supply chains different management concepts and cultures often clash making

Supply chains different management concepts and

This preview shows page 4 - 5 out of 11 pages.

supply chains, different management concepts and cultures often clash, making analysis difficult. 3 As a result, companies expand their sustainability pro- grams to include suppliers but often struggle in implementing their initiatives. 4 However, looking at the entire value chain is criti- cal, as the opportunity to reduce one’s footprint is often bigger outside organizational boundaries. Total value-chain assessment also allows a company to identify “material issues” and thus focus its efforts. Results indicate that companies with strong perfor- mance on such material issues outperform those with poor performance on them — a finding con- sistent with material investments being value- enhancing for shareholders. 5 The value chain describes the full range of activities that are required to bring a product or service from conception through the intermediary phases of production (in- volving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use. Embedding a sustainable business model thus re- quires an integrated perspective, incorporating both marketing and supply-chain considerations. From a marketing perspective, sustainability goals strongly influence product design, communication, and chan- nel selection. From a supply-chain perspective, sustainability goals strongly influence component se- lection, materials sourcing, production, packaging, distribution, and recycling decisions. For a company to promote a sustainability agenda to its markets, it is critical that the enterprise consider the entirety of value-added processes. Tools such as carbon- and energy-footprint analysis and life-cycle assessment help companies identify the sources of waste in supply chains. Life- cycle assessment is particularly useful: It captures environment-related inputs and outputs of entire value chains, from raw-materials supply through product use to returns. This has helped companies identify the parts of their supply chains that use the most resources. At Unilever, armed with the realization that the company would have to fundamentally change the way it did business, the first step was to perform an internal measurement across the value chain of the environmental impact of the company’s products — in terms of waste, carbon dioxide emissions, water, and packaging. The key point is that this assessment was done across all brands, all countries, and total value chains — to see, for example, what the carbon impact was in cooking, taking showers, deforesta- tion, or food waste. Notably, Unilever’s analysis of its entire value chain revealed that much of its foot- print was at the consumer end, involving issues such as using more product than necessary or im- proper end-of-life disposal. This analysis revealed a tremendous opportunity to reduce Unilever’s environmental footprint, as well as to focus the or- ganization and to align resources.
Image of page 4
Image of page 5

You've reached the end of your free preview.

Want to read all 11 pages?

  • Spring '20
  • MIT Sloan Management Review

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture