The science and application of sustainable supply chain activities
Executives and researchers met on May 8 to discuss the challenges and opportunities raised by sustainable supply chain management at a workshop conducted by the Institute of the Environment and Sustainability's Corporate Partners Program.
Two leading companies, Mattel and Dr. Bronner’s Magic Soaps, presented their approach to supply chain sustainability and two UCLA faculty, Professor Delmas and Professor Corbett, highlighted research findings that can help increase supply chain transparency and environmental performance.
Jennifer DuBuisson, Mattel’s Associate Manager of Global Sustainability, said that when children play with toys, they imagine a clean, green world. Therefore, parents expect Mattel to care for the environment in a responsible way.
DuBuisson identified four components to Mattel’s supply chain: ideation, procurement, manufacturing, and distribution. Procurement involves 1,500 employees and is responsible for maintaining a robust quality management system; resins and surface coatings are a major concern, with testing conducted at several stages.
In the summer of 2011, Greenpeace organized a protest at Mattel headquarters in El Segundo. The organization produced a Youtube video depicting the shock of Ken upon learning that Barbie packaging came from rainforest destruction in Indonesia. The event prompted Mattel executives to examine its supply chain, with the result that 85% of fiber-based packaging will be sourced from recycled and certified fiber by 2015.
Dr. Bronner’s Magic Soaps
Gero Leson, Director of Special Operations at Dr. Bronner’s Magic Soaps and a doctoral graduate of UCLA’s Environmental Science and Engineering Program (ESE), focused on the company’s efforts to build fair and sustainable value chains from agricultural raw materials, crediting these efforts for much of the company’s financial success (from sales of $10 million in 2002 to approximately $60 million today). Dr. Bronner’s is the best-selling brand of natural soaps in the U.S. and is known for printing the philosophy of founder Emmanuel Bronner on its soap labels.
Leson emphasized the company’s focus on social responsibility. He noted that the company pays good wages and provides profit sharing, bonuses, and free health care. He said the maximum salary ratio is 5 to 1, and one-third of pre-tax profits are spent on traditional charity (e.g. orphanages in Haiti and China). As well, most raw materials in the company’s products are sourced from developing countries. Leson noted the company intentionally sources its olive oil from both Israel and Palestine.
In 2005, the company began shifting all key ingredients to certified Fair Trade & organic sources. Leson managed this conversion, designing, setting up and operating several oil mills and spending more than half of his time at Dr. Bronner's projects in Sri Lanka, Ghana, India and Kenya.
The company defines organic as “no use of synthetic fertilizers, herbicides and pesticides.” Fair Trade involves paying fair prices to farmers, fair wages and working conditions in the field and factories, and customers pay a Fair Trade Premium to finance community development projects. A third party inspects and certifies these claims, according to Leson.
While Dr. Bronner’s approaches supply chain sustainability by relying on established local farmers – and helping them become more efficient and sustainable – the scope and scale of Mattel’s supply chain is a much more difficult challenge, requiring numerous staff to ensure Mattel’s strict sustainability guidelines are met.
Magali Delmas, Professor of Management affiliated with both the UCLA Anderson School of Management and UCLA Institute of the Environment and Sustainability, introduced the workshop by noting that supply chain emissions are often much greater than a firm’s direct emissions; the supply chain accounts for two-thirds of all hazardous waste generated by major U.S. economic sectors and 50% of carbon emissions.
Delmas identified the key challenges associated with supply chain sustainability as (1) lack of information about green supply chain best practices, (2) few software tools for enabling end-to-end optimization of supply chain along with environment management, (3) global sourcing makes tracing of footprint difficult, and (4) it is difficult for a firm to influence its supply chain if the firm is not dominant in the market.
Charles Corbett, Professor of Operations Management and Sustainability at the UCLA Anderson School of Management, concluded the workshop by highlighting challenges associated with information reporting. Two types of reporting, one geared to financial metrics and the other to sustainability (including carbon footprinting, water footprinting, and social aspects) are converging – but the need remains for enterprise-level information systems for sustainability reporting. As well, these systems must be integrated with existing systems (e.g. financial, accounting, HR, operations, etc.).
Published: Wednesday, May 15, 2013