When they take their seats for the keynote address at the NA 08 Show and Conference next month, at least a few audience members will still see the green movement as more fad than force of change. But by the time they leave, they're likely to be converts to the cause. In his address, "Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build High-Performance Supply Chains," corporate environmental strategist Andrew Winston will not only make a powerful case for embracing the eco imperative, but also explain precisely how supply chain professionals can develop cleaner, greener strategies that give their companies an unassailable competitive edge.
Winston is founder of Winston Eco-Strategies and works with leading companies to use environmental thinking to drive growth. He has consulted with start-ups and Fortune 500 companies such as Bank of America, Reuters, Coca-Cola, and IKEA. As co-author of the best-selling book Green to Gold, which highlights what works—and what doesn't—when companies go green, he is a nationally recognized expert on green business, and has written for or appeared in Time, Newsweek, BusinessWeek, Forbes, The New York Times, and The Washington Post, as well as on ABC, National Public Radio, and CNBC.
Winston bases his work on significant on-the-ground, in-company business experience, including executive positions and P&L responsibility at global companies, start-ups, and dot-coms. With the Boston Consulting Group, he helped Fortune 500 companies grow and prosper. He also held the positions of marketing and development director for Time magazine and director of business development for MTV and VH1.
He has served as the director of the Corporate Environmental Strategy Project at Yale University's renowned School of Forestry and Environmental Studies and is a fellow of the Center for Environment and Business at Yale.
Winston received his B.A. in economics from Princeton, an M.B.A. from Columbia, and a Masters of Environmental Management from Yale.
A few weeks before his keynote address at NA 08, he spoke with DC VELOCITY Group Editorial Director Mitch Mac Donald about the greening of the business world and how it affects supply chain operations.
Q: Can you tell us a little bit about the message you'll be sharing with attendees of the NA 08 conference?
A: Sure. You wouldn't want to ruin the surprise for them, though.
Q: Well, tell us everything but the ending.
A: I'm going to discuss some of the fundamental forces coming to bear on companies—forces that are driving the "green wave" in the business community and in society. The bottom line is that there is no alternative any more. A green approach to business is where we are headed, and companies can embrace that reality or they can choose not to and then risk becoming irrelevant. The risk of not embracing this trend is high. The benefits of participating, conversely, are enormous and the value to be created is very large. But it's not always easy. This isn't a pie-in-the-sky win-win discussion. There are challenges to be tackled.
Q: A lot of what we've been hearing in the past 24 months or so suggests that companies are finding that environmentally friendly practices make good business sense. By that, I mean in the financial sense as opposed to the sort of tie-dyed Ben & Jerry's approach of the not-so-distant past where companies really used their environmental sensitivity as more of a marketing tool than anything else. Do you agree with that, and if so, what do you think has kick-started this trend?
A: Clearly, I agree with the larger point. I think there is real value in putting an environmental lens on your business. I think marketing, though, actually is a part of making financial sense if you're doing the right things and you've got a story to tell. Marketing, in effect, creates branding to drive your revenues and customer loyalty if you've got a legitimately clear story and your products are greener than the competition's and they help your customers reduce their environmental impact.
Well, let me step back for a second and just say that some of those pioneers like Ben & Jerry's have been financially successful. The company was founded to satisfy a customer need certainly, but as a social entity as well as a business one. I think that is part of the distinction you are making between some of those early guys and what is happening now where Wal-Mart and GE, in particular, as two of the biggest companies in the world, are very serious about their greening. So the financial logic is very clear today and just makes sense because the biggest companies in the world are doing it themselves and they are asking their suppliers to be greener.When you think about who supplies Wal-Mart, it is nearly everyone. As a result, greening is an important factor in any business growth plan.
One of the best ways to drive revenues is to think about your customers' environmental needs.What that means for anyone working in the logistics and supply chain side is that finding ways to reduce waste in the delivery network is going to have real value.
Q: So the goal is not just to roll out environmentally friendly products and so forth, but also to devise an eco-friendly process for getting your products to customers?
A: Absolutely, and you can take that thought even further. Companies are now linking business value to green thinking in several ways. First, they can use a greener approach as a way to cut costs. Second, they drive new revenues. Third, they create intangible brand value. I think companies throughout any supply chain can do all of this to varying degrees and all of those have financial benefit. That's why I was saying before that marketing certainly connects to the revenue and to the brand-value stuff.
Q: The momentum certainly seems to be there, especially when you have companies like Wal- Mart and GE leading the ecocharge. I don't want to overstate it, but it is almost tough to be in business in today's global economy if you're not doing business with those two companies.
