From Start to Finish: Michael Forhez, TCS

Almost all major consumer goods (CG) companies are now focusing on long-term sustainability initiatives that align with governing values and principles even as they grow their businesses. This month, Michael Forhez, Director of Business Solutions, Consumer Markets, TCS, draws on his vast experience working with leading CG companies to share best practices for logistics, product lifecycle management and IT that will undoubtedly contribute to a more environmentally-friendly business model.

 

Forhez: Slowly but steadily, our industry is going beyond core manufacturing, taking a more holistic view that encompasses the entire enterprise, including its people, processes and technology infrastructure as well suppliers, customers and consumers. CG companies are also engaging more proactively with federal, state and local governments, regulators, local communities and NGOs. Some of this outreach is a result of direct pressure from stakeholders who are increasingly playing a major role in driving companies to adopt more environment-friendly business models. The most recent and telling example of such pressure is evident in the crisis unfolding in the Gulf of Mexico, but we have seen this taking place across the world as the meaning of sustainability takes hold for all of us.However, there are those who still have the impression that many sustainability initiatives lead to higher costs. This limited view often comes from a lack of information on best practices, including, for example, the long-term benefits resulting from improved distribution efficiencies and compliance processes. More specifically, CG companies that have moved to advanced logistics modeling and product lifecycle management (PLM) are seeing results that others might want to study and possibly emulate.

 

To that point, why are logistics and PLM considered vital to a company's sustainability effort?

Forhez: Well, freight transportation accounts for nearly 9 percent of energy-related carbon emissions worldwide. Add warehousing and cost-of-goods handling and you have an approximate total of 11 percent to 12 percent. We also know that the outputs to the environment at each stage in the product lifecycle, from prototyping to final disposal, continue to increase at a staggering rate. Some of this is hidden from sight, (waste disposal at the plant and after consumer use) but for the willing eye, it does not take much effort to recognize that we over-package consumer products, with costs impacting both the environment and the bottom line.It is possible, and necessary then, that we quantify these outputs to either reduce or mitigate their impact.

 

As a result, CG companies are now looking for a greener supply chain built on the design, manufacture and distribution of eco-friendly goods, beginning from the point of product conception and ending not just at the point of sale, but with final disposal. Some of this will happen through recycling. In other cases, we need to re-think how much packaging is really required moving from the factory to the shelf. For logistics, successful sustainability includes network optimization, updated procurement procedures and warehouse layout optimization. Separately, each area can have a positive impact on the environment with commensurate financial and other savings. Taken together, the values increase with coordinated efforts; meaning no department or group should gain at the cost of another when synergies can drive efficiencies for all.For example, packaging represents about 20 percent of wasted weight and 37 percent of waste volume. While acknowledged as an extremely important shopper marketing tool, where brand image is conveyed and managed, it also adds tremendous costs to the supply chain, accounting for upward of 12 percent of expenses for a typical consumer product. A marginal reduction in packaging, then, can not only be a smart sustainability decision, it can also result in a positive expense reduction benefiting shareholders, the trade, consumers and the bottom line.Lastly, with Collaborative Planning, Forecasting and Replenishment (CPFR) now an industry recognized process, it is possible to build a sustainable supply chain, which can be actively measured and managed with higher forecast accuracy and improved production schedules.

 

Forhez: IT has always played a key role in most strategic initiatives, and the sustainability movement is no different. In fact, IT might be more critical than ever, given the need to manage multiple platforms and data across the entire enterprise.For example, working with IT, transportation managers can mitigate the effects of unexpected and causal events with analytical upstream and downstream (DSR) models that smooth and streamline the transportation and planning process, resulting in improved cubing as well as inbound and outbound scheduling. Another example includes the use of mobility solutions, which can enable dynamic scheduling of transportation tasks, while providing for the real-time tracking of assetsIT can also support an environment of end-to-end collaboration with master data management and intra- and inter-enterprise data sharing, enabling better utilization of transportation assets, reducing energy requirements for all trading partners.We have come a long way in just a few years.

Forhez: Our industry is on the threshold of moving from the lofty goal of a "sustainable" business, balancing opportunity and risk, to a more forthright -- and worthy -- consideration of what it will actually take to conserve resources while being less egregious to the environment.Like most initiatives of this size and importance, the challenge is in understanding the scope of the problem and effort required to solve it. With a vast array of best-of-breed monitoring and process improvement tools, which incorporate key performance indicators for monitoring sustainability-driven work, there is little reason why manufactures, their suppliers and retail partners can't live up to both the sprit and intention of this critical world-wide movement.We are at a point of inflection where attention and need have never been more focused or necessary. With the information, technology and expertise readily available, the time is now to move forward as aggressively and decisively as possible. The leadership of the CG industry seems to have this well in mind.