Puma's Sustainable Supply Chain

Supply chain sustainability reporting is a key feature of Puma’s overall sustainability strategy. At the GRI Global Conference in Amsterdam, sporting goods manufacturer Puma, in cooperation with the Global Reporting Initiative, announced its intention to expand environmental considerations and improve working conditions throughout their strategic supplier network.

Those responsible for more than two-thirds of all Puma products will receive GRI certified training on transparent measurement and reporting on their sustainability performance using the GRI G3 Guidelines – the world’s most widely-used framework for sustainability reporting. These twenty Puma suppliers are based in China, Vietnam, Cambodia and other countries. The first sustainability reports are expected to be released in 2011/2012.

Reiner Hengstmann, Puma’s Global Head of Social and Environmental Affairs said, “Without sustainable suppliers, we will not be able to produce sustainable products or credibly report about Puma’s own sustainability initiatives.”

Puma originally joined a GRI pilot project called “Transparency in the Supply Chain” back in 2006. Under this project three South African Puma suppliers were trained on issuing sustainability reports. Managers learned how to measure sustainability concepts such as waste diversion, energy efficiency, and other performance indicators.

As the result of this training Impahla Clothing, a Puma supplier in Capetown, was the first carbon-neutral garment supplier on the African continent in 2009. Impalah's 2009 Sustainability Reports reveals a 40% increase in production, a doubling of its permanent staff, and a 10% drop in absenteeism. The company's bottom line improved through the cost savings gained.

Similar projects are underway in China, South Asia, Turkey, and Portugal. By engaging with its vendors and offering them further resources, PUMA has empowered these companies to proactively address the weak points in their operations, while also giving them the tools to find those improvements independently.

Many companies can learn from PUMA's leadership. PUMA has added value to its offering by changing its corporate mission from the most 'desirable' sporting brand, to 'desirable AND sustainable.' Once accused of having low labor standards, Puma is now emphasizing transparency and using supply chain reporting as a central part of its strategy to become the most sustainable sport-lifestyle company in the world.
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IT Sector Should Leverage Their Supply Chains

Research funded by the European Supply Chain Institute (ESCI) indicates that IT supply chains afford significant opportunities for carbon reduction.

The ESCI is a member-driven organization that researches all areas that will have a direct, positive impact within the supply chain. Last September, ESCI formed a new group called the Supply Chain Carbon Council to research issues related to carbon emissions in the supply chain and make recommendations.

According to the Supply Chain Carbon Council, “Businesses need to focus less on how IT contributes to their environmental impact and more on how IT can help lessen the environmental impact of their supply chain operations. While making IT more green must remains a concern, there are areas where deploying more IT can significantly contribute to making an organization’s supply chain activities more environmentally sustainable.”

There’s a mounting evidence to indicate that by leveraging their supply chains IT can play a major role in reducing carbon.
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Sustainable Supply Chains

Sustainable supply chains are an integral part of a rapidly growing trend that is transforming businesses around the world. Supply chains are critical links that connect an organisation’s inputs to its outputs. The increasing environmental costs of these networks and growing consumer pressure for eco-friendly products has led many organisations to look at supply chain sustainability as a new measure of profitable logistics management.

Approximately 70 percent of all surveyed top executives consider sustainability efforts essential to long-term profitability. For firms' purchasing strategies, purchasing heads rank environmental efforts as most important among sustainability initiatives.

In response to overwhelming demand for sustainable supply chain expertise, educational facilities like the W. P. Carey School of Business at Arizona State University are building green supply chains into their curriculums.

The level of an organizations involvement can be catagorized into one of three general groups sometimes referred to as the three tiers of sustainability.

Tier 1) The Basics: This is the base level where companies employ simple measures such as switching lights and PCs off when left idle, recycling paper, and using greener forms of travel with the purpose of reducing the day-to-day carbon footprint. Some companies also employ self-service technologies such as centralised procurement and teleconferencing.

