Sustainability Innovation and Improvements a Case Study. Wende Huehn-Brown, Ph.D., CPIM

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1 Sustainability Innovation and Improvements a Case Study Wende Huehn Brown Ph.D., CPIM October 15, 2012 Biography Wende Huehn-Brown, Ph.D., CPIM Professor: St. Petersburg College Ph.D. : University of Missouri Rolla, Engineering Management M.E. and B.S.: State University of New York (SUNY) at Buffalo, Industrial Engineering Interests: Implementation of continuous improvement with lean, six sigma, sustainability, and supply chain management Experience: Worked almost 20 years with a variety of both manufacturing and service organizations APICS: Missouri and Florida APICS chapter boards (>13 years) 1

2 Agenda Background Objectives Regulation vs. Self-Regulation Case Study: Wal-Mart Supplier Exercise Further Discussion Conclusion Brain Teaser Make as many words as you can from these ltt letters (20 seconds): d) T A S B U I S T I L A Y N I 2

3 High Level View Competitiveness Strategic Management Leadership Energy Sustainability Renewable and Clean Environmental Resources Ethics and Corporate Social Responsibility Operations Management Location and Design Supply Chain Management Globalization Society Business Problem Sustainability International National Regional Value Brand Local Reputation Regulations Customer Expectations Other Stakeholders Lifecycle Analysis Certifications Strategy and Operating Decisions Business-to-Business Self-Regulations Other Risks Competition Complexities Global Evolving Standards Economic Society Energy Environment Infrastructure 3

4 Comparison Regulation Self-Regulation Different levels and forms License to operate of government controls Voluntary endorsement Varies globally Contract terms May conflict one another Codes of conduct May not all be feasible Certifications May create trade barriers Standards Supplier selection Sustainability Audits or Assessments Integrate sustainability into decision-making Variety of artifacts or criteria Frame problem with goals and objectives May be biased and driven by time, data, budget, qualifications, access, and other constraints Compare impacts of policy or improvement, monitor progress, and reflect on decision making Different communications of sustainability 4

5 Case Study Wal-Mart Sustainability Measurement and Reporting System (SMRS) 1 2 Supplier Sustainability Assessment (SSA) Sustainability Product Index Life Cycle Analysis (LCA) Wal Mart Sustainability Product Index Energy and Climate: Reduce Energy Costs Reduce Greenhouse Gas (GHG) Emissions Measure GHG emissions? Report to Carbon Disclosure Project (CDP)? Total annual GHG emissions (most recent)? Set GHG emission reduction targets? 5

6 Wal Mart Sustainability Product Index Material Efficiency: Reduce Waste Enhance Quality Report solid waste to produce Wal-Mart products? Set solid waste reduction targets? Report water to produce Wal-Mart products? Set water use reduction targets? Wal Mart Sustainability Product Index Natural Resources: Produce High Quality Responsibly Sourced Raw Materials Sustainability purchasing guidelines for direct suppliers? o Environmental compliance o Employment practices o Product/Ingredient Safety Third party certifications for products sold to Wal-Mart? 6

7 Wal Mart Sustainability Product Index People and Community: Ensure Responsible and Ethical Production Know location of all facilities that produce product(s)? Evaluate quality, capacity, etc. of business relationships? Process to manage social compliance? Work with supply base on issues (evaluate and document)? Invest in community development activities? Wal Mart Life Cycle Analysis (LCA) Working with The Sustainability Consortium Suppliers, retailers, non-governmental organizations (NGOs), and government officials Database of products at every stage Inventory of relevant raw material, water, and energy inputs Evaluate releases to air, land, water with potential environmental impacts 7

8 Case Study Medium-sized international supplier Wal-Mart s Chemical Intensive Products Sustainable Value Network Home and Personal Care Sustainable supply chain design challenge New product New market entry Various stakeholder influences Exercise: Part 1 In Small Groups Brainstorm one sustainability focused example or situation relative to key supply chain challenges at your organization(s) Write down on the post it note Place post it note on the flip chart 8

9 Case Study Self-Regulation: WlM Wal-Mart and other customer (medical) requirements Non-Governmental Organizations (NGOs) influences Many (>75) requests for sustainability information (2008) Regulations: Local, State, and National European Union Directives International Agreements` Reshaping Strategic and Operating Decisions Compliance Examples Local and State Air, water, storm water, building, waste, labor, + National EPA (waste, air, water), OSHA, FDA, California Proposition 65, Green Chemistry, DfE, Pharmaceuticals in the Environment, RCRA/CERCLA, Regional Initiatives (RGGI, WCI), Calif. Transparency in Supply Chain, + 9

10 Compliance Examples European Union Biofuels/Renewables RoHS/REACH/WEEE Ecodesign of EuP CE Mark GHG Emissions Cap and dtrade Water, Waste, Packaging + International ISO 14001, 14040, 50001, Biodiversity Human rights ULE 880, CDP, GRI Farming, forestry, and other industries Finance + Case Study: Situation Impacting competitive scenarios Expertise critical and expanding Past performance not good enough Customer values changing Wal-Mart SSA score used with price for selection Massive retailer market Influencing other stakeholders 10

11 Case Study Integrated Sustainability into Environmental, Health, and Safety Program Reconfigured Strategy Mission and Values Goals and Objectives Assessment Criteria Case Study Initiated Sustainability Program 2008 Cost savings approximately $1M annually since Positive business-to-business contracts Large retailers, group purchasing organizations, and government contracts growth Positive Corporate Social Responsibility audits Recruitment of increased sustainability expertise Perceive good place to work 11

12 Further Discussion Distinct value chain => Unique competitive advantage Global l market and customer expectations Triple bottom line Redefining productivity Beyond compliance Idealizing (not focused on limitations) Shared value Connecting economic progress to societal needs Transparency and accountability Further Recommendations Don t just monitor your (or supplier) performance Collaborate with other stakeholders Including competitors at shared suppliers Review other public data/records Support training needs Leverage incentives and resources Evaluate scorecards/dashboards Tailor programs at a local level 12

13 Exercise: Part 2 In Small Groups Using the sustainability focused example or situation from Part 1 Brainstorm 2-3 specific strategic and/or operating recommendations for your organization(s) to overcome these challenges (or minimize risks) Write down on the post it note Place post it note on the flip chart by Part 1 post it note Conclusion Best practices vary Learn from gaps and criticisms Impacting brands and reputations Extending improvement and innovation needs Collaboration needs Spreading across supply chain and other stakeholders Align strategic and operating decisions Evaluating bias and conflicts 13

14 Questions and Answers Wende Huehn-Brown Ph.D., CPIM St. Petersburg College: Mail: P.O. Box 13489, St. Petersburg, FL Phone: Skype: whbrown2 Linkedin: 14

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