Before anyone begins to think it, let me say that I have no
'green' bees in my bonnet, despite several articles on green issues. I cover the subject again because I have spotted a trend in supplier-retailer negotiations that carries a new, green-related component.
In the past month I've seen four firms use green leverage in their negotiations with two of our biggest retailers, to refute or seek to change supply chain practices that would have increased the supplier costs and the carbon footprint of the activities. Since my number of examples is small and due to global communications, I can't be as specific as I want to be. The examples involve adding miles to the distribution task and adding to the total packaging waste.
The first case of extra miles comes from an instance of current retailer 'backhaul', which involves a lot of dead mileage. Reverting to supplier delivery would reduce that dead mileage. The second example focuses on a new way of delivering to a retailer who is moving away from full loads and full pallets even for the biggest volume producers. A combination of more exacting service demands and smaller, more frequent orders means a loss in payload factors and an increase of 27% in total kilometres run. See http://www.wikipedia.com for carbon footprint calculators.
Two examples of a packaging waste problem result from the shelf-ready packaging (SRP) initiatives. The costs of packaging have risen because of SRP and the costs have already been built into pricing recovery negotiations. What may have been missed by many suppliers is the effect on carbon footprint of these changes. It is easy to calculate this cost with the help of your packaging vendors. Why not add this cost to the list of arguments against certain kinds of SRP?
If you assemble all the arguments against some of the more unreasonable demands of retailers, you don't have to be a multinational manufacturer to win commercial battles.
Tim Knowles is partner at supply chain consultancy TKA.