Going Lean and Green

The next focus of supply chain management

Scottsdale, Ariz. — February 14, 2008 — The move toward leaner and greener supply chains have companies focused on further reducing waste and lowering excess inventory and creating more eco-friendly operations.

This is escalated by the number of green-conscious consumers, as recently reported by Forrester Research indicating that 12 percent of U.S. adults — nearly 25 million people — are willing to pay extra for consumer electronics that save energy or come from a company that is environmentally responsible.

As companies examine ways to streamline operations, tools that can help lower excess inventory, determine the optimal "right-shoring" plan and reduce fuel and logistics costs while lowering overall carbon emissions are in high demand.

David Johnson, JDA Software's senior vice president of manufacturing and wholesale distribution, addresses the three major areas that companies are focusing on as they strive to become leaner and greener in 2008:

1. Lower-Impact Manufacturing
No longer are companies narrowly focused on maximizing the utilization of their factories, but rather on creating inventory based on consumer demand. With the ability to access and analyze real-time demand signals, there are a growing number of companies moving from push to pull manufacturing. By nature, this not only eliminates excess inventory, thereby reducing waste, but it also decreases carbon emissions as it relates to the creation of products and materials.

2. Re-evaluating Global Sourcing
Off-shoring models of the past are increasingly being replaced with more efficient "right-shoring" models, as the risks and costs associated with manufacturing overseas continue to surface. Longer lead times, increased fuel costs, larger carbon footprints and excess inventory are causing companies to re-examine where and how much they outsource. With the ability to analyze the various factors driving costs and environmental impacts, companies can create balanced plans that are both cost-effective and environmentally friendly.

3. Streamlining Transportation
One of the fastest ways to become "greener" is to optimize overall transportation plans. By maximizing the space utilization of every truckload, the number of trucks required to deliver goods is reduced. The establishment of optimal routes allows for lower fuel consumption and fewer carbon emissions. Together these changes are allowing companies to reduce overall supply chain costs and become more socially responsible in the process. The balance of the two creates benefits for both companies and end consumers.