IntroductionFacing sustainability issues is not easy. Timberland for instance was surprised to discover that its major carbon impact occurred before the company even got involved in the making of shoes. It was the manufacture of the raw materials, not the manu-facture and transportation of the final product, that caused the greatest impact 24.

4.2 Isolated approaches still dominateAs has been pointed out in the previous chapter, companies who are involved in implementing sustainable strategies mostly have isolated approaches in separate parts of companies or their process-chains. The most common strategies are:> monitoring and accounting of green impacts. The intention here is to calculate the own carbon footprint and to start with environmental reporting; > sustainable transportation. Companies increasingly want to utilise co-modal transports and expect renewable energy to play a much more important role in the future;> green packaging. Ranging from applying reusable boxes and containers to recycling of packaging materials and the usage of environmentally compatible packaging materials (e.g. made of biodegradable materials and the adoption of reusable packaging);> sustainable sourcing. Companies seek to audit their suppliers greenness or purchase goods that are certified ‘green’;> involvement and cooperation with LSPs. Companies are assessing LSPs’ sustainable achievements during tenders and form partnerships to jointly develop green solutions. Transport Intelligence stated in 2008 that 90% of outsourcing decision-makers have indicated that ‘environmental stewardship’ will influence the outsourcing choices they will make when contracts come up for tender during 2009.

And that is not all. Also sustainability of the built environment is quickly becoming an active consideration in traditional cost-benefit analysis. National and internatio-nal certification programs and award programs are setting standards, following in the wake of a rapid increase in the public’s awareness of sustainable development. The implementation of the EU Energy Performance of Buildings Directive and, in particular, the introduction of energy performance certificates (EPCs), is providing an EU-wide benchmark. The extent to which companies are prepared to push forward with ‘green’ agendas varies across sectors and markets. Progress can depend on wider environmental awareness. A case in point is the retail sector, where consumer

24 Accenture, “Achieving high performance: the sustainability imperative”, 2008

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In April 2009 together with their forwarder, Mars launched the ’Green Order Initiative’. This makes Mars the first European food company calculating carbon dioxide emission on order placement level and also to display this on waybills. Green Order is to be fully integrated in the normal logistics process, collaboration with logistic and commercial contacts being an important condition for success. Now each supplier has a better insight into its order pattern and the impact on the environment. This way Mars makes suppliers more aware and it enables Mars to optimize their transport. Mars strives for Green Order to be a generally accepted standard within the business 29.

Logistics Service providersIn October 2009, UpS became the first small package carrier to offer its customers the ability to offset the carbon dioxide emissions generated by the transport of their packages within the United States 30.

DB Schenker wants to become the leading green logistics provider – and by 2020 discharge 20% less CO2 than in 2006.

Since the first ‘Climate Counts shipping scorecard’, released in late 2007, the biggest improvements in the sector have come from FedEx and DHL. FedEx nearly doubled its score to reach the second place among major shippers after coming in last in 2007. Along with other improvements, both FedEx and DHL did a better job of measuring their global warming pollution in 2008. The two companies also strengthened their goals to reduce greenhouse gas emissions, improved their reporting on the achieve-ment of real reductions, and increased the climate accountability of their manage-ment. In addition, both DHL and FedEx have taken positive and increasingly vocal positions on public policy and legislation that would address global climate change 31.

DHL has committed itself to minimizing the environmental impact and has a comprehensive environmental management program in place to do so. In 2008, the ambitious ‘GoGreen’ climate protection program was launched. The goal is to reduce CO2 emissions for every letter and parcel sent, every ton of cargo transported and for every square meter of warehouse space used by 30% by 2020 (compared to the 2007 baseline) 32.

4.4 Dutch companies accepting the green challenge

4.4.1 Manufacturers

DESSoIn signing a partnership agreement with the Hamburg-based Environmental Protection Encouragement Agency (EPEA), DESSo has become the first carpet manufacturer in EMEA to adopt the Cradle to Cradle design. It marks DESSO’s radical decision to move beyond ‘mere’ sustainability in producing its carpets and artificial grass, making a fundamental, sweeping advance in its already impressive environ-

29 www.mars.com30 www.carbonneutralups.com31 environment.about.com, “Environmental issues. Shipping companies improve climate performance in 2008”, 200932 www.dp-dhl.com

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demand for ethical products over recent years has fed into the wider social respons-ibility efforts of retailers themselves 25.

