responsible supply chain innovations

8/8/2019 Responsible Supply Chain Innovations

http://slidepdf.com/reader/full/responsible-supply-chain-innovations 1/4The STanford Global Supply Chain ManaGeMenT foruM Vol14 iSSue 3 – SuMMer 2008 paGe 1 of 4

Some of the greatest challenges and opportunities

of our time have a direct impact on companies’

supply chains. For example, climate change,

globalization, and the rising cost of food and

energy influence actions taken by supply chains every

day. Now, more than ever, companies are looking to their

product design, sourcing, manufacturing, and logistics

operations to identify opportunities to reduce their

carbon footprint and save on energy costs. Along a more

human dimension, companies that manufacture goods inemerging economies must also consider factory health

and safety issues, workers’ rights to organize, and the

unique issues faced by migrant workers. Finally, continued

outsourcing and subcontracting within increasingly

complex supply chains can lead to product safety issues,

which often end up in headlines as front page news.

How do supply chains proactively manage all of these

challenges and find opportunities within them that can

enhance business performance and deliver benefits to

a broader group of stakeholders? These are some of the

questions that set the stage for the 2nd annual Stanford Socially and Environmentally Responsible Supply Chains:

A Source for Innovation conference on April 22, 2008.

Cosponsored by the Stanford Global Supply Chain

Management Forum and the Stanford Center for Social

Innovation, 280 people attended this dynamic gathering

of thought leaders and industry executives from across the

country. Participants heard from three keynote speakers,

and also attended several breakout sessions where they

delved into specifics. Here are some key takeaways from

the day’s events.

Be sector-blind when seeking good ideas. Throughout

the day, several examples highlighted how the govern-

ment and nonprofit sectors are providing leadership in

supply chain responsibility. Buddy Polovick of the U.S.

Environmental Protection Agency SmartWay Transport

Partnership discussed how his group partners with

over 600 companies to share best practices on reducing

logistics emissions, and shared innovations such as truck

idle reduction technologies with the audience. Shawn

Rosenmoss, from the City of San Francisco Depart-

ment of the Environment, discussed how the City’s green

purchasing practices are influencing not only the demand

for green products (given the City’s purchasing power)

but also the supply, since vendors are highly motivated

to develop more sustainable products to meet the City’s

needs.

Responsible Supply Chain InnovationsCan Benefit People, Profits and the Planet

By Sonali Rammohan

SER ConfEREnCE AnAlySiS, ApRil 22, 2008

l to r: Judy Glazer, Buddy Polovick, Lee Kindberg, and Richard Alloo



Since social responsibility is embedded within the

mission of Raising A Reader, a nonprofit that sells book

bag kits for young children, when they faced a lead hazard

in their book bags, Executive Director Carol Gray reacted

quickly and proactively—she contacted the Consumer

Product Safety Commission, conducted a voluntary recall,

and then worked with an innovative company called

Rickshaw Bagworks to design responsible, safe book

bags in a timely fashion so that their business was not

interrupted.

Look across your network for partners in innova-

tion. When auto refurbishing and auction giant Manheim

was faced with local government pressure to use less

water in its refurbishing process, it turned to supplier

Ashland for ideas. Manheim’s Vice President of Best

Practices David Munnikhyusen and Ashland Water

Technologies Senior Technical Consultant Kevin Bice

shared with the audience how Ashland designed an

innovative wastewater treatment and reuse system, which

resulted in a 60 percent decrease in water consumption

and a reduction in costs. Sometimes, partners outside of

one’s immediate networks can also provide innovative

ideas. Karl Walk , chairman of the World Cocoa Founda-

tion, discussed how his organization looked to a nonprofit

organization for innovation—the foundation uses farm

field schools to educate cocoa farmers on better farming

techniques. In one instance, the foundation learned from

one of its nonprofit field school partners about an innova-

tive solar dryer used by coffee farmers to prevent mold

damage. The result of employing solar dryers for cocoa

beans was a 60 percent increasing in cocoa bean pricing.

Social responsibility should not be forgotten. As thegeneral public continues to embrace “going green” and

the corporate world implements sustainable practices in

their supply chains and beyond, it is important that we

also remember the social side of the supply chain respon-

sibility equation. The conference highlighted a number

of examples of how companies both large and small are

finding ways to treat workers more fairly and still make

profits. World of Good sells ethically sourced artisan

products from around the world. Priya Haji, cofounder

and CEO, discussed how the company’s foundation arm,

World of Good Development Organization, has developeda transparent fair wage guide to ensure that artisans

are compensated fairly for their work. In the spirit of

increasing the standards for the entire industry, World of

Good shares this guide publicly, and Priya mentioned that

profits have not been hurt by implementing this guide.

Instead, it is helping the company to meet the growing

demand for ethical products.

