Sustainability as a business opportunity

Posted on April 12, 2011 by Paul Leavoy

Thinking of bringing your business to a more sustainable place?

The best starting place for any business leader to embrace sustainability is to shift away from looking at sustainability in terms of how much it will cost, and towards assessing the returns it will generate.

Consider the phenomenon known as the Cost of Poor Quality (COPQ) which emerged in the field of quality management in the late 1980s. COPQ can be thought of as follows: by neglecting the importance of quality, an organization literally pays to generate waste and other problems, often in the form of scraps, reworks, recalls, rejects, reworks, service calls, warranty claims and more. Similarly, in the realm of corporate social responsibility (CSR) and sustainability of environmental, social and economic responsibility, organizations essentially commit capital to generate waste. Not a great investment, especially when sustainability actually presents a ton of revenue-generating opportunities.

Since the purview of sustainable development is so vast and comprehensive, the ROI of sustainability initiatives manifests in myriad ways, some direct (basic cost savings through curbing resource consumption and waste) and some indirect (risk mitigation and avoidance).

Some examples of direct and indirect impacts of sustainability on financial performance include:

Resource Conservation and Waste Reduction: Minimizing your consumption of water, energy and resources (anything from essential office supplies like paper to raw materials for manufacturing) by implementing conservation policies and tracking sustainability key performance indicators generates the obvious, direct effect of cost savings: by consuming fewer materials either in operations or production, you’ll save money associated with the acquisition of materials. However, you must remember the old management adage about measuring what you want to manage.
Penalty Aversion and Regulatory Compliance: Any organization committed to sustainable development and reporting on its progress in achieving its sustainability goals will be required to track essential environmental, social and economic metrics including, for example, air emissions and wastewater discharge. If you’re committed to tracking, analyzing and reporting on air emissions data, you’ll be better prepared to avoid the costly fines of notices of violations associated with exceeding permitted air emissions and wastewater tolerances.
Brand Image: Though boosting environmental, social and economic performance should be the crux of any sustainability strategy, the marketing and publicity aspects and opportunities are not to be diminished as ROI-generating facets of sustainable development. By leveraging a proven commitment to social responsibility and environmental responsibility, an organization stands to place in high-profile rankings on CSR performance, attract and retain top-tier talent, gain media attention and public respect, and improve sales by enticing more high-level, global clients.
Customer and Consumer Relations: Wal-Mart’s recent initiative to green its supply chain represents a great example of how one company’s sustainability initiatives can affect thousands of other businesses. America’s largest retailer has been on a mission to green it massive supply chain, recently announcing it plans to cut 20 million metric tons of greenhouse gas from its supply chain by 2015. Wal-Mart’s initiatives affect thousands of other companies around the globe and represent an emerging cause-effect relationship between suppliers and big corporations. As one organization seeks to achieve and report on a certain level of social and environmental performance, it demands the same standard of performance and transparency across its vendor base and supply chain. Also, from a consumer standpoint, end users will increasingly demand sustainable products. Businesses will simply have to meet certain standards of sustainable development in order to retain clients and grow their business.

Though the essential financial benefits of conserving resources, for example, can be easily quantified and tracked, it is more difficult to pull tangible ROI statistics from the cost- and risk-aversion factors, as well as customer retention factors, associated with some of the above points, except on a case-by-case basis. However, proactive corporate strategies beat trial-and-error approaches as the best recipe for optimizing returns on sustainability investments.

Five Ws: Avoiding the nightmare of a product recall

Posted on April 11, 2011 by Paul Leavoy

Eggs. Toy trucks. Spinach. Meds. And now walnuts.

Recalls — and not the good kind — are a daily reality within an interconnected, modern global economy. But for the unprepared business, a product recall can be a logistical and PR nightmare, costing significant capital, and precious hours of downtime as well as — perhaps most significantly — irreparable damage to delicately nurtured brand image.