4.3 ‘Greening’ gains importance in all sectors Greening the industry gains in importance in all sectors. In high-tech, electronics, fast moving consumer goods (FMCG), followed by automotive original equipment manufacturer (OEM), sustainable solutions hold the greatest importance 26.This applies to the own implementation and expectations of supply chain partners. Retail, although surprising, follows this ranking at some distance. Along with FMCG it will display the highest future growth in these issues. The majority of companies in these sectors consider sustainable concepts as a competitive advantage. In these industries there even seems to be a humble willingness to pay for sustainable supply chain concepts.

AutomotiveJust recently, William Clay Ford Jr. (great-grandson of Henry Ford) and executive chairman of Ford Motor Company stated in an interview 27 that Ford will be winning through sustainability. Profits will rise, as it delivers vehicles that are better for the environment, made in plants that are increasingly energy efficient and, consequent-ly, less costly to operate. And Ford Motor Company is not the only car manufacturer going green. The Toyota Prius is a fully hybrid electric mid-sized car developed and manufactured by the Toyota Motor Corporation. It first went on sale in Japan in 1997, making it the first mass-produced hybrid vehicle. It was subsequently introduced worldwide in 2001. Also other car manufacturers are implementing green strategies. Renault for instance, is coming up with new concepts (ECO2 WAY) and TV commer-cials to show its commitment towards the environment. Volkswagen states to be dependent upon the services of nature in many respects. With “forward-thinking management of opportunities for and risks to biodiversity, Europe’s number-one car manufacturer wants to provide an active contribution to sustainable development, and it wants to set a benchmark for other companies”. Volkswagen actively supports the spatial groupings of traffic routes designed to permit free movement for animals. Volkswagen pushes for the development of efficient technologies and innovative vehicle concepts (BlueMotion and EcoFuel) and initiates projects for the develop-ment of economical and at the same time environment-friendly driving 28.

Mars, Incorporated Throughout the entire supply chain Mars acts upon possibilities to contribute to a good working and living environment, starting with the purchasing of raw materials and ending in a responsible consumption of the products. Together with their suppliers and customers they aim to make a difference in production and logistics too.

Mars is proud to be the first global chocolate company to commit to fundamentally changing the way sustainable cocoa farming practices are advanced by aiming to certify its entire cocoa supply as being produced in a sustainable manner, by 2020.

25 Cushman & Wakefield, “Green buildings – a behavioural change”, 200826 Center of Innovation for Transport and Logistics at the Berlin Institute of Technology “Global Logistics 2015+”, 200927 McKinseyQuarterly, Automotive, Strategy & Analysis, “Building a sutainable Ford Motor Company: An interview with Bill Ford”, 201028 www.volkswagenag.com

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integrated business-sustainability plan. Business managers should directly participate in their design and implementation.

4.4.2 Transport and logisticsIt seems that a lot of logistics companies are lagging behind compared to front runners in the sector (among others TNT, Air France/KLM, Port of Rotterdam, Amsterdam Airport Schiphol). But still, there are many inspiring examples and these are not only developed by global players:> The Van Gansewinkel Group sees waste as the foundation for new raw materials and energy. Van Gansewinkel’s role and responsibility is to complete the circle. In recent years, Van Gansewinkel has transformed itself from a traditional waste collector to a sustainable (and award winning) raw materials and energy company;> Boekhout Transport won one of the Lean and Green Awards. Together with the Climate Neutral Group, Boekhout have calculated the CO2 emissions from their fleet and expressed it in terms of CO2 emissions per pallet/km transported. The entire emissions generated by Boekhout distribution will be offset, by ClimateNeutral Group, with investments in tree planting and energy projects. For International Full Truck Loads they are offering carbon-neutral transport as an option for their clients;> Rotra Forwarding b.v. introduced the Mercedes-Benz Econic NGT (Natural Gas Technology) distribution truck and is the first company within Europe to use a truck on ethanol developed by Scania; > Ten Dutch transporters decided to report on their CO2 emission in their annual report: Den Hartogh Logistics, Jan de Rijk, Van den Bosch, H&S Groep, HZ Transport, Bas Logistics, Vos Logistics, Gé Simons, Rutges en Albert Keijzer;> EVo (Dutch shipping counsel) proposes a 10 step plan to reduce CO2 to the government.