Tier 2) Thinking Sustainably: This is the second level, where companies begin to realise the need to embed sustainability into supply chain operations. Companies tend to achieve this level when they assess their impact across a local range of operations. In terms of the supply chain, this could involve supplier management, product design, manufacturing rationalisation, and distribution optimisation.

Tier 3) The Science of Sustainability: The third tier of supply chain sustainability uses detailed auditing and benchmarks to provide a framework for governing sustainable supply chain operations. This clarifies the environmental impact of adjustments to supply chain agility, flexibility, and cost in the supply chain network. Moving towards this level means being driven by the current climate as well as pushing emerging regulations and standards at both an industry and governmental level.

An October 2009 GTM report, titled Greening the Supply Chain: Benchmarking Sustainability Practices and Trends, indicates that green supply chain leaders are benefiting from reduced costs, increased revenue and recognition.

The report includes case studies and interviews with supply chain executives and sustainability officers. Although energy reduction in the supply chain has received a lot of attention, there are other efforts including more efficient product designs.

According to David Schatsky, one of the report's authors, "The supply chain represents a big opportunity for firms to realize the financial, operational and strategic benefits of sustainable business practices."

Despite its growing prominence, sustainability is not at the core of most companies’ strategic planning and although involvement is increasing, it is not yet the prime driver of supply chain agendas.

While there are many benefits to greening the supply chain, there are also impediments. Many companies cannot fully evaluate their suppliers and customers, making it difficult to assess the true environmental costs. However, as the basic standards of sustainability reporting become increasingly common it will be easier to make more accurate assessments.

Sustainable supply chain efforts are a defining feature of a serious environmental commitment. Overall, the research indicates that sustainability offers major competitive advantages, especially with regard to production efficiency, supplier management skills and employee morale.
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Consumer Demand for Green

Green is increasingly part of almost every survey measuring consumer interests and/or buying behaviour. A well informed public is asking businesses to make more responsible choices and rewarding those that do with their patronage. In response businesses of all sizes are finding ways to make their operations more sustainable and environmentally responsible.

A recent article written by Dr. David Suzuki and Dr. Faisal Moola indicates that, "protecting our planet is no longer seen as a fringe activity. Most people now consider themselves to be environmentally aware and are taking steps to help. Caring for the environment has become mainstream – it’s the “new normal. Businesses respond to consumer demand, and the right demands can result in real benefits for the environment."

With the help of the David Suszuki Foundation, the Overwaitea Food Group has adopted a program that emphasizes sustainable seafood. Overwaitea president, Steve van der Lees said, "doing the right thing always pays off.”

As Kathleen McLaughlin writes, in an article entitled "Consumers Want Green Furniture Options, "environmentally friendly has transcended from a buzzword to a multi-million dollar revenue generator spanning many industries."

A "2008 Green Marketing Consumer Study," sponsored by the Sustainable Furnishing Council, indicates that appoximately half of respondents are "very interested in global warming and have started doing what they can, with the No. 1 action being to buy green products in a variety of categories."

According to another report, a majority of respondents indicated that businesses should reduce greenhouse gas emissions. The report also indicated that people are more likely to purchase products bearing a seal that proves corporate sustainability commitments.

Earlier this year Joel Makower wrote an article in which he reviewed the marketing data on Green and discovered that the vast majority of consumers say they have adopted, "greener habits in their daily lives, and shop for at least some products with a keen eye on their environmental provenance and energy and climate impacts. In other words: the marketplace is getting greener -- way greener.."

Consumers do not appear to be deterred by the current state of the economy. One study quoted by Makeover indicates that 82 percent of Americans say they're still buying green products despite changes in the economy.

Consumers have expressed real interest in making Greener purchases in everything from seafood to furniture and the business community is responding to this ever increasing consumer demand.

Business owners simply cannot afford to ignore consumers because if they fail to respond to consumer demand for Green, others will seize the opportunity.


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