Reverse Supply Chain & Our Shared Values

Recently, I attended an all-day supply chain conference at Stanford Graduate School of Business. The topics for the various sessions were centered on shared value and supply chains and the strategies for success.

First, let me say how enjoyable the conference was as the speakers were highly qualified in each of their respective fields of expertise. Presenters from Microsoft, Intel, Coca-Cola, and Nike all spoke on how their global activities and presence affected the supply chain and where they were adding value to the participating countries using their goods and services.

All were concerned about their environmental impact. Coca-Cola has been busy installing waste water reclamation facilities and using bioplastics for new, recyclable bottles called “Plantbottle.” The bottles are 30 percent ethanol composite based upon sugarcane. So, Coca-Cola is subsidizing farmers to help increase the sugarcane crop supply. “Shared value” is a term that means something like “as we grow, you will grow too.” It is a nice concept that transcends pure greed but also makes it a challenge to understand how to share and end up with more.

In fact, Coca-Cola's goal is to double its beverage business by 2020. That means more potable water that will be dedicated for soft drinks in an increasingly drying world. Coca-Cola is also helping locals in many remote villages start businesses for distribution of Coke's products. It is training individuals on how to manage the last mile distribution systems by teaching accounting, inventory management, and good employer practices. Where trucks cannot go, human powered carts and bicycles can. This constitutes a business win-win for all the parties involved.

As the various company VPs took the microphone and reported on their “good deeds,” each talked of reduced carbon footprints, more jobs, accessible goods, and a cleaner environment. When Jill Boughton, associate R&D director at P&G, took the podium, I was all ears. The subject matter was “Waste to Worth,” and the presenter characterized her job as being the trash lady. Boughton said she couldn't believe it, but she is paid by P&G to talk trash. She characterized her role as heading up the reverse supply chain for P&G.

Where most people driving down a street in India would see just bags of garbage cluttering the sidewalks and streets, the P&G “trash lady” sees caloric value. Boughton's specialty is to work with businesses and governments to reclaim the value in their garbage to the betterment of their economy and people. To that end, P&G is putting in a pilot gasification plant in the Philippines, hopefully to be replicated worldwide. Gasification is not incineration. The byproducts from the process do not go into the air.

P&G partners with municipalities to help establish ownership and responsibility for the plant operations. The owners get the profits from the electricity produced and P&G gets zero revenue. The city is not required to increase its consumption of P&G products, so this would seem a very altruistic enterprise. However, P&G is not just concerned with the safe and proper disposal of a mountain of used diapers, but in the process of moving towards a healthier reverse supply chain, all products, from all suppliers, are reviewed.

The bulk of P&G's expenditures go towards pre-treatment and post-treatment of the waste products. The new model has been so well accepted that investors are stepping up to create 10 more plants just like it. They recognize the value of this method of waste treatment, so P&G doesn't have much of a selling job to have these services replicated many times over in developing countries around the world.

In fact, when P&G's Boughton began to design the program, one of her must-haves was that the idea had to go viral to be truly effective and worth pursuing. This is a huge PR gain for P&G, and that isn't too shabby for business either.

Our family spent three months in the Philippines working with a medical team to help provide basic care for the 5000 families actually living on top of garbage heaps. Much of our care involved escorting sick people to the hospital, providing for their IVs and medicine, and cleaning systemic wounds that became infected after they would accidentally stab or cut themselves on the hooks they used to sift through the waste. The ground on which we had our makeshift medical clinic was actually smoking from the decomposing garbage. Periodically, the ground would just flash into flames from the methanol byproduct of decomposition.

Boughton had been to 12 such garbage dumps and became the advocate for P&G for resolving not just the garbage issues, but also health treatment and infection prevention for the families that made their living by picking through the trash looking for something they could sell or recycle. As a result, P&G is providing gloves and masks to these poor entrepreneurs. Many of the diseases we treated on a daily basis like TB and pneumonia were respiratory system-based. Believe me. A simple mask could save a life. Now you really know why I enjoyed the conference so much.

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