Nowadays, shippers are hiring their own intermodal transport managers in order to develop sustainable transport. Companies are getting more and more sensitive with regard to sustainability as a sales argument to purchase intermodal transport like rail and barge transport. Van den Bosch Transporten have opted to adopt a proactive approach with respect to restricting the emission effects as much as possible. In applying intermodal transport, in which the company puts a strong believe, Van den Bosch Transporten intends to restrict its emissions of harmful substances. The company in its own words, “we want to be a front runner with respect to corporate sustainability and not await market developments. Intermodal transport has grown considerably over the past couple of years, even partially at the expense of road transport”. In order to convince the customer of the positive impact on emissions of rail transport, compared to road transport, Van den Bosch Transporten developed a monitor with which the CO2 emission can be calculated. Based on the most up-to-date calculation tools, the emissions of a rail transport are compared to those of the same transport by road. It turns out that rail transport has much lower CO2 emissions

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mental credentials. DESSO has been working on the Eco effectiveness and Eco efficiency. Their current energy efficiency index is 73%. Today, waste recycling from their factories exceeds 90%, and all packaging is 100% recyclable. At the production facility at DESSO in The Netherlands alone, they have reduced energy consumption (per m2 of product produced) by 23% since 1998, resulting in a 23% reduction in CO2 emissions 33.

Definiton of Cradle to cradle 34 Cradle to Cradle means that non replaceable natural resources can be used again and again in the same way. It is a bit different from recycling that is applied more often since it is also taken into account that natural resources should be used again at the end of the lifetime of the product as the same substance (waste equals food). Cradle to Cradle is about eco-effectiveness and ‘doing the right things’.

Dutch Van Houtum’s tissue paper first with C2C certificationThe Dutch company Van Houtum papier is the world’s first recipient of Cradle to Cradle (C2C) certification which it has won for its toilet paper product, Satino Nature. Van Houtem received the designation from the American MBDC agency. It guarantees that the production process for Satino Nature is entirely environmen-tally friendly. Van Houtum aims to operate in a CO2-neutral manner in its production of sustainable toilet paper and paper towels, to replace grey gas with green gas, and to use packaging materials that do not release biologically unfriendly substances into the environment. Van Houtem’s products are distributed throughout Europe, North America and the Caribbean 35.

Mosa the world’s first Cradle to Cradle ceramic tile factoryHolland’s Royal Mosa is the world’s first ceramic tile factory to receive the Cradle to Cradle certificate. An intensive research and development program, lasting two years, preceded the certificate. Together with the EPEA Institute Royal Mosa scanned its entire manufacturing process, raw materials, suppliers and products. Materials that were not sustainable were replaced by materials that are. Mosa adapted their production methods where possible to make high quality tiles which are recyclable. Now Mosa tiles contain 10% to 40% recycled material. Tile waste from within the factory was already recycled in a closed cycle, but other tile waste often ends up in landfill. Therefore the company has started a pilot project in the Netherlands to separate and collect tile waste from construction sites and use it for new tiles. The result of this program is that most Mosa tiles are being classified as ‘to be used in the technical Cradle to Cradle-cycle, but safe for the biological cycle’. The company also launched pilot projects to collect tile waste as raw material to be used for new tiles 36.

To maximize their effectiveness for the global company, greening the supply chain initiatives should not exist separate from the mainstream activities of the business. Rather, they should be fully integrated with and reflect the core value proposition of the business strategy. They should yield measurable results that are part of an

33 www.desso.com 34 McDonough, W. and Braungart, M, “Cradle to Cradle: Remaking the Way We Make Things”, 200235 www.hollandtrade.com36 www.mosa.nl

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over the course of 2009. Construction started on a new office building for transavia.com at Schiphol-East, the first office building in the Netherlands designed to meet the highest sustainable construction standards of the internationally renowned LEED system’s (Leadership in Energy and Environmental Design) Platinum Certificate. Schiphol also became the first business in the Netherlands to start a trial with new roof cladding capable of filtering nitrogen oxides (NOx) from the air. The airport was also one of the first organisations in the Netherlands to purchase the fully electric ‘Th!nk City’ car 38.

