The Advantages of a Short, Sustainable Supply Chain

By Gray Rinehart

Long before I ever heard the terms “supply chain” or “sustainability” — when I was fresh out of college, and before I went on active duty in the Air Force — I worked for a factory that had and still has one of the shortest and most sustainable supply chains I’ve ever heard of.

At the International Paper Container Division, we made corrugated and laminated paperboard boxes for a variety of customers. How short was our supply chain? You’d measure it in feet, because the box plant was situated right next to the pulp mill that produced the kraft paper we used to make the boxes.

(“moving II,” by Robert S. Donovan, on Flickr under Creative Commons.)

Of course, that was not the full extent of the supply chain. The plant still had to buy glue for securing the corrugations, ink for printing on the boxes, the dies and patterns for cutting and printing, wire for stapling some of the boxes together, and the wax that made the poultry boxes waterproof. We also had to buy spare parts in order to maintain the corrugator, laminator, and other machines — which, maintenance has its own supply chain challenges — but the primary raw material that we used to make the boxes came from right next door, from a plant that was owned by the same company.

And even if you extended that supply chain further back, you’d find that it was not only very short but also highly sustainable. The primary raw material the pulp mill used to produce the paper was pine trees harvested from forests right in the general area — forests which were managed such that more than one new tree was planted for every tree that was harvested. So we could trace our supply chain for the primary component of our product only a few steps back to the raw material that came out of the ground.

Despite being part of an international firm, our local plant depended on local sources for most of what we needed. We did not have to deal with customs clearances, security issues, regulatory restrictions, or other supply chain barriers (as discussed at the recent 2014 Global Supply Chain Summit), nor did we have to be concerned with how much supply chain risk ‘varies wildly in the developing world’.

Many companies today are not so fortunate, either because their products are much more complex or because their materials and components come from much farther away. Companies with longer and more complex supply chains that cannot simplify them by finding dependable local vendors may turn to RFID — radiofrequency identification — tags or other methods to “uncomplicate” their supply chain, but a short, simple supply chain certainly has distinct advantages.

Likewise, companies that do not grow their own raw materials are also not so fortunate as we were, but can take steps toward developing and reaping the benefits of more sustainable supply chains. A 2013 survey of APICS* members conducted by PwC US** showed that supply chain sustainability is poised to become a bigger issue in years to come: 76% of respondents said they expected their companies to increase their focus on creating more sustainable supply chains. Why?

When we asked how sustainability initiatives added value to the supply chain in the last two years:

• 43 percent of operations professionals attributed cost reduction to sustainable supply chain initiatives;
• 35 percent reported improvements in their company’s environmental impact; and
• 25 percent saw improved customer satisfaction as a result of programs tied to improving supply chain sustainability.

The complete survey results are available in the recent report, Sustainable Supply Chains: Making Value the Priority, but the message is clear: sustainability of the supply chain, along with its own reliability, can pay off in immediate and long-term benefits to the company. You may not be able to shorten your supply chain to the degree that ours was, but is your company doing anything to make its supply chain more sustainable?

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*Formed in 1957 as the American Production and Inventory Control Society, and soon to be merging with the Supply Chain Council
**Better known to me as PricewaterhouseCoopers; became PwC in 2010

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Here are a few articles and resources you might check out:
– Does your supply chain run through Long Beach or another West Coast port? Global Supply Chain News: Is a Strike Likely at West Coast Ports this Summer?
– In Decatur, Illinois, a logistics training program based on the Manufacturing Skills Standards supply chain management curriculum: Logistics program eyes future needs
– In Minnesota, a “Made in Minnesota” supply chain database at https://mn.gov/deed/data/data-tools/made-minnesota.jsp
– In North Carolina, a “Made in North Carolina” supply chain database at http://www.manufacturednc.com/
– Upcoming Supply Chain Security Workshops in Philadelphia (29 May) and Los Angeles (4 June); one was held in Chicago on 15 May

Thumbnail photo courtesy of http://www.korsnas.com/sv/Vart-erbjudande/.

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Gray Rinehart spent 20 years in the U.S. Air Force, during which he refurbished space launch facilities, fought rocket propellant fires, commanded the Air Force’s largest satellite tracking station, and did other interesting things. Gray spent 6 years with the North Carolina MEP Center, and has been a contributing editor for Baen Books since 2007. He is an author of fiction and nonfiction, and his web site is http://www.graymanwrites.com. Connect with Gray on LinkedIn at http://www.linkedin.com/in/grayrinehart or on Twitter at http://www.twitter.com/GrayRinehart.