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09/17/2008
'LEAN and Green' - the Supply Chain of the Future
As an industry, logistics is not immune to climate change. Consumers, environmental authorities and trading partners are increasingly looking for information about how much greenhouse gas is created in the production and distribution of a product. Increasingly, too, they are demanding measures that protect the climate. Companies wanting to make a strategic response to this requirement can now take advantage of J&M’s Green SCM Scan.

Known to damage the climate, carbon dioxide is created during the manufacture, packaging, storage and transportation of products. Energy-intensive processes, combined with long-distance procurement and distribution, can significantly influence the carbon dioxide balance - or 'carbon footprint'. In the United Kingdom, some retailers already place labels on their products with wording such as 'by air freight' or '148 grams of carbon dioxide'. In Germany, a similar need to act is growing. For companies looking to find a comprehensive and far-sighted response to these challenges, J&M has developed a multi-stage process:

1. Green Scan: In this phase, the carbon footprint of defined organisational units and product segments is calculated. Surveys are conducted to establish how many of the associated raw material or packaging suppliers are able to provide information about their product carbon footprint. Should the required data not currently be available in the necessary detail, this is flagged up and measures designed to improve the company’s carbon footprint proposed.
The results are compared with the carbon footprints of other companies. In addition, the results are published in a 'Carbon Disclosure Project'. The J&M Green Scan delivers clear statements about the rating and shows how it can be improved.

2. Green Strategy: This step contains a forecast of parameters, for example risk to the climate from a company's own business activities or requirements imposed by the authorities, trading partners and customers. In addition, the company’s objectives are clarified. Does it want to position itself as a forerunner with a climate-friendly image, or just as a me-too supplier? Once the strategy has been determined, the company is given a Carbon Balanced Scorecard.

3. Green Design: Once the individual strategy has been determined, the current carbon footprint established and compared to an industry benchmark, potential areas for improvement and action can be identified. Together with the departments in question, J&M's consultants draw up specific measures to effectively reduce the carbon dioxide contribution of procurement, production, distribution and administration.

4. Green Business Case: The measures previously identified are prioritised and assessed. The final step involves the production of an implementation plan, including a roadmap, cost-benefit analysis and the drawing up of a full business case. This also contains qualitative goals, for example the image boost achieved through reducing emissions and transparency.

British retailers Tesco and Marks & Spencer have chosen to adopt the role of forerunner, investing 200 and 500 million pounds respectively in green SCM. International players such as Coca-Cola, Nestlé and Procter & Gamble, but also German firms such as Tchibo, Henkel and Beiersdorf, have already introduced initiatives for logistics that have a reduced effect on the climate.

Further Information: Klaus Ballas, Partner, J&M Management Consulting, telephone +49 (0) 621 12 47 69 0 or via e-mail k.ballasjnm.com.