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Some day in the near future, all supply chains will need to be sustainable supply chains. Our current supply chains are depleting non-renewable resources and they are not optimized to sustain renewable resources. I just recently read the book, Collapse: How Societies Choose to Fail or Succeed, by Jared M. Diamond. This book brought home to me the message that we cannot continue to indefinitely rely on non-renewable resources to sustain our supply chains and economies. We cannot continue to use supply chain sources and solutions that degrade and reduce the productivity of the environment. These type of supply chain practices will more and more result in supply chain and business collapses. There is a need for change that can only be brought on by innovation and the better use of technology to include information technology.

The Need to Transform Unsustainable Supply Chains. Jared M. Diamond’s book, Collapse: How Societies Choose to Fail or Succeed, provides ample evidence that there is a close correlation between poorly managed economic growth and environmental degradation. There are countless examples going back thousands of years, where societies and economies have collapse because they depleted the natural resources that supported their economies. It is quite obvious that most of our supply chains today are unsustainable. Within our generation we must change our supply chain practices through innovation and technology or suffer the consequences of unsustainable economic growth.

Sustainability Development Defined. The United Nations defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. This is the goal needed to transform unsustainable supply chains into sustainable supply chains. We need to find innovative business practices and technologies that enable supply chains to support the current needs of businesses without compromising the ability of supply chains to meet the needs of businesses and customers in the future. See Wikipedia for more on Sustainability.

Measuring Supply Chain Sustainability. If you cannot measure something, it is difficult to manage it. This is the same with supply chains. How can we measure the sustainability of a supply chain? At the macro level, supply chains can be measured by their environmental impact or ecological footprint. One way to measure environmental impact is by using the human impact I PAT formula. This formula measures Human Impact (I) on the environment. It consist of measuring population, affluence, and technology. In the case of supply chains, the human impact (I) in the I PAT formula is the supply chain impact on the environment. Using I PAT for measuring supply chain impacts consists of population numbers (P) the supply chain supports, level of consumption or affluence (A) for each person supported with a product or service, and the impact per unit of resource used which is dependent on the technology used (T). Thus, I = P X A X T.

I PAT Supply Chain Sustainability Example. A supply chain example using the I PAT formula would be as follows: a supply chain supports 10 million people a year with their paper needs (P), these people need X pounds of paper products a year (A), and the supply chain needs X acres of renewable timber lands for each pound of paper products (T). As you can see supply chain managers can best influence supply chain’s sustainability by how much they can reduce the T (the technology solution) that they apply to supporting the production and distribution of each paper product unit.

Competitive Advantage With a Green Supply Chain. Material Handling Industry of America’s article, The Green Supply Chain, provides convincing arguments that a sustainable supply chain can be a competitive advantage. Advantages include:

• New Products. The article mentions GE’s “Ecomagination program where they are focused on growing their revenue stream from environmentally friendly products to the tune of 20 billion dollars by 2010.”
• Meet Customer’s Evolving Requirements. Customers are more and more demanding environmental friendly products, and will increasingly prefer products that are supported by a sustainable supply chain.
• Reduce Costs. The Green Supply Chain article goes on to say “Sustainability can be a competitive advantage for many companies. If you can develop a sustainable supply chain think of the money that can be saved by not having to dispose of harmful by-products, reducing obsolescence, decreasing the amount of money spent on scrap and the resources spent on adhering to regulatory issues.”
• Compliance With Government Regulations. More and more governments are taking action to assure a sustainable economy now and in the future. This means businesses having to comply with regulation or be subject to fines or denied from doing business until they do comply with environmental regulations.

For more on transforming unsustainable supply chains see: Jeff Ashcroft’s The Green Supply Chain Network, and the Environmental Protection Agency (EPA) publication, The Lean and Green Supply Chain.

Data mashups for the most part are made possible by the advent of the world wide web. Data mashups have the potential to be major enablers for business operations and customer service to leverage the ever increasing amount of business data that is available today. A data mashup is defined as a web page or application that combines data or functionality from two or more external sources to create a new service. A real estate listing service combined with Google Maps is an example of a mashup.

