Tag: water

Good OM Reading: Sustainable Supply Chains

climateClimate change is once again rising up the global agenda. Physical climate, and regulatory and consumer preference changes expose supply chains to growing levels of climate risk. This new 21 page report, called Supply Chain Sustainability Revealed, by Accenture, discusses threats and opportunities for companies at the top of supply chains. Findings include: (1) High levels of climate risk in key supply chains, and inadequate supplier response; (2) Supply chains in the US, China, and India are considered ‘vulnerable’; (3) Suppliers in India and Canada are not doing enough to manage climate change risks;  (4) Suppliers in Brazil have done the least to manage climate exposures and recent water shortages; and (5) Suppliers who demonstrate a high propensity to collaborate with supply chain partners to reduce climate risk and, and who invest in emission reduction initiatives, deliver the greatest ROI.

The  report also shows an increasing level of climate risk management within supply chains, which in turn is generating better climate risk outcomes. Water risk remains a concern – despite its potential for shocks – with 45% of exposed companies surveyed not carrying out a water-risk assessment.

The report states that the onus for changing lies with the customers, the large multinational companies like Wal-Mart whose procurement spending drives the global economy. Accenture writes: “Leading companies already understand their ability to drive change among their suppliers. It is incumbent upon more of their peers to require that their suppliers measure and disclose their carbon footprint, and work with their suppliers to find and, if necessary, incentivize emission reduction initiatives.”

Suppliers, meanwhile, should recognize that it is in their own interest to embrace more sustainable modes of operation. Not only do these offer a means to reduce costs by driving efficiency in resource use, but sustainability is likely to become a key differentiator in the marketplace. The report also urges policymakers must acknowledge their responsibility, and provide regulatory support to encourage companies.

Good OM Reading: Our “Big Thirst” for Water

Of the dozens of papers presented at the POMS meeting that dealt with sustainability, not one focused on the critical manufacturing resource of water. But Charles Fishman’s newly published book, The Big Thirst: The Secret Life and Turbulent Future of Water (Free Press, 368 pp.), may very well raise our awareness of what he calls a “silent revolution” in water usage in the biggest economy in the world.

Why is this a sustainability topic worth discussing in class? Perhaps because of a 2007 UN study predicting: “Major cities in the West, like Phoenix and Las Vegas, may have to be abandoned as badlands”? Las Vegas, which has one of the biggest water shortages in the country, now pays residents $40,000 an acre to take out their lawns and put in rocks and local plants.

The golden age of water, as Fishman calls it, was the last 100 years, where we lived in a “kind of aquatic paradise…our water has been abundant, safe, and cheap”. He writes: “We don’t take it for granted because we don’t notice it enough to take it for granted”. But the new scarcity of water may take us “from the golden age of water to the revenge of water”. Water is the key ingredient in making computer chips, blue jeans, iPhones, kleenex, rice, and steel. A 2-liter Coke takes 5 liters of water to produce. The population increase by a factor of 4 during the past century was marked by a water consumption increase by a factor of 7. Here in Florida, we use 50% of our water in gardening!

The good news is that we getting the message. US farmers use 15% less water than 30 years ago, with a 70% bigger yield. GE and IBM are not only reducing water usage, by have created new divisions to teach towns and companies how to manage it.

You can  listen to Fishman’s NPR interview at npr.org.