Posted by: edwinrutten | December 3, 2010

Creating sustainable, innovative value chains: key takeaways

Yesterday, I attended the International Supply Management Congress “Creating sustainable, innovative value chains” in Amsterdam. It was good to notice that the interest for this topic is growing, and visionary multinationals are taking the lead. A poll among the attendees, revealed that 90% doesn’t expect any significant outcomes from the UN Climate Change Conference in Cancun that is taking place at the moment of writing. So it seems that businesses should be leading the way, albeit using a multi-stakeholder approach involving governments, NGO’s, suppliers and customers. Let me share with you some important insights from the CEO’s of these visionary multinationals and other key-note speakers.

All of them see the challenges that a population growth (6.5 billion people now, 9 billion in 2050), increased urbanisation & welfare will bring: a big change in the way we do business is necessary to secure sufficient supply of resources, in a sustainable way.

Björn Stigson, President of the World Business Council for Sustainable Development, states that “the green race has started” and there will be an increasing pressure on measuring and reporting sustainability along the value chain.

Professor Carlos Cordón of IMD Business School sees a need to change business models. With this comes a trend of insourcing, nearshoring and integration (as opposed to the trend over the last two decades) to secure supply and stay in control.

A representive of one of the largest NGO’s, WWF, Johan van de Gronden (CEO), stressed the importance of ‘peer-pressure’ and multi-stakeholder initiatives in getting things done. WFF has a clear strategy by focussing on 15 key commodities, key areas for biodiversity and key companies, thereby trying to exert the pressure where the leverage is. Sustainability is becoming a pre-competitive issue, so co-operation and competition can go hand in hand.

The CEO of AkzoNobel, Mr. Hans Wijers explained AkzoNobel’s strategy focussing on accelerated and sustainable growth. He highlighted the impact of the developments in high-growth economies, like China. Some 200 new cities of 1+ million people will develop here in the years to come. And with construction having a huge environmental footprint, AkzoNobel is looking for (business) opportunities to support this growth in a sustainable way. This calls for open innovation in their industry and new client-supplier relationships. Also, their incentive structure goes beyond financial performance and has a large sustainability component.

Nutreco, represented by Wout Dekker (CEO), clearly identified where they have the largest impact in their value chain. The main impact is not in their factories, but downstream in their supply chain. They’re trying to reduce their footprint, or in their case ‘foodprint’, by identifying issues in the whole value chain, taking an industry approach.

Mr. Feike Sijbesma, CEO of DSM, referred to Darwin’s survival of the fittest concept. Companies that show the greatest adaptability will thrive and survive. By seeing sustainability not only as a responsibility, but more so as a business driver, they can grow the scale and productivity needed to serve the need of high-growth economies. For SCM this means monitoring suppliers, reciprocal support, and joint improvement projects with SC partners. 

Darwin_monkey_business

Summarizing, we can conclude that sustainability is no longer a buzzword, but a true business issue. No more isolated CSR-departments at the end of the hallway, sustainability is (or should be) ingrained in all primary processes and along the value chain. Only in this way, we can realize growth in an innovative and sustainable manner. Hope you share this vision. I wonder what Darwin 2.0 will conclude in 2050 when analysing the evolution of business…what will have happened to monkey business?


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