Energy efficiency and supply chain savings

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Back in January when we brought you our “Predictions for 2013“, we suggested that one key trend would be aligning “green initiatives” with cutting costs. Since then a number of environmentally conscious supply chain projects have been launched and have met with considerable success.

Green Incentives

Marks & Spencer’s, one of the UK’s leading retailers, was recently presented with a number of awards for its socially conscious approach to supply chain management. The company, which announced its “Plan A” initiative in 2007, has drawn up a list of 180 commitments to be achieved by 2015. These include targets on ethical trade, sustainable sourcing and energy efficiency. Crucially each objective is backed by financial incentives for the M&S buying teams.

One of M&S’s objectives is to reduce carbon emissions. The company has implemented numerous energy and cost saving initiatives including installing new light fittings which reduce energy use by 70 per cent, store optimisation which has resulted in a 28 per cent reduction in energy consumption and the introduction of 400 fuel saving trucks.

Discussing the benefits of the project, Adam Elman, Head of Delivery Plan A and Sustainable Business at M&S said; “As well as the internal and supplier recognition, it’s great recognition externally for customers and other people who are looking at our business.” Plan A delivered £70m in net benefits between 2010-11, which were reinvested in the project.

Another business which is looking to harvest the benefits of an environmentally conscious supply chain is Taylor Wimpey. The British homebuilder recently unveiled plans to implement £38m in savings by 2020, through encouraging energy efficiency in its supply chain. Measures which are being implemented include behaviour and process changes, equipment and system optimisation and upgrades.

Harvesting the Benefits

The most obvious benefit people associate with green initiatives is reputation. As consumers become increasingly environmentally aware, they are more likely to select brands which reflect these values. However, as illustrated by the examples above, there are also very real cost saving advantages to be had by implementing green measures and behaviours.

In addition incentivising buyers to source sustainably instead of purely by cost would have reduced the risk of suppliers being pressured into mislabelling certain products. The time is right for the supply chain sector as a whole to embrace a more sustainable approach.

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