Posts tagged ‘corporate responsibility’
How a New Design Revolution will Change Supply Chain Management
Howard Brown
Stories about Henry Ford’s genius with manufacturing abound, though it’s rarely clear which ones are actually true. One of my favorites is his insisting that parts manufacturers deliver their products to his plants in wooden crates of his design, which he then dismantled and used as floorboards in his cars.
Supply chain management has grown in sophistication and importance since Ford’s time. The quality movement, just-in-time manufacturing, corporate responsibility initiatives, enterprise-wide information systems, environmental impact analyses like life-cycle assessments, and growth in transparency and public access to information have all brought about major changes in supply change management. Now a new design revolution is about to create an even bigger change in supply chain thinking. The change will come both from new materials and products and from new manufacturing technologies.
Radical new materials and products (such as the ones we feature in the dMASS Insights newsletter) will themselves disrupt traditional supply chain relationships. For example, there are composite materials that exhibit behaviors with the potential to replace mechanical appliances, tools, and other machinery – even entire factories. There are materials that can be used to generate electricity by movement, temperature differences and solar energy conversion. Others have the ability to interfere with the growth of harmful bacteria, actively transfer heat or emit light with minimal energy subsidy. The cumulative effect of new materials and products will be shorter and simpler supply chains.
New manufacturing technologies will be at least as disruptive as the products themselves. Nano-scale manufacturing technologies such as Additive Layer Manufacturing (including 3D printing) and bio-manufacturing (the growing of products) stem from recent advances in the scientific understanding of how nature organizes itself at the most fundamental levels of matter and energy. Similarly, biomanufacturing stems from new discoveries in the fields of genetics and micro-organisms. The common thread among each of these technologies is a growing knowledge of nature’s tendency to self-organize, and an ability to leverage this knowledge.
Three-dimensional (3D)printing, in particular, has the potential to drastically cut resource demands, costs and dependence on resource-intensive supply chains, as well as pollution and waste. Advanced computer-aided design (CAD) systems bring design down to the level of individual molecules. The entire downstream supply chain for a 3D-printed product can be a set of printer cartridges containing different chemical elements. When laid down in precise proportions, the atoms arrange themselves into material structures with the desired characteristics. Printing can often be done in small shops, portable facilities, or even in the home. There is little or no need for high-temperature smelting in parts manufacturing, high-speed grinding or stamping that produces manufacturing scrap, or glues, adhesives, staples, rivets and other parts to hold separate pieces together.
Henry Ford’s tactic saved resources a century ago by creatively taking advantage of existing supply chain resources and harvesting value from waste. Nano- and bio-technologies will radically transform supply chain management in a new way. Business success will increasingly require understanding these technologies and taking advantage of the changes they will bring about.
What are your thoughts? Have you begun to experience supply chain changes due to commodity prices or supply problems, or due to the availability of new materials, products, or technologies?
Howard Brown is a noted entrepreneur and the founder of dMASS.net, an organization focused on helping businesses improve resource performance. For more than 20 years, he was CEO of the consultancy RPM Systems, Inc. (Resource Planning and Management), where he worked with companies such as International Paper, Mobil, BP, Duracell, Avery- Dennison, Whirlpool, SaraLee, and Wrigley, earning a worldwide reputation for developing practical strategies that merge environmental and business goals. To learn more about dMass, visit: http://www.dmass.net/wordpress/
A Peek Underneath the Hood of CR Magazine’s “100 Best Corporate Citizens List”
Elizabeth Boudrie
Recognized by PR Week as one of America’s top three most-important business rankings, Corporate Responsibility Magazine’s “100 Best Corporate Citizens List” evaluates companies on 325 corporate social responsibility data points. This week we caught up with Elizabeth Boudrie, Vice President of Research for SharedXpertise (parent company of CR Magazine) to learn more about the methodology behind the ranking.
GT: With all the rankings out there, why should companies pay attention to this one? What makes this ranking unique?
EB: From a methodological standpoint, this is an audit versus a survey. One of the frustrations that I think a lot of people have in the corporate responsibility (CR) space is that “We get so many surveys, we have to pick and choose which one we’re going to do and we’re not going to do yours.”
We have to explain to people that it’s an involuntary audit—you don’t have to fill anything out. What we do is the IW Financial folks go and look for essential 325 data elements that are publicly disclosed for all Russell 1000 companies. There are a few data elements that are performance -based, but for the most part they’re disclosure-based. I think that the biggest way [the ranking is different] is that it’s very broad. We’re looking really across a broad spectrum of issues as opposed to others that are very specifically oriented to environment, social and governance (ESG), human rights or specific issues, versus our seven different categories.
GT: How did you come up with those categories?
EB: We have a methodology committee comprised of industry folks and academics and folks who together help us oversee the direction of the data elements and the whole process. And back when they originally started the process – I think this is the 13th year — they looked and said, “Ok, what are the main categories that we think make sense, that we think should be important?” And these are the categories that they came up with.
And over time, we continue to review them. They’re weighted differently based on how important the collective group thinks they are and over time we continue to review them and believe that these are the categories that do capture a broad picture of corporate social responsibility (CSR).
GT: And 2012 is the 13th year for the ranking?
EB: Yes. 2012 will be the 13th annual list.
GT: In the absence of widely agreed-upon performance metrics, I understand that many rankings currently rely on transparency as a proxy for progress. Is this the best way to evaluate companies?
