Forging New Links -- Enhancing Supply Chain Value Through Environmental Excellence
was designed to identify and illustrate opportunities for EHS professionals in collaboration with other functions within their companies to enhance supply chain performance. Both the report and the associated web site (www.gemi.org/supplychain) are intended as resources to assist managers in recognizing, prioritizing and pursing specific value creation opportunities.
The goals of environmental, health and safety (EHS) excellence are no longer confined to compliance and cost avoidance. EHS groups are collaborating with other functions to enhance shareholder value throughout the supply chain — contributing to profitability, resource productivity, innovation and growth.
Supply chain management (SCM) is evolving from a traditional focus on purchasing and logistics to a broader, more integrated emphasis on value creation. Leading companies increasingly view supply chain excellence as a source of competitive advantage, with the potential to drive performance improvement in customer retention, revenue generation, cost reduction, and asset utilization. Cross functional teamwork is essential to orchestrate the core SCM business processes — managing relationships with suppliers and customers as well as managing the flow of goods, services, and information along the supply chain.
As the scope and cross-functional integration of SCM increase, there is a growing need for effective EHS capabilities in all supply chain business processes. The emergence of globalization, outsourcing and corporate social responsibility, along with regulatory changes and security concerns, has made EHS excellence a key success factor. Moreover, EHS issues can no longer be addressed in a reactive fashion. Manufacturers are increasingly expected to take responsibility for the disposal of products and packaging at the end of their useful life, so that designing for reverse logistics has become a strategic approach for converting wastes into assets and thus generating shareholder value. Likewise, anticipating safety and security risks and developing contingency plans is critical for assurance of business continuity.
This report provides a comprehensive review of the opportunities for EHS to create business value in the supply chain across a variety of industries. The broadening of EHS scope beyond compliance toward value creation is illustrated by case studies drawn from GEMI member companies. The figure below depicts three main pathways for EHS contributions to supply chain management (SCM) value creation.
The focus of this report is on how EHS excellence contributes to shareholder value creation. Waste reduction, business continuity, resource efficiency and stakeholder satisfaction are intrinsic elements of modern supply chain management. Thus, environmental and social benefits such as pollution prevention can be natural outcomes of supply chain business process improvements.