Keynote speaker Dan Henkle, senior vice president

corporate responsibility at Gap Inc. discussed the

evolution of his company’s ethical sourcing program

and how the Gap strives to make social responsibility aregular part of doing business by rewarding responsible

suppliers with more orders, among other things. He also

discussed the incident last year in which child laborers

were found making clothes for the company in India. The

Gap employs 90 full-time inspectors that make unan-

nounced visits to factories. In this case, an unauthorized

subcontractor was operating the factory in question, and

the Gap dealt with the issue swiftly and didn’t sell any of

the clothes made by that factory.

l to r: Julie Juergens, Priya Haji, Shawn Rosenmoss, and Adrienne Moser

l to r: David Munnikhyusen, Kevin Bice, Larry Coburn, and Karl Walk

Responsible Supply Chain Innovations Can Benefit People, Profits and the Planet



Lessons can be learned from smaller organizations.

World of Good, Nau Inc., Raising A Reader, Dagoba

Organic Chocolate, and Rickshaw Bagworks—these

organizations were founded on holistic principles of

integrating social and environmental responsibility into

their business, making it a natural process for them to

build responsibility into their supply chains. Several of

the executives from this group highlighted their belief that

sharing responsible innovations can “raise the bar” for the

entire industry. For example, World of Good promotes

“open source” practices by sharing its fair wages guide

with others so that the standard of living of workers can

improve across industries and across the world. Adrienne

Moser of Nau Inc. (which sadly recently closed its

business) discussed how Nau shared sustainable fabric

formulations publicly, as part of their strategy to be a

leader in responsible product design practices throughout

the garment industry.

Social and environmental responsibility touches

all aspects of the supply chain. Supply chain respon-

sibility begins at the product or service design stage.

Ideo, a firm based in Palo Alto, is at the forefront of

sustainable design. In one workshop, Ideo designers led

conference participants through a creative exercise that

explored sustainable design using a human-centered lens.

Participants were asked to engineer a more sustainable

emergency room, after exploring the particular wants

and needs of one specific customer. Using this human-

centered design approach helps to ensure that a company

gives a consumer what he or she wants, and increases the

likelihood that sustainable products and services have a

market. Tim Bailey, vice president of Product Supply at

Clorox Inc. also discussed product design and the chal-

lenges around defining and sourcing natural ingredients

for its new sustainably focused product line, GreenWorks.

From the manufacturer’s perspective, researchers from

the nonprofit forecasting firm Institute for the Future led

participants through a strategy workshop that explored

techniques for long-term benefits of manufacturing in

China. Participants were introduced to strategy tools

that tap new trends of the open economy and models

of cooperation rather than competition. Focusing more

on logistics, Maersk Inc. shared an innovative carbon

calculator tool that can track the carbon emissions a

product generates from the point it leaves the factory to

the shipping dock to the ocean journey to the port to the

warehouse, and finally to the retail location.

Looking ahead. While the day showcased many

examples of organizations employing innovative tech-

niques for being more responsible, various speakers

highlighted the challenges that accompany supply chain

responsibility. Dan Henkle from Gap Inc. emphasized the

need for global regulation on manufacturing compliance,

in order to avoid an excess of audits and monitoring costs.

As supply chain complexity continues to increase, productsafety monitoring will remain of top concern. Speakers

such as Kevin O’Marah, chief strategy officer at AMR

Research; Frederick Schilling, founder of Dagoba

Organic Chocolate; and Mark Dwight, CEO of Rickshaw

Bagworks shared ideas on how to handle a crisis once

it has occurred and how to reduce the likelihood of

an occurrence in the first place. A key takeaway from

their discussion was that one cannot outsource supplier

monitoring. Having strong relationships and personal

connections with suppliers is increasingly important and

helps ensure that suppliers are vested in the company’sgoals and are responsive to company expectations.

With the rising cost of energy and potential future regu-

lation of carbon emissions, alternative energies will have

to be explored in more depth. Chris Field, professor of

biological sciences at Stanford University and director of

the Department of Global Ecology at the Carnegie Institu-

tion discussed the science behind biofuels and emphasized

Tim Bailey


http://www.stanford.edu/dept/biology/

http://globalecology.stanford.edu/




http://www.stanford.edu/dept/biology/



that companies must look at the source of biofuels and the

total ecosystem of a crop before determining whether acrop is good for the environment. He stated that biofuels

can be a good alternative energy source under the proper

conditions, but that, ultimately, they will not make a

significant impact in satisfying the growing demand for

energy.

Given the vast array of topics being explored at the

conference, it was clear that supply chains are making

important strides up the continuum of social and environ-

mental responsibility, but that more guidance was needed

on which aspects of these efforts made business sense.

Many attendees indicated that they could implement more

responsible practices if there were a clearer business case,

and that therefore more metrics and research in this arena

were needed. With the active cross-sector networking that

took place over the day, it was clear that the conference

provided a rich environment to spark new ideas, connec-

tions, and networks to continue innovating in the future.

* For more information and resources from the 2nd

annual Socially and Environmentally Responsible

Supply Chains: A Source for Innovation conference,

please visit www.gsb.stanford.edu/ser .

Chris Field


http://www.gsb.stanford.edu/ser

http://www.gsb.stanford.edu/ser

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