What not to look for in 2011

High-tech companies may talk the talk when it comes to green, but when it comes to prioritizing supply chain goals, sustainability ranks low on companies' “to do” list. A survey conducted by {complink 7014|IDC} and UPS ranks sustainability as a top priority for only 19 percent of the high-tech companies surveyed.

IDC's Simon Ellis wrote the following in an analysis of the survey:

    This, frankly, is quite surprising. At the very least, we would have expected a majority of the responding companies to consider sustainability — even if, in the end, it proved to be less influential on the final decision. We asked supply chain executives this question in detailed interviews, and their feeling was that while sustainability is very important for companies that have a notable brand name to protect, for others it may not be a top criterion yet in evaluating business decisions.

In terms of current sustainability practices, the survey found when asked how often they factor environmental or social sustainability into supply chain decisions, less than half, or 47 percent, of companies said “always.” The reasons were varied and include the following:

  • Only 26 percent said sustainability was an important value driver
  • Another 21 percent reported this as a company or industry mandate
  • Another 33 percent of companies reported occasionally factoring sustainability into their supply chain decisions as a “nice to do” but not an imperative
  • 18 percent said sustainability is a factor only when it’s cheaper or more efficient
  • Only 3 percent of companies never factor sustainability into supply chain decisions

In terms of future drivers of sustainable supply chains industry mandates were the overwhelming reason companies cited as primary drivers for them to engage in green practices moving forward. More than one-third of respondents — 36 percent — say their customers will demand sustainability practices while 26 percent believe legislation will require it. Less than one quarter, or 24 percent, of companies believed that sustainability would be an important part of their CSR agendas in the next three to five years; only 11 percent saw sustainability as key to their competitiveness in the future.

The survey targeted senior-level decision makers in the areas of operations, supply chain and logistics and distribution at 125 high-tech companies across the U.S. IDC Manufacturing Insights also conducted approximately 25 in-depth interviews with companies located in five key high-tech markets.

Sustainability should be higher on the list for the supply chain. From raw materials sourcing though finished product delivery the supply chain has a significant impact on the environment. The by-products of manufacturing, carbon foot printing, paper and plastics recycling, energy use and consumption of fuel are being scrutinized by governments all over the globe and many of these functions have already been subject to some kind of regulation.

There is no indication that the regulatory environment is going to ease. If high-tech companies don't address these issues voluntarily, you can be sure there will be mandates sometime down the line.

11 comments on “What not to look for in 2011

  1. AnalyzeThis
    December 28, 2010

    Frankly, I'm not too surprised by the results of this survey. In fact, I think the 19% response for sustainability as a top priority seems perhaps a little bit too high.

    I think the “nice to do but not an imperative” and the “if it's cheaper and more efficient” responses are fairly common opinions though, I think that's generally how I feel.

    Don't get me wrong; I do agree that sustainability should be a higher priority. But at the end of the day, you need to make good business decisions.

    That said, I do believe that sustainability is more important in other industries, outside of high-tech: my philosophy would be very different if I was working in commercial fishing, for example.

    Also, I think many people (including myself) don't consider sustainability if the availability of the materials will not be threatened within our lifetimes. If I were manufacturing something that contained, say, a REE that was generally thought to have only another 50 years of supply left, I probably wouldn't really worry too much about potentially using up all of that resource because I'd be retired by the time availability became an issue (and of course it would be very unlikely that we'd manufacture the same electronics product for 50 years anyhow).

  2. Himanshugupta
    December 28, 2010

    it all boils down to the profit and good PR for companies. It was quite attractive for companies to claim that their products were sustainable but i have not seen much advertisements of products specifically mentioning the term 'lower carbon footprint' or 'lower green house emission' etc recently. Even global warming is not much in the news now a day!

  3. tioluwa
    December 29, 2010

    Well who can blame them?

    It's all a matter of priority, and profit truely.

    It appears that the issue of sustainability has not had any serious effect on profit for tech companies, that's why  its not a priority, when it begins to have such effects, then it will be made a priority.



  4. stochastic excursion
    December 29, 2010

    International organizations have been putting into place systems for limiting carbon emissions over the past few years.  Once regulations and carbon trading are a part of doing business, this aspect of sustainability will become higher on the priority list.

    It remains for the U.S., Afghanistan and Somalia to ratify the Kyoto agreements.  That these countries can stave off mandates and trade-based incentives indefinitely may not be a good bet.

  5. Taimoor Zubar
    December 30, 2010

    @TIOLUWA: I also had the same point while reading through the article that companies are not willing to invest their resources to achieve sustainability just because they don't see their profits getting higher by doing so. The problem with the issue is that unless all the companies take serious measures towards achieving sustainability, the gains cannot be seen. If only a couple of companies make efforts in this area, they would only lose out on their profits and not make any significant impact.

  6. Taimoor Zubar
    December 30, 2010

    @Himanshu: You are right, companies did use the sustainability factor to promote their products and build up a good reputation in the minds of consumers. I guess consumers no longer fall for this and the companies have to do other acts in the way of Corporate Social Responsibility to build up a good image.

  7. hwong
    December 31, 2010

    To execute  “sustainability”, there must be some incentives provided by the government. Like other bloggers point out, it all comes down to whether investing “sustainability” project will have ROI. If not, then companies aren't going to do it. Hence government needs to step in here. Whether it be a tax credit or subsidy to motivate companies to enforce sustainabiliity strategies would require further economic analysis.

  8. Backorder
    December 31, 2010

    I dont understand how sustainability can not be a priority. Or atleast pretty high on the list. I think, the problem is how we define the sustainability vis-a-vis the supply chain. If a supply chain manager figure out that a crucial link in the chain is not ' sustainable' and will fall apart in a couple years probably, he will be concerned. And if the danger is imminent or unpredictable, the concern should be greater still. The point is if any of your critical resources can be impacted in immediate future by sustainability issues, sustainability becomes your problem. Business will always attach only so much value to 'nice-to-have' concerns. But sustainability is not only nice to have, it can turn out to be an essential in a unpredictable fashion too!

  9. Taimoor Zubar
    December 31, 2010

    @hwong: I agree with you on this that the government needs to step into this issue to regulate the corporations and make them take measures towards ensuring sustainability. One of the biggest downside of the free market economy is the damage to the environment by the companies, and as economic analysis points out, the government needs to intervene in the economy to control that.

  10. Taimoor Zubar
    December 31, 2010

    @Backorder: Firstly, the direct effects of sustainability cannot be reflected in the profits, not at least in the short-term. It's hard to determine how much the company earned out of using renewable energy sources or making their business processes environmental friendly. Secondly, even if the company was sure of long-term benefits, given the intense competition these days, a lot of managers would prefer short-term savings in costs over long-term prospects.

  11. hwong
    December 31, 2010

    Sustainability is just another buzzword. All it really means is to use resources effectively such that we have the means to rebirth the process of producing something of value. People should always try to be more aware of how we can save resources such as not creating too much Waste and have a way to recycle old to make new.

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