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Sustainability and the Supply Chain Intelligence Report (SCIR) 2009
Despite the global recognition of the importance of environmentally responsible business practices, a large number of companies in South Africa are not implementing sustainable strategies as a key performance indicator (KPI).
This is according to the results of a recent study – the Supply Chain Intelligence Report (SCIR) 2009.
The SCIR is an annual, independent and international study into the supply chain and logistics practices of emerging economies around the world.
Developed and compiled by Terra Nova Research, the 2009 edition saw over 200 senior company officials, from both a strategic and supply chain perspective, participate in an in-depth survey.
All major industries in the country are represented, including the automotive, food and beverage, mining, construction, transportation and finance industries.
One section of the survey focused on what business in South Africa is doing to ensure environmental sustainability.
A list of several KPIs around environmental sustainability was drawn up and respondents were asked to indicate whether any of the KPIs from the list provided “are or will be forming part of their supply chain measurement metrics within the next 12 months”.
The percentage of companies not considering the following environmental KPIs currently, or in the future included:
• Energy consumption from supply chain operations: 51.1%;
• Carbon dioxide emissions from supply chain operations: 51.9%;
• Water consumption from manufacturing operations: 46.2%;
• Delivery time lost due to traffic congestion: 46.6%;
• Employee safety and stock security compliance: 12.9%;
• Infrastructure simplification – reduction of the physical footprint of the supply Â
chain, such as warehouse space: 23%; and
• Reverse logistics – the reprocessing of materials, packaging or products that can be Â
recycled or used: 34.6%.
Surprisingly, the results indicate that most South African companies do not have any measures regarding their impact of their supply chains and operations on the environment, nor do they plan to introduce any of these measures within the next 12 months.
A total of 41.3% of the companies that took part in the survey did not have or plan to introduce metrics to measure their impact on the environment.
This revelation is quite startling, considering the long publicised and growing concern about the environment globally.
Respondents were then grouped according to their level of complexity and capability (using the Complexity Masters Theorem developed by Deloitte in 2003, which holds that companies in the United States and Europe with complex value chains and the capability to properly manage those complex value chains are 73% more profitable than their peers).
The Complexity Masters stood out against the total sample with 88.6% of these companies having planned or already introduced metrics to measure their impact on the environment.
This progressive behaviour could partly be driven by their global complexity and the fact that they are required to conform to certain standards in international markets.
Perhaps the Complexity Masters are more sensitive to consumer expectations and know that legislation is bound to change in the short- to medium term.
Measures of success, acceptance and ways of doing business are changing rapidly to incorporate sustainable practices, which are considered to become a major component of competitive advantage.
The Complexity Masters in South Africa have made strides in adopting the necessary strategies, pre-empting an inevitable change in legislation.
Over 40% of South African companies have not, which does not bode well for their own sustainability.
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