Yigit Kullah
In today's world, our generation is experiencing the fourth industrial revolution through the Internet of Things (IoT) and renewable energies, while ensuring sustainability in every process.
By Yigit Kullah, management consultant at the Pollen Consulting Group.
In the 18th century the industrial revolution began with an emphasis on productivity through mass production and standardization. After that, machines and skilled workers gained importance to improve the throughput of production, which led to the search for new equipment and resources. This marked the beginning of the journey for technological advances, new applications in manufacturing, and research into new energy sources; (Coal, electricity, gas, oil and nuclear energy were discovered!) There was also a shortage of resources.
In these circumstances, perhaps the most important goal is to build a sustainable supply chain to help protect our environment. The concept of the Triple Bottom Line (TBL) is a fundamental component for building a sustainable supply chain with its comprehensive approach to operation taking into account three bottom lines; People, planets and profit.
People
The first step of the TBL approach is to consider all stakeholders from the people concept. A typical supply chain has a significant number of people as stakeholders in the operation. Customers, employees, managers, shareholders, communities, and society are all drawn into this perspective. From now on, the organization should define SMART (specific, measurable, achievable, realistic and timely) goals to provide added value to people. For example, the appreciation of employees and fair working conditions can benefit the organization in order to ensure the satisfaction of its employees and managers. Looking at customers, the quality of goods and services could be the yardstick for satisfying customers, i.e. communities and society at large.
planet
Much has been said about the scarcity of resources in our world today. In this sense, TBL considers the planet plausible in its philosophy. Every process in the supply chain has an outcome on the planet we live on. There is a consumption of resources from inbound logistics to outbound logistics. Consequently, a sustainable strategy to protect the environment should be implemented during these processes.
From the point of view of inbound logistics, responsible sourcing could be the first step in procurement. Responsible sourcing involves the long-term delivery of materials and services through the exercise of ethical and social considerations in sourcing using professional standards.
Another critical component for a sustainable procurement strategy is called Just-in-Time (JIT), which appeared for the first time in the Toyota Production System. Technology claims to buy goods as they are needed to meet customer demand. After the customer order has been received, the purchase is planned using the just-in-time (JIT) method. This strategy aims to reduce inventory, which means lower storage and insurance costs. This approach becomes especially critical when storing perishable items, such as groceries. This makes FMCG one of the industries in which just-in-time (JIT) is a prerequisite. Eliminating inventory waste (especially perishable items) and reducing storage and insurance costs could make just-in-time (JIT) a competitive advantage in the marketplace. Of course, there would be enough safety stock to meet expected needs or to avoid unexpected circumstances, but the excess inventory would be avoided to avoid wastage.
When it comes to manufacturing processes in a supply chain, the Kaizen philosophy, lean manufacturing and Six Sigma have a decisive influence on efficiency and a contribution to the planet. Kaizen's process-oriented approach perceives employees as a resource and uses their working time efficiently through time and movement studies.
Kaizen's 5S concept contributes to the planet through zero waste, zero defects and full employee participation in the workplace. Six Sigma is the math tool in this roadmap to measure the outcome of quality management to achieve zero defects and zero waste, which are emphasized in 5S. In these processes, Lean is the methodology in which value-adding operations are retained and non-value-adding operations are discarded.
When evaluating outbound logistics, route optimization is a key to sustainability in a supply chain in order to protect the environment. With transportation fuel consumption and carbon footprint in mind, route optimization is useful for a supply chain in advancing a roadmap that is less costly and has less impact on the planet.
Benefit
Economic sustainability is the original component of TBL as profit should be the priority in funding organizational needs. In this sense, the company must deliver added value to its stakeholders in order to achieve economic sustainability. Product differentiation, great customer service, effective marketing and advertising can all help a business make a profit. Reducing costs and striving for productivity are essential terms for a supply chain's profitability.
Conclusion
Sustainability is the problem of our time due to the scarcity of resources, while Triple Bottom Line (TBL) is the approach to addressing it. In light of the UN Sustainable Development Goals, TBL should be considered at every stage of a supply chain as it offers a comprehensive approach to see the big picture. In order to provide a bright future for our next generations, sustainability should be the ultimate goal of the supply chain, with people, the planet and profits included in the valuation of any business or task.
Remember, there is always room for improvement!
About Pollen Consulting Group
Pollen is the consultant of choice for executives who have their business in mind.
Pollen was founded in 2016 and is “a special kind of management consultancy” that drives end-to-end performance through the end-to-end transformation of the supply chain.
We work with retailers, suppliers and manufacturers and offer exposures that cover every element of a COO's duties.