The port of Rotterdam Authority is working to become THE European, world-class port by conducting its business operations in a sustainable and socially responsible way. Sustainability is one of the Port Authority’s five key values. The construction of Maasvlakte 2 provides unique opportunities for improving the environment. Over the next 25 years many measures (for instance with a focus on goods transport, links with the hinterland, traffic emissions, traffic management, intelligent vehicles and the pricing policy for road traffic) will make traffic between the port and the hinterland cleaner and more efficient 39.

38 Schiphol Group, “Amsterdam Airport Schiphol: leader in innovation for over 40 years”, 200939 www.maasvlakte2.com

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than road transport, the difference can amount to 50%. Over long distances within Europe, intermodal transport is always advantageous. The company also has an “Emission Tool” publicly available on its website. Customers can calculate for themselves the effects if a load is transferred from road to rail or barge 37.

Source: www.vandenbosch.com

Amsterdam Airport Schiphol wants to become Europe’s most innovative and sustainable airport, with an eye to combining growth of the airport with efforts to minimise its environmental impact. The airport also seeks to assume a leading role in addressing the global climate problem. By 2012 Amsterdam Airport Schiphol intends to be climate-neutral in respect of all its own on-site activities and, by 2020, to rely on sustainable energy for 20% of all its energy needs. To realise these objectives, in 2008, Amsterdam Airport Schiphol started using the world’s first kerosene vapour conversion system. 2008 also saw the start of a water-purification test using algae.

To ensure safe take-offs during wintertime, Amsterdam Airport Schiphol uses glycol and potassium acetate as de-icing fluids to keep the taxiways free of ice and remove ice from aircraft wings and bodies. A basin is now being used to test whether algae can break down the glycol and potassium acetate and whether it will be possible to generate energy from the resulting biomass. Various other initiatives were to follow

37 Rail Cargo Information Netherlands, “Spoor in cijfers”, 2009

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Impact of sustainability on the logistics programs at the NHTV Academy for Urban Development, Logistics & Mobility

5.1 IntroductionSustainability is crucial in the programs of Higher Vocational Education. As sustain-ability is so far still fragmented in the programs, the Dutch ‘Kennisakkoord’ urges to fully integrate sustainability throughout the complete program.

Sustainability is also affecting the competition for talent. Recruits in the labour pool, particularly among the younger segment, are increasingly considering either a company’s posture on sustainability issues or the connection between their job and sustainability. College graduates today are much more mission-oriented than those in the past, and they are looking for companies that match their personal values. If the company they join does not reflect their beliefs, they are more likely to push their values on the company than let the company push its values on them. A 2007 Monster.com study found that 92% of students are more inclined to work for a company that is environmentally friendly 41. Companies may need to become more ethically and socially responsible in order to attract candidates. This also has its repercussions on the way students are being educated.

NEA Transport research and training Ltd., as a member of Panteia, operates on a completely climate neutral basis. Panteia attaches great importance to sustainability in the provision of services both to its own clients and within its own organisation. Panteia translates sustainability into concrete targets and criteria - criteria that match, but in actual fact often exceed, the criteria applied by its clients. NHTV educates professionals who are aware of the importance of (corporate) social responsibility and who can translate that awareness into feasible solutions to benefit society. NHTV formulated its strategic plan in order to create a process towards further introduction of social responsibility, to find a joint focus and to determine what the strategic goals are for 2012.

