Opinion / Economy

Sustainable supply chain initiatives

By Marcos Fava Neves (chinadaily.com.cn) Updated: 2012-04-20 17:28

This article was written to share with China Daily readers my impression studying the document of McDonalds called “Best of Sustainable Supply 2012”. This initiative was a competition launched by the company, stimulating suppliers to submit the best practices done. 400 projects were submitted and 51 selected by six company and NGO experts based on criteria of measurable results and innovation. It is a value creating and sharing project.

The areas where projects were done to creat and share value were: employee wellness, waste, climate/energy, animal-welfare, water, raw materials and community impact. Here I summarize findings in each area.

Employee wellness: value was created based on improving working conditions, where freedom, security, equity and dignity were guaranteed. Also criteria for compensation and benefits were considered. In the evaluation of McDonalds, these projects went beyond the “McDonalds Supplier Code of Conduct” promoting real benefits in creating value via differentiation. Among the wining initiatives were an educational program designed by a supplier in Thailand to help its employees to complete their primary, secondary and even higher education, with more than 2100 employees participating since the beginning (1994). Also initiatives regarding employee’s health plans in South Africa, wellness programs with fitness-centre and weight watchers within the company and opening channels for better employee communication.

Waste: food production operations can generate large amount of waste within the production and packaging process. Value was created within McDonalds suppliers via eliminating waste sent to landfill via control of production processes and increasing recovery rates. Several suppliers had initiatives in the field, some of them approaching policies named “reduce, reuse and recycle”, reducing excess materials in packaging, cutting delivery trips, the usage of recycled plastic pallets, recovering animal grease from dissolved air flotation units and collecting restaurant waste.

Climate/Energy: in this topic the efforts of suppliers were to identify the sources of greenhouse gas emissions for a reduction in carbon footprint. To achieve these goals, the projects focused in increasing energy efficiency and the use of renewable sources of energy. One of the projects started with a “real time” energy management, other stimulated a program for energy-saving ideas among employees in order to raise awareness, use of flowing water and solar structures to generate electricity, transforming waste-water to biogas and using biodiesel in truck engines.

Animal Welfare: the efforts were to create value via proactive steps for the welfare of animals including responsible use of medication, growth promoters and genetic selection, and improving nutrition, husbandry and well being of animals in slaughter process and also within the several transports done. The initiatives were done in animal welfare training, thermal comfort for poultry and best practices sharing.

Water: value creation initiatives in water were related to improving water efficiency, reducing water pollution and creating policies for wastewater treatment and reuse. The best were the projects to raise awareness, to collect ideas among employees, have more efficient equipment for water treatment, wastewater recycling, water consumption in ice machines and the creation of specialized cross-functional teams that visited factories and discovered opportunities for water saving policies.

Raw Materials: value also could be created with the McDonald’s suppliers raw materials initiatives, really moving backwards at the supply chain (suppliers of the suppliers). The goals were to include agricultural working conditions, soil fertility, erosion and contamination, promote responsible use of chemical products, preserving biodiversity. McDonalds suppliers worked offering free programs for carbon assessment in their suppliers identifying potential saving initiatives and having innovative projects for carbon emission reduction. Plastic bottles produced with ethanol, micro-irrigation, safe handling of chemicals, package recycling, integrated pest management and programs for soil recovery were the initiatives. McDonalds suppliers worked together with their raw materials suppliers towards these value creation activities, building a real integrative chain approach.

Community Impact: this was the final possibility considered for value creation. Projects demonstrating capacity to give value back to communities where they are located via volunteer efforts, investment in infrastructure and charitable organizations. This was done supporting medical programs, creating nutrition for orphanage, supplying clean water for villages, teaching children, improving air quality, offering free technical assistance, recycling uniforms as cloths and programs for fighting hunger.

Several lessons came from this initiative of a leading food service company creating value via sustainable supply. The most important is the creativity to implement a program stimulating suppliers to compete and submit the projects for evaluation and then communicating the results, spreading knowledge and benchmarks. Several nice ideas were given in this real integrative chain approach for value creation and sharing.

The author is professor of strategic planning and food chains at the School of Economics and Business, University of Sao Paulo, Brazil (www.favaneves.org) and international speaker. Author of 25 books published in 8 countries.

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