The Inovis Blog

Image Source: Diamond Management & Technology Consultants

Ok. So I haven’t seen the Al Gore movie (that’s not a political statement, so no political posts, please!), but there’s a whole lotta green talk going on these days. As far as I can surmise from reading, watching, listening and thinking, going green is nice for the environment but better for the pocket book for corporations – not that there’s anything wrong with that. And with gasoline topping $110 a barrel (can you say goodbye SUV and hello sub-compact, ala the EU), a lot of energy is costing a lot more green, and companies need to invest in technology and process alignment in the supply chain to reduce as much fuel and energy waste as possible.

A lot of focus has been on reduction of energy use in data centers as it should be. However, as I noted in an earlier blog entry titled, “Supply Chain Overtakes CIO in Spending,” AMR reports that most companies budget between 2-5% of revenue for IT budgets, yet they spend roughly 50% of revenue on all aspects of supply chain management. If that’s the case, then there is probably far more green to save in going green in the supply chain than in data centers – not that companies should take an either or approach.

The trend we see (supported by a lot of independent research sources), is that there will be more investment in driving efficiency and eliminating cost in shared business processes outside a corporation’s firewall rather than between departments inside the firewall. So it stands to reason that companies can invest in more energy efficient servers, etc in a data center at the same time that they are optimizing their supply chains. Craig Guillot contributes an article on Green Retailing in STORES Magazine this month about software solutions that can help create and maintain sustainable supply chains. In addition, Diamond Management & Technology Consultants is sponsoring a white paper titled “The Case for a ‘Green’ Supply Chain: Turning Mandate into Opportunity” on Retail Wire. Here are a couple figures about green savings:

• Wal-Mart anticipates its goal of a 5 percent reduction in packaging by 2013 will produce $3.4 billion in direct savings and roughly $11 billion in savings across the supply chain.
• Johnson & Johnson’s energy efficiency program resulted in an estimated $30 million in annualized savings over the 10 years prior to the company’s 2006 sustainability report.
• Nestlé, through a combination of packaging source reduction, re-use, recycling, and energy recovery, saved $510 million, worldwide, between 1991 and 2006.

Diamond provides a strategic framework on how to implement a green supply chain, and one of the pillars is collaboration with external business partners. More and more, companies are going to place a premium on suppliers that can help them be more efficient environmentally and more efficient from a cost perspective. As you look to invest in aligning shared business processes with business partners, such as transportation management, remember to think green. It’ll pay off.