Sustainability is about a lot more than saving energy, says Dale Rogers.
It's also about adopting business and supply chain practices that ensure a long life for a company, argues Rogers, who is professor of logistics and supply chain management and co-director of the Center for Supply Chain Management at Rutgers University. And it involves practices that pay off not only in building a reputation for corporate good citizenship, but in long-term prosperity.
Perhaps best known for his research on reverse logistics, Rogers has turned much of his attention to the topic of sustainability in recent years. At his former post at the University of Nevada-Reno, he led a major research project on sustainable supply chains, work that he is continuing at Rutgers. Rogers is currently writing a book on the topic with a former University of Nevada-Reno colleague, Craig Carter (now at Arizona State). In a nod to Philip Crosby's classic text Quality Is Free, Rogers and Carter have given their book the working title "Sustainability Is Free."
Rogers says his interest in the topic was sparked by a conversation with a Hewlett-Packard executive during a plane ride to a reverse logistics conference. She told Rogers that she was attending the conference as part of a broader effort to make H-P a sustainable company.
"I knew by the end of the ride that I had to write a book about this," he says. "It is safe to say this is a big idea."
Although companies often equate sustainability with energy conservation, that's just a small part of the picture, Rogers says. "It is not just a green, environmental movement. It is about being ethical and honest. It is about how to make something last for a long time. It's about increasing productivity, getting more out of what you are doing, and using fewer resources—particularly non-renewable resources. It is really about looking at things from a holistic point of view and not just for the short term."
Social responsibility comes into it as well, he says. "Part of sustainability is doing the right thing by the people in your company," Rogers says. Among other things, that includes ensuring good working conditions and promoting employee safety and wellness.
Showing the way
As for where the sustainability movement is headed, Rogers says adoption will likely be more evolutionary than revolutionary. It took time to bring Corporate America on board with the quality movement, he says, and it will probably be the same with sustainability. Nonetheless, he expects to see sustainability widely incorporated into supply chain processes and strategies over the next several years.
In fact, a number of companies in the logistics space have already taken major strides in that direction. One such company is Tennessee-based Kenco Logistic Services, a large logistics service provider.
Kenco recently signaled its commitment to sustainability when it named Deni Albrecht as its first leader of sustainability. Albrecht says his appointment "brings to the forefront a concern that has been in the background for several years." He credits Rogers, who has worked with the company on its sustainability initiative, with helping foster Kenco's culture of sustainability, and he echoes Rogers' broad view of what it entails. "The vision of sustainability in business is almost endless," he says. "It is about doing the right things and doing them efficiently."
Kenco is now working with customers on a variety of projects aimed at reducing energy consumption, transportation costs, and waste, according to Albrecht. "We pride ourselves on partnering with people of like vision," he says. It's not a one-way street, Albrecht adds. While Kenco might offer guidance to a customer looking to trim excess packaging, he says, "we also have some customers showing the way to us."
He cites GlaxoSmithKline Consumer Healthcare (GSK) as an example. Last year, GSK installed 11,000 solar panels on the roof of its Northeast regional distribution center near York, Pa. The company says it expects the array, the largest rooftop system in North America, will generate enough electricity to meet all of the facility's energy needs.
Albrecht admits that some customers still view sustainability as a cost, but he predicts that will change over time. "Since we've started this journey, we're dovetailing with Six Sigma thinking and using the low-hanging fruit approach. We believe we will get a quick buy-in once we show the dollars in acting sustainably," he says.
Making a difference
Another third-party logistics and transportation firm that has made a commitment to sustainability is New Jersey-based NFI. In April, the company launched what it calls "NFI Impact," an initiative aimed specifically at reducing its carbon footprint. In a press release announcing the program, CEO Sidney Brown said, "Running a sustainable business is vital to the health of this company and the environment. ... Fuel conservation, reducing emissions, solar energy, recycling, and building to LEED standards: these are our guiding principles as we move forward and conduct business." "
While the initiative itself is new, NFI's commitment to sustainability is not. The company has been working to cut back on carbon since 2004, when it joined the Environmental Protection Agency's (EPA) SmartWay greenhouse-gas reduction initiative. Today, a small but growing number of vehicles in its truck fleet run on bio-fuels. It is in the process of outfitting the fleet with super single tires, which are more energy efficient than traditional double tires. Engine speeds are capped at 62 mph and idling is limited to five minutes in order to maximize fuel efficiency. The company's sleeper tractors are being equipped with battery-operated auxiliary power units to further reduce fuel consumption and emissions. Most of the fleet's tractors use synthetic oil.
The company has also started its own renewable energy business, NFI Solar, which has already outfitted two of the company's office buildings with solar panels. It intends to add solar panels to those DCs whose roofs are strong enough to support the heavy solar arrays.
Last year, NFI joined the EPA's WasteWise program, which is aimed at reducing solid waste. Management was pleasantly surprised by the results of the company's baseline audit, which showed that its facilities were already doing a great deal of recycling, reports Susanne Batchelor, NFI's senior vice president of marketing, who has lead responsibility for the company's sustainability initiative. It has now upped the ante, giving managers of all 53 of its facilities goals for further reducing waste, she says.
As for what led NFI down this road, Batchelor says it all comes down to social responsibility. The company operates some 19 million square feet of DC space nationwide and has a fleet of 2,000 tractors and 6,700 trailers. "We looked at the company and said, 'We are big enough to make a difference,'" Batchelor recalls. "So we said, 'Let's start doing some positive things.'"
From the ground up
Another company that's decided it's big enough to make a difference is ProLogis. The company, one of the world's largest developers and operators of distribution space, with more than 435 million square feet in North America, Europe, and Asia, aims to be more than just a global leader in industrial development; it aims to be a global leader in sustainable industrial development. To that end, it has set three "environmental stewardship" objectives for itself: to minimize carbon emissions, to minimize the ecological impact of its developments, and to minimize the impact of its own operations.
To show that it's serious about green building, the company seeks outside accreditation for its facilities, obtaining independent verification that its properties meet local standards for environmentally responsible construction. In 2008, ProLogis pledged that every building it constructed in the United States would be built with the intent of earning LEED certification from the U.S. Green Building Council, says Michael Englhard, the developer's senior vice president and director of project management. It seeks similar certifications for its properties in Europe and Asia.
At ProLogis, "building" has come to be virtually synonymous with "green building," according to Englhard. Sustainable development, he says, "is just part of what we do."