CSCMP's Supply Chain Quarterly
October 16, 2018
Forward Thinking

Costs remain a significant barrier to sustainability programs

A new AlixPartners study finds that many companies with "green" supply chain programs are concerned about getting a return on those investments.

A new survey of supply chain executives found that cost concerns continue to restrain companies' efforts to incorporate sustainability into their supply chains. Eighty-four percent of the 150 supply chain executives who participated in the consulting firm AlixPartners' 2013 Executive Survey on Supply Chain Sustainability said that lower costs are more important to their customers than an improved environmental impact.

Most of the respondents were from companies that already have environmental programs in place. Nearly three-fourths (72 percent) of respondents said their companies have corporate policies or objectives regarding sustainability. That's more common in Europe, where 88 percent had sustainability policies in place, compared to 68 percent for U.S.-based participants.

In regard to sustainable practices, most companies are engaging in recycling or shipment consolidation. Forty-two percent of respondents said they had expanded programs to recycle raw materials, and the same percentage had implemented programs to consolidate less-than-truckload movements into full truckloads. Thirty-four percent said they had introduced energy conservation programs or initiated solar energy use. (See the chart for the full list of activities.)

Executives who participated in the study expressed concern about the return on investment associated with green supply chain practices. While 62 percent of European executives said they would be willing to invest in initiatives that do not produce positive financial returns, only 31 percent of Americans said they would be willing to do so. And of those who would be willing to spend on sustainable technologies, nearly 60 percent would require a cost payback in 18 months or less.

Top sustainable supply chain practices launched in 2012
Truckload consolidation and expanded recycling programs tied for first place among the sustainable programs survey respondents said they had implemented in 2012.
Expand programs to recycle raw materials 42 percent
Consolidate less-than-truckload into truckload 42
Introduce energy conservation programs or solar energy use 34
Introduce returnable packaging 24
Install fuel-saving equipment on private fleet 24
Increase use of intermodal transportation 24
Shift airfreight to ocean 20
Select or discontinue supplier due to environmental concerns 14
Increase inventory to reduce transportation costs 10
Nearshoring 7

Source: AlixPartners, 2013 Executive Survey on Supply Chain Sustainability

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