As interest and activity in the Green supply chain practices heat up, companies are experiencing a multi-step change in requirements and complexity that is in some cases proving almost overwhelming.

The demands are many: a company’s own Green supply chain initiatives; pressure or requirements from customers; rules and regulations from governments across the globe. Managing these and other pressures while having little or no cost impact to the enterprise may seem at times an almost impossible task.

Consider, for example, the use of chemicals in products and production processes. A growing number of companies, especially in the high tech world (Dell, HP) but also in retail (Walmart) are assembling detailed “chemical inventories” of what substances are used where in their supply chains. By definition, that will mean their suppliers will have to go through the same exercise, going further and further back into the supply chain (supplier’s supplier, etc.).

This will require construction of what in some cases will be large databases where none likely exist today. An electronic bill of materials (BOM) does not provide information about what chemicals may have been used to produce the component products, to use perhaps the most notable example.

“Managing the information contained within multiple bills of materials (BOM), recipes, and formulas across a product supply network is complex enough,” says Simon Jacobson, an analyst at AMR Research. “Grasping product-specific environmental information is arguably more daunting, especially since the information is often fragmented and unstructured.”

The Green Supply Chain Says: This will require construction of what in some cases will be large databases where none likely exist today. An electronic bill of materials (BOM) does not provide information about what chemicals may have been used to produce the component products. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

This data can come from a myriad of sources, such as individual Chemicals Abstract Services (CAS) registry numbers; toxicity and flash data, rules and phrases; GHS classifications and material safety datasheets (MSDSs); localized handling and transport processes, and more.

In his research note, Jacobson cites the following barriers to making progress on Green supply chain issues, especially with regard to chemicals employed in products and their related supply chain processes: 

• Regulatory dynamism: The rules keep changing, especially on a global basis, and it is hard to find the right information, most importantly on interpretation of the rules. 

• Relevant access to supplier information: What do they have, and how do you get it? 

• Lack of process standardization: This is largely new territory; companies are mostly making it up as they go, with little yet in the way yet of processes. 

• Dearth of standard IT systems: As many of these requirements and goals are new, there is also little in the way of IT/software support; building such systems takes time and money.

• Skills gap: This is a new discipline, really, and not many have deep skills in how to go about these tasks; many companies have shed significant workers in the recession, losing institutional knowledge and leaving very lean staffs to get the work accomplished. 

• Executive leadership ownership and commitment: How strongly are senior execs really behind the effort? 

• Access to capital: Corporate investment remains tight, and Green projects must compete with other requests for funding.

Companies are Feeling the Pressures

AMR surveyed some 128 companies about the types of programs they are implementing or will be required to be compliant with by customers. Those results are shown in the graphic below.

Jacobson says an increasing number of companies are starting to outsource parts of this data collection and maintenance work, while others are looking at a new generation of “on-demand” software solutions to get the job done without the need to buy or build traditional applications.

“Both the imminent and long-term need is to capture content and communicate it throughout the product supply network all the way through to the end customer,” Jacobson concludes. “Establishing this foundation of environmental content is not the end game, but it’s crucial if broader product stewardship issues, such as energy outputs and lifecycle analysis, are to be executed.”

Are the growing Green supply chain reporting requirements becoming overwhelming? How big a task” will it be to build “chemical inventories” for products and the supply chain? Any smart ideas on how to get this done? Let us know your thoughts at the Feedback button below.

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