A: I don't think that overstates it at all. I was at a meeting a week ago [at Wal-Mart's headquarters] in Bentonville, Arkansas. It wasn't a highly publicized meeting and that is, in a way, what made it interesting. Wal-Mart invited the CEOs of its biggest suppliers, so those are some big companies, as well as some outside observers like myself. There weren't a lot of big fancy announcements about how green they were going to be. It was in a lot of ways operational. It was them sending the message to their suppliers that they are not going back on this. They want them to innovate and create greener products for them to put on the shelves. They sold a hundred million compact fluorescent bulbs this year. They said they want a hundred more products like that. To me, that was the starter's pistol. Now you've got the biggest companies in the world saying, "We mean it." Not only is this not a fad, but it is actually a better way of doing business. There is no going back because it would make no sense to go back.
Q: Let's say you are speaking to an audience of business people who are interested in introducing these types of green products and services. What are some reasonable long- and short-term goals for them as they begin that journey?
A: In the short run, the first steps that are critical include really understanding your environmental footprint— getting some hard data on what your impact is and how environmental issues touch your business. That might sound easy, but it is very challenging. Most companies don't have a good handle on it. There is a tremendous opportunity for businesses that can help bring the data together. Imagine the success of a logistics services company that can say, "We are going to handle this part of your supply chain. We're going to tell you for that part of it what the footprint is because we have all the data." It's easier said than done, but it will present some great opportunities for those that do it.
In the short run, it really comes down to just knowing where you stand. That means hard data: What is your impact on climate change? What is your energy use? What is your water use? What is your toxic production and usage?
In the short to medium run, just getting a handle on where you are and what your strengths and weaknesses are is a good starting point. In the longer term, I think the sky is the limit. You can become a much leaner business and work closely with customers to help solve their environmental challenges.
Q: In your research, have you come across any logistics-specific business practices that companies might look at to benchmark their operations against?
A: There is a huge range of ideas out there for logistics operations. I know that trying to be more efficient in logistics is nothing new. A company like Wal-Mart is famous for all the things it has done in logistics for years. Companies are finding over and over that even if they thought they were very lean, that by putting on this lens and saying "OK, how can we reduce carbon and reduce emissions?" they just almost automatically start to look at their business in a new way.
Take UPS, for example. UPS has this "no left turns" policy. It maps out its 15 million daily deliveries so that its drivers have to basically turn right. This works in the cities mainly. It means less idling, less fuel use, and probably less time wasted at red lights. It's just the kind of thing that might not have occurred to them before they started thinking about things from a new perspective and realized just how much it's costing them and how much fuel is wasted every time one of their trucks is sitting there idling.
Q: That sounds pretty minor, but when you multiply the savings by the number of vehicles UPS has on the road every day, that adds up pretty quickly, doesn't it?
A: Right. It is over 8,000 trucks. So you can see by that one example that there is an almost endless range of small things that actually can add up to much bigger things. Wal-Mart has announced that it hit its first target of a 15-percent improvement in its fleet's fuel efficiency in just the last couple of years. It is shooting toward, I think, a 25-percent improvement in three years and doubling that again by 2015. It has done that mostly by taking a lot of little steps rather than one great big idea. It looked at truck idling. It has tried different fuel additives. It pays attention to things as simple as keeping tires properly inflated.
Q: Where do we go from here? What, if you will, is the next big thing in environmentally friendly business practices?
A: There is no easy answer to that question. This is a movement. It is a powerful trend that is changing the way business is done and the way society is going to operate. The next level is just an integration of this type of green thinking into everything we do, into every job. It's not going to just be the environmental guy's concern anymore. It's going to be everybody's job. That is happening at the leading-edge companies already.
I do think as it relates to the supply chain we're going to get to a place—and this is beginning already—where companies not just ask but demand that they have full information on everything for every step of the chain. What's in this piece of material you're sending me? What's in this product exactly down to the chemical level so I know what toxic things I'm dealing with? How much energy did it take to make? Wal-Mart has started to ask that recently. A month ago, it started asking a set of suppliers to quantify the energy use for making and delivering certain products. The next step will likely involve a bunch of different environmental dimensions.
In the longer term, Wal-Mart suppliers may find that they'll get more shelf space if their product and process is greener. That is coming. Imagine every product arrives at the dock and then arrives at someone's home with a label that states the environmental impact of making and distributing the product.
Q: Sounds like the environmental equivalent of nutritional labeling!
A: That is beginning to happen. Timberland has been doing something like that on its shoe boxes. It is happening in other countries too. Tesco, which is a U.K. grocery chain that is now moving into the United States, said earlier this year that it is going to try to label every product it carries—70,000 products—with something about greenhouse gases. That requires, obviously, their suppliers telling what the environmental impact of each item is. I bet that for 69,990 of those products, the manufacturer probably doesn't even know.
Q: If you could offer just one piece of advice to a company looking to adopt more environmentally friendly business practices today, what would it be?
A: They have to think of green business not as a separate, nice-to-do thing, but as a core part of their business and strategy. The future is not environmentally friendly business; it is just good business. It is a fundamental way to compete. As I said, there is no alternative anymore. This is not a fad, so treat it like an opportunity. This is a chance for the business community to help create a more sustainable, livable planet, which is great and moral and will engage your employees like you can't imagine. But it is just as much an opportunity to be competitive and to profit.
