Positioned at the intersection of internal operations, company-wide strategy and external relationships, supply chain managers are in a unique spot not just to consider sustainability initiatives, but to benefit from them. Edgar Blanco of the MIT Center for Transportation & Logistics says there are four key opportunities.
Here’s one more reason that supply chains are so interesting (you already know the others): every supply chain is a ready-built collection of modern-day innovation levers, whether managers take advantage of those levers or not. All those diverse inputs, all that cross-boundary creative collaboration (“friction,” even), all the visibility into so many organizational silos, and all those multi-level sources of on-the-ground information that, if attention is paid, can answer questions you didn’t even know you had. Managed right, a supply chain can be an organization’s neural network. It can surprise you. It can help make a company new.
Edgar Blanco knows that.
Which is why he’s a little disappointed right now.
Blanco is research director at the MIT Center for Transportation & Logistics, and an expert in the design of environmentally efficient supply chains and innovations in emerging markets. His work provides him a window onto the opportunities that supply chain management can offer to companies — and he sees companies not capitalizing on them. Supply chain managers are stuck, he says. “They’re still very much focused on cost.” Not that cost isn’t pivotal, but, ironically, a cost-focus to the exclusion of innovation and sustainability payoffs can be a path not only to missing out on business-building non-cost benefits but can be a path to missing out on cost-cutting benefits themselves, Blanco says.
That dynamic is changing, though. As managers of supply chains become better versed in the language of making a business case for change and also in the language of sustainability, they are getting better, Blanco says, at suggesting smart improvements in operations, logistics, and sourcing that can be environmentally innovative and present real cost savings.
Blanco spoke with MIT Sloan Management Review’s editor-in-chief, Michael S. Hopkins, about the four key opportunities that modern supply chains present.
How do you think the supply chain world compares to the non-supply chain managerial world when it comes to thinking about sustainability issues? Ahead? Behind? The same?
I would say they’re behind.
Really? That surprises me.
If you look at the lay of the land, at logistics-supply-chain groups, they are still very much focused on cost. This topic of sustainability is very hard to bring to the table. Whenever you see an organization that is supply chain savvy, they’re also very advanced in sustainability, like Nike and Wal-Mart.