Adding Green to the Picture

Becoming “green” and “sustainable” has been a hot issue for retailers lately. From LEED-certified remodeling projects to public relations campaigns that spread the word on sustainable practices, environmentally-friendly initiatives are taking center stage. Thanks to technology and software solutions, creating and maintaining a greener supply chain may be one of the simplest and more financially-rewarding places to start.

Within retail supply chains, such initiatives “are gaining so much popularity now because the two ends of the spectrum [environmental impact and economic feasibility] are no longer in opposition,” says Erik Huddleston, vice president of strategic applications for Inovis. “When it comes to logistics, it’s all about the cost of gas at the end of the day.”

Constructing a new LEED-certified facility or installing solar panels can require significant upfront costs, but the efforts to make a supply chain greener usually do not require additional capital and can generate immediate returns.

A number of firms now leverage technology and software to make supply chains more efficient, green and cost-effective. Jeff Boudreau, a partner with XCD Performance Consulting, says retailers can use software to make numerous small improvements that add up to large results.

“Almost everything a company can do to improve its business operations also has a sustainability benefit,” he says. “Improvements in a supply chain, transportation, technology, labor and packaging will almost always show a sustainability improvement.”

Retailers of all sizes can add more green to their supply chains by cutting down on packaging, maximizing space on their trucks or in their containers and optimizing just-in-time inventory practices.

Tim Minahan, senior vice president of marketing for Atlanta-based Procuri, says his company’s solutions help clients utilize their spend, negotiate with and source from their suppliers and manage their contracts and commercial agreements, all while tracking a supplier’s record of sustainability. A web-based portal allows buyers to view a supplier’s LEED certifications, performance scores and progress on improvements and corrective measures.

“On the front end, it’s about making sure that you get the right sustainable suppliers in the first place, and on the back end it’s about making sure that they remain so,” Minahan says.

Gurdip Singh, retail division vice president for supply chain management software provider i2, says many retailers use their solutions to minimize transportation. Other areas Dallas-based i2 focuses on include optimizing logistics management, collaborating with suppliers to create a just-in-time delivery system and a merchandise management solution that helps create more advanced planning.

“Basically, if you can do a better job of just managing inventory and look at the whole picture of how a product gets to the store, that is a very direct way of creating a more sustainable supply chain,” Singh says.

Suppliers and retailers that are streamlining and greening their supply chain through the use of technology can also put themselves ahead of the curve for any potential government legislation that calls for more environmentally responsible practices.

Suppliers earn a score
Procuri’s TotalSupplier supports the supplier management lifecycle from initial registration and assessment to ongoing performance measurement. Suppliers can register on a portal and, based upon how they answer questions, are given a score that ranks their environmental and social responsibility indicators.

Boudreau says retailers also are using software solutions to consolidate shipments. When a retailer makes a purchase from a consumer products company, numerous purchase orders from various departments could create multiple shipments. A single bill of lading and package could make that shipment two or three times more efficient, reducing both the transportation costs and the company’s carbon footprint. Software can also help maximize space in shipping containers and warehouses, which Boudreau says can increase density by as much as 15 percent.

Social concerns also play a part in the push for sustainability. Huddleston says that more retailers are implementing audit programs to take a closer look at their factories overseas. By observing working conditions, pollution controls and operations and inputting such data into a software solution, retail executives can gain a better view of what’s happening at their overseas facilities.