Newsletter – January 2019
A Revolution in the Making?
The Wharton School of the University of Pennsylvania, CHEP and the Initiative for Global Environmental Leadership have published a new study entitled “A Revolution in the Making: The Quest for Net Positive Supply Chains”. The report focuses on the need for businesses to not just reduce their environmental footprint, but to also enhance their “handprint”, thus actively working to restore and regenerate the resources needed to thrive in the long term, and what this means for supply chains.
The report comprises four sections: Being Less Bad is No Longer Good Enough; Collaboration is Key to Net Positive Results; Four Principles for Creating Net Positive Supply Chains; and Net Positive Supply Chains: How far have we gone? How much further do we need to go?
The principles behind a net positive approach are concentrated on companies actively giving back to the environment, society and the economy more than they take out. Instead of merely mitigating the damage, they are determined to make a positive contribution. Brambles Ltd, the global supply chain logistics specialists, and parent company to CHEP, have adopted a circular business model which offers unique opportunities to advance sustainability. “We have more visibility than anyone else on how products move, because they move on our pallets,” said Juan Jose Freijo, Brambles’ head of global sustainability. CHEP owns approximately 300 million pallets, crates and containers through a network of more than 750 centers in more than 55 countries. Brambles uses this knowledge to help disparate companies coordinate and consolidate their trucking operations. This collaboration reduces the number of trucks on the road, the amount of fuel consumed and CO2 emissions.
Collaboration is central to the success of the program. No one company can become net positive on its own. That realization has sparked a multitude of collaborative efforts in recent years, as individual companies have found new ways to work with suppliers and customers, and as companies within and across industries have come together to tackle challenges that no one of them could hope to resolve on their own. CHEP realized that its pallet operation was ideally positioned to facilitate a collaborative solution to one of its clients’ major challenges, empty truck miles. All too often, trucks travel long distances without a load. Such “deadhead” trips are a waste of fuel and a significant source of greenhouse gas emissions. In Europe, where truck emissions are 36% greater than they were 20 years ago, empty truck journeys are increasing.
Because CHEP is constantly picking up and dropping off shipping platforms all across Europe, its database currently holds information on about a quarter of a million transport lanes and 13.5 million declared shipments. To make use of this data, the company developed a proprietary algorithm that enables it to efficiently match empty trucks with potential loads.
But it takes more than data and programming to make CHEP’s Transport Collaboration Program a success. According to CHEP, 61% of suppliers and 58% of retailers agree that lack of trust between partners is the biggest challenge to collaboration. Companies without an existing relationship are often reluctant to share information with each other and competitors are downright hostile to the idea. “In such situations, it’s very useful to have a neutral player, trusted by all parties,” said Freijo.
Even as a neutral third party, CHEP has had to work at bringing potential collaborators together. “It took some years, but more and more as we gain trust and credibility, this idea of collaborating gets into the DNA of the industry,” Freijo added.
CHEP’s Transport Collaboration Program was launched in 2015. Today, it is used by more than 220 customers across Europe. In the past year alone, a total of 3.4 million empty miles were avoided in Europe and 6,200 tons of carbon dioxide (CO2) emissions were prevented.
The report expands on the principles for creating net positive supply chains including the development of a common language linked to a clear set of codes companies could embrace. A dozen principles were drafted, but soon boiled down to just four with clear applicability to what became known as the value chain:
- Materiality: Focusing on what matters most
- Transparency: Sharing progress openly and honestly
- Systems thinking: Influencing change across entire systems
- Regeneration: Creating long-term, sustained and absolute impact
“These four principles have been thoroughly road tested, and businesses are finding them useful,” said Sally Uren, CEO of Forum for the Future. “We ran workshops in the U.S. and the U.K. with organizations that had committed to Net Positive and other organizations that hadn’t yet really engaged. We asked them to use these protocols to test existing strategies, and they actually found ways to strengthen them.”
The report concludes by examining how Unilever and the UK’s Crown Estate (a $17 billion real estate business that manages the holdings of the monarchy in Great Britain) are tackling net positivity and what goals they set for the future. With major corporations such as as Amazon, Coca-Cola, Google, AT&T, Johnson & Johnson and Levi Strauss & Co, among others, moving in that direction, it’s a challenge that will undoubtedly become more commonplace on boardroom agendas for decades to come.
The report is available to download in full at https://bit.ly/2FKD4lR
[Acknowledgements to Knowledge@Wharton, the online business analysis journal of the Wharton School of the University of Pennsylvania and the Initiative for Global Environmental Leadership (IGEL)]