Logistics and Supply Chain Management, 4th Edition

LOGISTIC S & SUPPLY CHAIN MANAGEMENT

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Further pressure on businesses to reduce their environmental footprints is coming

from government regulation, often in the form of Emission Trading Schemes (ETS)

or so-called ‘Cap and Trade’ legislation. For example, the European Union’s

Emissions Trading Scheme has recently been extended to cover a greater range

of industries and is based on the principle that companies have a basic allowance

for carbon emissions – if they go beyond that level they have to buy additional

allowance from other companies who do not fully use their own allowance. Similar

schemes are currently contemplated by governments around the world and in time

their impact is likely to be significant.

Since, as we have noted, most of a typical business’s total environmental foot-

print lies in its wider supply chain, particularly upstream of its own operations, the

need for supply chain managers to become more involved in managing this foot-

print becomes apparent. Unless upstream suppliers are able to reduce their own

footprint the additional costs that they will incur will inevitably end up in their cost of

goods sold – and ultimately in the price of the products in the final marketplace.

The impact of congestion

One of the key issues when considering sustainable supply chain solutions is traf-

fic congestion and the related infrastructure issues. In probably the majority of

countries, developed and developing, the creation of logistics infrastructure has

not kept pace with the level of economic activity. This is true for all types of infra-

structure, including roads, ports and railways. Gridlock on motorways, container

vessels waiting to unload at ports and bottlenecks on the railways are common

occurrences in many countries and add to carbon emissions as well as adding

cost to suppliers and customers alike.

Wal-Mart’s $11 billon ‘green’ savings

Wal-Mart has pledged to work more closely with suppliers to reduce its environ-

mental impact. The retailer, which owns supermarket Asda in the UK, has launched

the ‘Sustainability 360’ programme to make its suppliers and customers greener.

The news follows similar announcements by Marks & Spencer and Tesco.

Lee Scott, Wal-Mart CEO, said: ‘Sustainability 360 takes in our entire company

– our customer base, our supplier base, our associates. We believe every business

can look at sustainability this way.’

Scott said that Asda had taken the lead on working with suppliers to reduce

packaging, aiming for a reduction of 25 per cent by the end of 2008. Wal-Mart’s

overall target is a 5 per cent reduction by 2013, saving the global supply chain $11

billion (£5.59 billion).

The company also intends to launch a new ethical-sourcing initiative this year,

investing in the current team and sharing best practice with suppliers.

SOURCE: ‘WAL-MART’S $11 BN “GREEN” SAVINGS’, SUPPLY MANAGEMENT,

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FEBRUARY 2007.