Monday, June 6, 2011

A Sustainable Supply Chain: Show me the Money – NOW!

A Sustainable Supply Chain: Show me the Money – NOW!

... The quantitative model was created by the analysis of the three main drivers and their respective impacts on the company’s annual procurement spend, market cap and revenue. Their impact was then compared to the implementation cost of a Sustainable Procurement program.

Among the reports key findings:

  1. The payback from investing in risk reduction activities in the supply chain targeting the financial impact on “brand value from negative supplier practices (e.g., child labor, creating local pollution);economic cost of supply chain disruptions (e.g., noncompliance with environmental regulation,” etc. is eighty-five times the cost associated with the initial risk reduction investment.
  2. Additional revenue through innovation of eco-friendly products/services, price premium or income from recycling programs yielded a 58 percent payback.
The study found sustainability- driven cost reduction from energy reduction programs for instance, could fund the entire cost of a procurement initiative. This would allow companies to benefit quickly from both risk management reduction and potential revenue growth opportunities. ...

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