The first thing you will notice is that I am bringing the concept of a supply chain into the 21st Century by calling it what it actually is...a Supply Network. A chain is linear, and has links above and below, while a network is dynamic and connected in many places.

There is no chain in this picture, only a web of networks. In today’s complex global business, it is imperative to recognize we have moved from supply CHAINS to supply NETWORKS.

Let’s now step back a few feet and describe what a sustainable supply chain network is, breaking it into nine overarching categories with a short description of each. This will allow us to have a solid foundation as we delve deeper into each of the specific categories in subsequent articles.

Whether you are a corporate professional, student, or just curious, this article will help you demystify the complexities of a supply network while giving you a clear and practical understanding. My previous article, Social Accountability 101: Moving from Sweatshops to Sound, Sustainable Supply Chains focused on the first category of a sustainable supply network – Social Compliance and Accountability.

Before I get into the specific parts of the sustainable supply network, let me define a Sustainable Supply Network:

A Sustainable Supply Network is comprised of raw materials as they flow from source to product to disposal/reuse. It encompasses people, environmental and human rights activities, information flow and resource consumption. Supply Networks include multiple businesses (miners, farmers, transportation, vendors, factories, and retailers etc.). Every organization is involved in multiple supply networks as a manufacturer and/or consumer.

Here than are the nine categories of a Sustainable Supply Network:

1. Social Compliance / Social Accountability

Social compliance gives you assurance that the people in your supply network are treated humanely (no child, slave, or forced labor), paid at least minimum or living wages, and have safe working conditions.

i. See my article on the Matter Network for a detailed description of social accountability.

2. Climate Change / Carbon Footprint Quantification and Measurement

Climate change has become one of the major challenges for our generation. The growing release of carbon dioxide (CO2) into the atmosphere and its proven effect on the climate is one key reason for this change. Carbon footprint quantification, analysis and reduction are important to preventing the growing volume of CO2.

There are many reasons why companies are measuring carbon impacts throughout their supply chain. Businesses are beginning to realize that good environmental performance can have positive effects on their profits, reputation, employee satisfaction, and on society as a whole. Knowing your company’s total carbon footprint allows you to take effective steps towards reducing the climate change impact of your business and supply network.

3. Energy Efficiency

Energy efficiency is doing more with less. The goal is to accomplish tasks and business functions the same as before – or even better. From the Supply Network perspective, the greatest savings and performance come from focusing on essential systems of a building, including:

- Mechanical (heating, air conditioning, water heating, pumping)

- Electrical (motors, conveyor belts, manufacturing machines, etc.)

- Lighting (fluorescent bulbs, LEDs)

- Office equipment (computers, security cameras, etc.)

4. Waste Management

According to the EPA (PDF), “In 2008, Americans generated about 250 million tons of trash and recycled and composted 83 million tons of this material, equivalent to a 33.2 percent recycling rate. On average, we recycled and composted 1.5 pounds of our individual waste generation of 4.5 pounds per person per day.”

Within a Supply Network, waste management can involve disposal of hazardous waste, recycling, managing the use and disposal of azo dyes (used in the coloring process of jeans, textiles, t-shirts, and leather), solid, liquid, toxic, and gaseous wastes, along with their unique disposal methods. One area I want to highlight is recycling / reuse. As more and more factories and manufacturing facilities utilize recycling and reuse, their costs go down (profitability goes up), and they decrease their carbon footprint, which benefits the environment. The most high profile industry pursuing recycling is the electronics industry (E-Waste). There are many connections between the waste management category and other Sustainable Supply Network categories below, including air emissions, water pollution, chemical management and raw materials extraction.

5. Air Emissions

BusinessDirectory.com says, “Air Emissions is the release of pollutants into the atmosphere from stationary sources (such as factory chimneys) and vehicles.” Air emissions also refers to gas emitted into the air from industrial and chemical processes, such as ozone, carbon monoxide, nitrogen oxide, nitrogen dioxide, sulfur dioxide and others, according to Biznc.com.

6. Water Management

This concept refers to your management of water, along with any direct or indirect uses of water within your supply network. This occurs in a context of growing water scarcity, increasing pollution, and efforts in water reuse. Water management is important to companies with a large agriculture supply network as well as factories that make jeans, textiles, and plastic products which demand a lot of water in production and manufacturing.

7. Chemical Management

This concept refers to understanding what chemicals are used in manufacturing products and what their impacts are. For your supply network, these chemicals include dyes, drugs, solvents, pesticides, and food additives. The most important regulations to know about are RoHS / WEEE in Europe, the EPA’s existing chemical programs in the US, as well as the new Green Chemistry Initiative in California, which hasn’t grown teeth yet but will have rules about as stringent as Europe’s. Chemicals have hit the headlines recently with reports of lead paint in toys and excess cadmium and mercury in children’s jewelry.

8. Raw Material Extraction

Raw materials lie at the heart of each supply network. To make yours a Sustainable Supply Network, you need to understand where your company’s raw materials come from and how they are extracted. Each material has an environmental and social implication, whether we are talking about minerals used to manufacture plastic toys, precious metals used to make electronic equipment, leather for furniture, or cotton for the clothing we all wear.

One neglected area I’d like to emphasize is packaging materials, both in the manufacturing process and the final product. There’s more of it than you think. Packaging includes: corrugated boxes used to ship products, folding cartons and plastic bags, labels, shrink sleeve foils, point of purchase (PoP) displays and metal cans. US brands and retailers have realized that it costs lots of money to ship products, and even more to dispose of the packaging/shipping waste. By working with your supply network partners (suppliers, vendors, and factories) to cut your packaging, everyone increases profit.

i. See example of how Wal-Mart is using packaging innovation to reduce waste to lower costs and increase profits (significantly).

9. Transportation

How your company transports its products around the world, from source to factory to warehouse to store, is an important piece of your Sustainable Supply Network.

Transportation can be utilized in the following areas:

a) Freight Ships / Boat – The most common, least expensive way to ship goods from overseas to the US and Canada. While this mode is slower, it has a low carbon footprint, and is more energy efficient. Averages 340 – 570 person-miles per gallon of fuel.

b) Airplane – The most expensive, fastest way to ship our goods overseas, with the highest carbon footprint, and least efficiency. Averages 42.6 – 53.6 person-miles per gallon of fuel.

c) 18- Wheeler Truck – Very common way to ship over land but expensive and a high carbon footprint. Shipping a ton of freight by truck is 35 times more expensive than shipping it over water. Goods from China travel roughly 7000 miles on ship to reach California, but that distance can be covered at the same cost as only 200 miles by truck. Averages 32.2 – 64.4 person-miles per gallon of fuel.

d) Freight Train – Another common way to transport, but can take a long time. While railroads are much more efficient than trucks, shipping by rail is still three times as expensive as shipping by freight. Averages 190.5 person-miles per gallon of fuel.

Hopefully his article gave you a clear and practical understanding of what supply networks are, helped you demystify the complexities of supply networks while giving you a reference for my future articles where I will do deeper into other specific areas. Enjoy.

Please post any questions or comments directly to this blog.

Oren Jaffe is a manager in the Corporate Social Responsibility (CSR) and Sustainable Supply (Chain) Network Solutions group at Intertek, a worldwide quality assurance services company that works with brands and retailers to enable global trade. Previously, Oren co-founded the national business networking organization EcoTuesday Inc., the environmental-consulting firm BlueMap Inc., and worked as a social accountability expert for Bureau Veritas Consumer Products (BV).