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Supply Chains experiencing frantic catch-up mode to set green agendas

Greening the supply chain is growing

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Supply Chain

Green Credentials Part of Outsourcing Decisions

A growing majority of corporate decision makers will consider green credentials when selecting future outsourcing companies, a recent study suggests.

Brown-Wilson Group, a Florida company that studies the outsourcing industry, generated a green-related sub-survey while questioning companies for its larger "State of Outsourcing Industry" report. The company concluded that more corporations are dumping environmentally-unfriendly outsourcers in a trend expected to continue.

"While many outsourcing vendors, particularly European- and U.S.-based vendors, have already established proactive green corporate policies, there will be a flurry of activity among offshore firms from India and China to retain competitive appeal," Scott Wilson, Brown-Wilson partner, said in a statement. "The offshore perspectives of these suppliers, traditionally focused on cheaper and faster, did fortify the strategic importance of the environment on the decision-makers within North American and European clientèle, hence the frantic catch-up mode to set green agendas."

Public Companies Apply Green Practices to Future Outsourcing Contracts for Regulatory, Shareholder and Customer Reasons

Public companies are more likely to work green practices into future outsourcing contracts because of regulatory, shareholder and customer concerns, the survey found. More than 21 percent of public companies have already added green policies into existing contracts while more than 94 percent of respondents intend to add green clauses when they go to renegotiate.

By comparison, 36 percent of private companies are now contemplating green policies for 2008 outsourcing contracts.

Nearly 90 percent of outsourcing decision-makers indicated that environmental stewardship will influence the outsourcing choices they will make when contracts come up for bid during the next year. Less than one in 10 anticipate an increase in pass-along costs from their vendors adopting greener policies.

Cost Effective Environmentally Friendly Practices Come from Supply Chain Are Competitive Advantage

The suppliers' trick involves finding ways to introduce more environmentally-friendly practices without increasing costs, the company said.

"Beyond labor savings and operational re-engineering, outsourcing clients now seek top-line and bottom-line contributions from their suppliers,” Wilson said. “There's still a very short list of outsourcing firms who are making the grade as good stewards of the planet with significant implemented ecological commitments and dedication to environmental responsibility."

Analysts worry about the cost of implementing green strategies, too, the company said. Institutional investors also are leery of green initiatives while individual investors support green companies.

Supply Chain Strategies

Outsourcing vendors are being forced to implement green policies, such as hardware energy consumption, waste disposal, using recycled and environmentally superior content, water and energy efficient products and alternative fuel vehicles, among other measures.

Wilson-Brown Group predicted that the next few years will be critical for outsourcing firms to establish "their road map to green leadership." Clients and investors whom buy stock in green outsourcing companies believe these companies will enjoy long-term success; these companies will gain an edge through efficiency-related cost reductions, and face less risk from environmental liability.

Wilson-Brown Group authored “The Black Book of Outsourcing.” Their “State of Outsourcing Industry” report surveyed 20,000 global outsource users.

Wilson-Brown Group
2519 McMullen Booth Road
Suite 510-108
Clearwater, FL 33761

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