EB: I think all of us would love to get past disclosure as the main determinant of ranks– and we do have some elements within our 300-some-odd data elements that are performance-based — but it’s predominantly disclosure-based. There aren’t enough people who are disclosing enough as it is. We have lots and lots of companies who disclose next to nothing out of the Russell 1000. We think of disclosure as the low bar, but if it’s the low bar there are a lot of people who aren’t stepping over it yet. So from that perspective, there’s still a long way to go.
The other issue is that with so many different companies doing so many different things, it’s very difficult to find a reasonable performance standard that you can apply across company size, across company industry, across company type. And I think everybody is still struggling to find out what that is in every ranking. So I think it’s a reasonable proxy for now because it’s the best we can do but I don’t think anybody’s happy with that forever. And I think everybody’s looking for a better way.
GT: What does transparency tell you about a company?
EB: Transparency maybe doesn’t tell you everything, but a company certainly doesn’t talk about things it’s doing poorly, typically. To us the willingness of a company to be transparent indicates strong management, a willingness to be self-reflective, to understand what’s going on within their environment—both within their own environment internally as well as externally– and it just demonstrates connection to what’s happening in the world right now. I think they’re recognizing over time that people are more interested in exactly what’s happening and that means being transparent about what’s happening with your organization, whether that’s your human rights record, whether that’s your impact on the environment, your philanthropic giving, all the categories we might address.
GT: How many of your top 100 companies are ‘repeat achievers’? How much turnover do you see year over year?
EB: It changes a fair amount. The turnover changes over time, which sort of depends on the changes in the methodology, the data set. We try to limit that so there isn’t so much impact, but there can be an impact. One of our data categories is financial performance and with the recent economic downturn that really impacted some folks. So there can be some churn.
GT: How often do you update your methodology?
EB: We try to take an evolutionary versus revolutionary approach. You’d hate to see 80 percent of the list change because it wouldn’t be meaningful…Ultimately what we’re trying to do is drive people to be as transparent as they can be. So ultimately if a company is being even more transparent in 2012 than 2011 we don’t want to penalize them randomly because the methodology has changed. So we’ll try to be very careful in doing that. What you’ll find is because it’s a comparative methodology a company can do exactly what they were doing the prior year and still fall in the ranking if other companies are doing better.
GT: How does the audit process work?
EB: IW Financial, as part of their process, sends out a correspondence file, which is an opportunity for a company that they’ve audited to review the file and make sure that everything is accurate. We’ve added a separate, additional review for companies that are potentially going to be ranked so they can have a second review.
GT: When does the ranking come out?
EB: In the Spring. This year it will come out in early April.
GT: What is the circulation of Corporate Responsibility Magazine?
EB: 19,000
GT: Is the ranking publicly available information? Or is it sold?
EB:The ranking is public. And free.
Elizabeth Boudrie is Vice President of Research at SharedXpertise, where she oversees all global research efforts addressing topics such as corporate responsibility, and transformation and outsourcing of business processes. She will share more information and answer more questions about CR Magazine’s “100 Best Corporate Citizens List” during the NAEM webinar on Jan. 24.
What is the relevance of ISO 26000?
Lina Azuero
The concept of social responsibility is not new. It has been around since the 70s, when early discussions on the role of organizations in society began. What is emergent, is the momentum social responsibility has gained and the shape it has taken.
The momentum is everywhere, evidenced through the different principles, conventions and guidelines now available on the topic or its elements, and their level of adoption. Some examples are the United Nations’ International Labor Organization Conventions, the United Nations Global Compact and Social Life Cycle Guidelines; Equator Principles; Global Reporting Initiative (GRI); Social Accountability 8000; AA1000 Series and more recently the ISO 26000 Guidance on Social Responsibility.
So I’m not going to spend time on the momentum, but rather attempt to discuss the shape social responsibility has taken… And yes, this is where ISO 26000 comes in handy.
ISO 26000 is a voluntary, non-certifiable standard, whose value lies in the attempt to compile all of the different elements of social responsibility in one place, define its evolved concept and provide ways to integrate it into the organization. In the past, social responsibility would be seen as purely philanthropic and/or volunteering efforts. While these are important, we now acknowledge that social responsibility requires understanding society’s expectations and evaluating the organization’s capacity to respond them, so that no false expectations are created. In addition, ISO 26000 also defines the seven core subjects that (at a minimum) need to be considered when thinking about social responsibility: governance, human rights, labor practices, the environment, fair operating practices, consumer issues and community involvement and development.
Thus said, I’d like to make a point clear: The appearance of ISO 26000 doesn’t mean other guideline documents on social responsibility or related aspects are no longer valuable or needed. Contrary to that, they are complementary. The challenge becomes understanding how they interact and at which stage of the process to use them. ISO 26000 is filling a gap between high-level aspirations and reporting by providing a good basis for the “how”.
As with everything, social responsibility has its passionate supporters and detractors. However, if organizations are interested in staying in business for the long-term, social responsibility has to be part of the agenda. So, I’d like to end with a quote from Marc Epstein’s book, “Making Sustainability Work” that really helps getting this point across:
“The issue of whether companies should consider their social responsibility or the impact on their activities … is no longer up for discussion…The challenge has moved from “whether” to “how” to integrate corporate social, environmental and economic impacts—corporate sustainability—into day-to-day management decisions.”
Lina Azuero is a management consultant with CDM, in Cambridge, Mass. She has a graduate degree in Business and Management from Harvard University, and a B.A. in Business and Management from the University of La Sabana in Bogota, Colombia. She is a candidate for a master’s degree in sustainability and environmental management from Harvard University, where her research has centered on social and environmental life cycle assessment in supply chains. She will be presenting during NAEM’s Sept. 8 webinar “New ISO Standards and the Impact on EHS and Sustainability”.