Since consumer activist agencies and public awareness at large tend to be a few steps ahead of legislators and regulatory bodies on public safety concerns, it is imperative businesses stay a few steps ahead of the game. For companies that rely on contract manufacturers, this can be easily achieved with a comprehensive quality management system (QMS).

Some essential questions — often rendered complex by the size and scope of large corporations — can be resolved with straightforward answers if an electronic QMS has been put into place.

For example, an electronic QMS is capable of providing quality managers the answers to what are known as the ‘five Ws’ of product recalls:

What: In the event of a product recall, the fundamental reason for the recall will narrow-down investigative work and help quality managers build a list of questions and criteria to determine who in the supply chain is responsible for the defect or issue in question.
Who: A company that relies on contract manufacturers around the world must determine which supplier within its supply chain is associated with the defective or unsafe part or product.
Where: The “who” and “where” questions are intrinsically related, for once it is established who is responsible for the issue, it can be broadly determined where the issue arose. But it is also essential to isolate where exactly — specifically within the manufacturing line of the contract supplier, for example — the defect was caused.
When: Supply chains can be complex systems, but it is important to have the capacity to determine when a defect or issue arose within the system.
Why: The other ‘Ws’ of product recalls will help a quality manager determine why a defect or issue arose. Answering this question quickly and effectively will help a business develop an action plan to respond to the product recall.

Quality managers strive for the often elusive goal of perfection but must come to grips that even in the most highly monitored systems and well-oiled machines, somewhere, somehow — by the laws of probability and human fallibility — an issue will likely arise. This probability is mitigated, however, if an electronic QMS has been implemented in the place of archaic spreadsheet- or paper-based tracking and supply chain traceability systems.

The advantage of web-based supplier management

Posted on March 17, 2011 by Paul Leavoy

While a supplier management system can be implemented without software, the benefits of establishing a software-based system are numerous and significant. Depending on how comprehensive the solution is, a software-based system can be capable of providing real-time metrics that can be accessed instantly with the click of a button, thus rendering an entire supply chain and vendor base transparent. Some critical features of a comprehensive software-based supplier management system include:

Supplier management and evaluation

The system should be able to register and categorize suppliers by company name, supplier number and performance rating as well as other details in a centralized portal. The system should use this information to schedule, notify, and archive all supplier evaluation activities and results and develop a consistent supplier rating program with customizable surveys.

Risk management and continuous improvement

To avoid quality issues and ensure all elements of the supply chain run at peak performance, the supplier management system should be capable of:

Tracking supplier non-conformances and all details associated with those non-conformances.
Specifying target investigation dates or target response dates and manage all investigation related data.
Implementing corrective actions and measure their effectives over time.
Reporting on and analyzing root causes.

Streamlining workflow

To take the time and energy out of micromanaging data and issuing notifications, the system should be capable of streamlining supplier management workflow by tracking all supplier and vendor data in a central portal that’s accessible across the organization. A proactive system should also be capable of sending automated email notifications on pending and overdue supplier tasks to employees and their supervisors.

Real-time visibility and reporting

An ideal system should be capable of monitoring, reporting on and storing data on each stage of the process, including initial vendor registration and setup, ongoing supplier performance assessments, the implementation of corrective and preventive actions and evaluations on the success of those actions. Employees with access to the system should be able to instantly update information and generate ad hoc, boardroom quality supplier management reports on root causes, correction actions, and authorize claim amounts based on real-time data.

Some key requirements

A web-based supplier management system should be:

Accessible from multiple locations around the world under stringent security protocols.
User-friendly and intuitive, thereby increasing user adoption and reducing training and support costs.
Easily configurable to address company-specific requirements and metrics (initial and ongoing).
Scalable, allowing an organization to roll out the system to key suppliers.

Learn more about supplier management optimization strategies and tactics by checking out Intelex’s Optimizing Supplier Performance white paper, or by giving us a call to discuss our supplier management solutions.