5.2 How will the lectureship contribute to the logistics programs of NHTV Academy for Urban Development, Logistics & Mobility?The aim of the Lectureship Logistics & Sustainability is to contribute to the incor-poration of sustainability in the logistics programs 42 of NHTV’s Academy for Urban Development, Logistics & Mobility by means of a research and innovation program that is closely connected to NHTV’s ‘Kennisplatform Vitale Logistiek’ and the Research and Development Program for Logistics and Supply Chain Management

5 |

41 Accenture, “Sustainability and its impact on the corporate agenda”, 200942 Logistics programs: ‘Logistiek en economie’ and ‘Logistiek en technische vervoerskunde’

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ConclusionsStudies highlight the pressure on supply chain design to supply products that are environmentally friendly in their sourcing, production, delivery, usage and disposal. Not just for marketing purposes or ‘green washing’. While companies sometimes limit innovation to isolated flagship products, benefiting their reputations by association, the real challenge is to mainstream them across existing product ranges. Greening the supply chain is an industry issue that will only gain importance over the years to come. Utilising network design, optimisation and planning systems, which incorporate, for instance, carbon footprint consideration, but also sourcing, procurement and end-of-life, will therefore be a crucial ally in ‘greening’ the supply chain and providing supply chain executives with a transparent view of the entire supply chain. Although sustainability programs may vary by industry, the basic needs for transparency, communication and collaboration are similar.

GrSCM is here to stay, the ‘green revolution’ has not yet started. The development of green supply chain models, the consequences for supplier and partner selection and improved concepts in, for instance, reverse logistics and Cradle to Cradle should be part of an integrated approach to green supply chain management. Several recent studies reveal however, that most strategies are not real long-term strategies, but isolated single solutions. Difficulties are not only seen in the lack of comprehensive strategies and the fact that instruments/methods for a comprehensive capturing of green impacts of supply chain management are not known, but also in assessing related financial impacts.

GrSCM improves operations by employing an environmental solution:> improves agility – GrSCM helps mitigate risk and speeds up innovations;> increases adaptability – green supply chain analysis often leads to innovative processes and continuous improvements;> promotes alignment – GrSCM involves negotiating policies with suppliers and customers, which results in better alignment of business processes and principles.

A critical consideration in this process is the role 3PLs can play in restructuring the supply chain to better meet current and emerging conditions, as well as serving in a more strategic capacity in the new infrastructure that results. In this respect the transport and logistics sector faces some serious barriers that keep the sector from really focussing on making the business more sustainable. These barriers include the small margins due to high competition within the sector, regulation related to time-frames for delivery in shopping centres and the strong position of the shippers. Transportation is very much in vogue as a topic of green discussion. We must be aware of the fact that we are not merely confusing the desire to reduce spending on high-priced fuel with the goal of becoming green.

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Dinalog (Dutch Institute for Advanced Logistics). The main topics of the lectureship are: green Supply Chain Management (GrSCM), ICT & supply chain optimisation, and co-modality. By combining the development of practicably applicable (new) knowledge, NEA’s project knowledge and experience, and by offering student internships – combined with the strong partnership with the (regional) business community – knowledge development will be nourished and the business community will be strongly involved in the education and research program. In this way, the lectureship will contribute to the competitive position of the Dutch business community and the development of a dynamic knowledge economy.

Core focus of the lectureship will be on the necessity of ‘green’ and on green operations (network design and reverse logistics, transportation, green manufac-turing and re-manufacturing and waste management). Elements of the research program will definitely contain the development of instruments/methods and comprehensive strategies for a clear establishment of green impacts of supply chain management, together with the assessment of related financial impacts. Not only to be applied within the context of large companies, but especially also for small and medium sized companies.

Furthermore, it is of utmost importance to keep pace with changes to relevant regulations at a national and European level when it comes to operating in a sustainable way.

1 Sustainability is becoming an increasingly important consideration to supply chain management executives;2 Most companies are still struggling with obtaining verifiable consistent data to measure value chain effectiveness and environmental responsibility;3 Consumer awareness and increased regulation will put added demands on companies to drive green initiatives and efficiencies in the supply chain;4 The new imperative requires that sustainability becomes woven into the core strategies of companies and public sector organisations.

Once companies gain the proper motivation and start looking at the greening of their supply chains in earnest, supply chain managers will need to focus on threeareas of relevance for them:

1 Greener product and packaging designDesigners will need to use the maximum amount of environmentally-safe product components, and finished goods and packaging will need to be more biodegradable and minimally harmful to the environment.2 Supply network complianceIt is not good enough for a company to be environmentally friendly if any of their suppliers - as removed as they may be from the end product - are not themselves green. It will become imperative for companies to do an audit of their suppliers and their suppliers’ suppliers to ensure every firm - both local and global - that has an impact on their products is complying with green guidelines.3 Reverse logisticsAs governments at both national and regional levels start imposing increased regulations on recycling, up-cycling etc. supply chain systems will have to accommo-date products being returned for recycling or disposal at end-of-product life. This will require a truly closed-loop supply chain where goods have to return to the supply chain to be broken down and properly disposed of.

By means of the lectureship we want to contribute to the above by developing a research program in which both companies, NGOs, (local) governments, colleagues at NHTV and NEA and students can participate. I therefore really look forward to the three years ahead, in which we are really going to make things happen!

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References

> Accenture, “Achieving high performance: the sustainability imperative”, 2008

> Accenture, “Compatible aims: sustainability and high performance”, 2009

> Accenture, “Series on high performance in retail”, 2008

> Accenture, “Sustainability and its impact on the corporate agenda”, 2009

> Capgemini, Georgia Institute of Technology, Oracle and DHL, “13th Third Party Logistics Study”, 2008

> Capgemini, “2016 future supply chain”, 2008

> Cushman & Wakefield, “Green buildings – a behavioural change”, 2008

> Deloitte, “Green means go. Green supply chain management: opportunity today, imperative tomorrow”, 2008

> Diamond Management & Technology Consultants, Insight “The case for a ‘green’ supply chain: Turning mandate into opportunity”, 2008

> Ernst & Young, “Green for go. Supply chain sustainability”, 2008

> European Environment Agency, Report No 1, “Climate for a transport change”, 2008

> Eyefortransport, “7th European 3PL Market Report”, 2009

> Eyefortransport, “Summary and analysis of Eyefortransport’s survey: Green Transportation & Logistics”, 2007

> Florida International University, College of Business Administration, Ryder Center for Supply Chain Management, “The state of Green Supply Chain Management. Survey Results”, 2008

> GTM Research, “Greening the supply chain: Bench- marking Sustainability Practices and Trends”, 2009

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> McDonough, W. and Braungart, M, “Cradle to Cradle: Remaking the Way We Make Things”, 2002

> McKinseyQuarterly, Automotive, Strategy & Analysis, “Building a sustainable Ford Motor Company: An interview with Bill Ford”, 2010

> Ministry of Transport, Speech Dutch Transport Minister Eurlings in Tokyo, “Seminar on sustainable logistics and climate change in Japan”, October 1, 2009

> NEA Transport research and training Ltd.,“New energy for the traffic and transport sector?”, 2010

> PricewaterhouseCoopers, Transportation & Logistics, “Moving green. Sustainability – insight into the Transportation and Logistics sector”, 2009

> Quariguasi Frota Neto, J., J. Bloemhof, J. van Nunen, E. Van Heck, “Designing and evaluating sustainable logistics networks”, International Journal of Production Economics111, 195-208, 2008

> Rail Cargo Information Netherlands, “Spoor in cijfers”, 2009

> Schiphol Group, “Amsterdam Airport Schiphol: leader in innovation for over 40 years”, 2009

> Simchi-Levi, D, “Going green in the supply chain”, MIT, www.logisticsit.com, 2008

> Straube, F, Borkowski, S., “Global Logistics 2015+”, Center of Innovation for Transport and Logistics at the Berlin Institute of Technology, 2009

> Transport Intelligence Ltd., “Special briefing: Embrase ‘green logistics’ or lose business: the stark choice for providers”, 2008

> Vermunt, Prof. Dr. ir. A.J.M., “Wegen naar logistieke dienstverlening”, 1993

> Yosi, T.F., “Greening the supply chain in emerging markets. Some lessons from the field”, GreenBiz Reports, World Environment Center, 2008

> www.boekhout.com

> www.carbonneutralups.com

> www.enpark.ae

> www.greenlogistics.org

> www.greeneconomypost.com

> www.greenpeace.org

> www.hollandtrade.com

> www.maasvlakte2.com

> www.mars.com

> www.masdarcity.ae

> www.rotra.nl

> www.vandenbosch.com

> www.vangansewinkel.eu

> www.volkswagenag.com

> www.vrom.nl

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