Business Mashups. Businesses are starting to apply mashups to support business operations and customer service. The key thing for a business mashup is that it be actionable, not just “eye candy”. Just because you can mash together an Excel spreadsheet to data in your ERP system is not a good reason to do it. A good example of a business mashup is where you combine data from your order management system and transportation management system in order to improve customer service. See posting, Business Mashups, for more on mashups.

Data Mashups for Supply Chains. Data mashups and near-real-time data synchronization is a new and interesting trend in B2B eCommerce. Here IT companies are enabling businesses and supply chains to synchronize their data to get better information. Instead of just transporting, translating, and securing data, more B2B eCommerce service providers are helping to synchronize data to help business get better visibility over products, movement of goods, and visibility over key supply chain processes such as product and shipment order management. See posting on Data Mashups To Leverage New Supply Chain Technology for how businesses and service providers are using data mashups to improve decision-making and make new information services.

Enterprises Mashups, Business Intelligence (BI), and Data Warehouses. Large businesses have many internal data sources such as invoice data, purchase orders, shipment status, inventory data, and so on. Traditionally, large companies have used data warehouses to combine and integrate different sources of data. The challenge with using a data warehouse is normally data warehouses can only be access by the few and adding new data sources can take months if not years. Using a mashup approach and mashup software tools, it is possible to integrate different data sources in hours or days. See Enterprise Web 2.0 Blog’s posting, When it Comes to Enterprise Mashups …, for the what, why, and hows of enterprise mashups.

RFID is not just a replacement for the bar code. There are many more benefits to RFID for supply chain and logistics operations than just improving identification of products, shipments, and assets. RFID technology has the additional benefits of reducing the decision-making cycle and optimizing the supply chain as well as improving the overall customer experience. Below are the reasons why RFID offers so much promise for logistics and supply chains:

Reduces Clerical Errors, Increase Data Quality. RFID gets the human out of the loop where clerical errors are about eliminated in terms of inventory levels and asset visibility.

Improves Asset Visibility and Utilization. RFID can give you complete situational awareness. If you know where an asset is, you can use it.

Increase Efficiency. No more point and scan labor-intensive tasks that are associated with bar codes. Also, people no longer need to be always looking for stuff, nor do they have to do inventories by hand. This frees them up to do their real job.

Reduce Theft. Theft can be a significant cost to businesses. RFID can provide near-real-time and historical information to reduce and prevent theft of products. By having near-real-time visibility of product, businesses can pin-point and eliminate theft that occurs along the supply chain as well as in retail stores.

Improve Customer Experience. RFID items enables businesses to further integrate service offerings, automate customer tasks, and anticipate customer needs. RFID technology can be integrated with smart shopping carts, kiosks, and Point-Of-Sale terminals to improve the customer’s shopping experience. RFID tags enable businesses to up-sell and cross-sell other products and accessories in real-time.

Improves Decision-Making. RFID technology gives real-time information that enable better decision-making as well as reduces the decision-making cycle. Improved decision-making results in:

• Reduce Inventory. RFID technology improves inventory accuracy. This enables businesses to eliminate excess and missing inventory as well as reduce losses and write downs. RFID technology enables physical inventory in stores and warehouses to match what is in the system.
• Improve Forecasting and Planning. RFID enable businesses to gain visibility of the entire supply chain to include supplier visibility, in transit visibility, and customer visibility. With better and expanded current and historical information, businesses can improve forecasting capabilities.
• Reduce Out-Of-Stock Conditions. Out of stock items cause missed sales, and will eventually lead to lost customers. RFID tags enable businesses to prevent out-of-stock conditions in warehouses and in retail stores. Businesses can get near-real-time and better historical information to eliminate conditions that cause out-of-stock conditions.

Help me to improve this posting on the Benefits of RFID by providing comments on other benefits or clarity of the benefits that I have listed above.