April is the cruellest month – what about May and June?

Westminster

“April is the cruellest month” said T.S.Eliot. For me it is. As we have a cold snap I engage in that very British concern of talking about the weather with anyone who will listen. In a broader sense all of us are concerned with climate and particularly the impact that human activity has upon our environment. This week as British politicians prepare for a general election ripped untimely from the womb of Westminster, ignoring the procedure established to prevent such a caesarean breach, we witness the devious political trickery of delaying bad news that might contaminate or infect the chances of winning. It is sanitation, redaction, or plain old whitewash removing any damaging ideas to accommodate the vanity of political self-interest. The diesel car scrappage scheme raised its ugly head like Leviathan rising from the sea to create impending disaster for the party of power. It is best now to deviate, to consider the distant problems of rogue states and take the public gaze there. Meanwhile Alchemists gather in party HQs to forge base ideas on the philosopher’s stone in preparation for publication. Key phrases will be needed to text and tweet! “Brexit means …”, what does it mean? New terms imported from former colonies create colour attacking opposition leaders such as ‘Mugwump’ although I would prefer to see ‘Boris and the Wagmump’ as an addition to children’s literature.

We have now reached that time when general elections induce a news freeze for fear of damage to prospective candidates including seasoned veterans like May (note also the month after April and the one before June). Rather like an episode of BBC Radio 4’s “Just a Minute” there must be no hesitation, deviation or repetition. But this is not “Just a Minute”, it is – Wait a minute, repetition is allowed because that provides opportunity for the Prime Minister and Government Ministers to repeat endlessly what we might not have already grasped – “Brexit means Brexit”. Although no one appears to know what this means, least of all those seated around the cauldron of power, or do they know more than they wish to disclose? Is the economy about to implode? Is this why the incumbent ruling party have pulled the election card early? Well, we may not know the answer to that last question for a year or two. However, what you can be sure to observe in the next few weeks, if you can stay awake long enough to listen carefully, to the endless political debates, is devious manoeuvring. There will certainly be silence at times, mostly after difficult questions get asked. The genesis of new but soon to be broken promises will arrive on a daily basis. Political polls will inevitably be wrong as no one really understands just how accurate they are. Statistical forecasting error appears to be a concept too far for most of the political commentators. Indeed fine margins make forecasts look silly mainly because forecasts are simply that, a forecast. It is not an actual result. So even if accurate, they will be wrong. Political candidates and parties would do well to remember this notion of standard error when weighing up their odds. So too, would political commentators after all they are supposed to be providing the public with informed opinion.

Personally, I look forward to summer. Warmer weather, election ended, long-term happiness beckons, in the knowledge that politicians will look after all my future needs, only a forecast, now that they themselves feel secure in their own jobs for another five, or should that be four, or three, or even two years?

After the 2010 general election, the Cameron coalition government enacted the Fixed-term Parliaments Act 2011 which set fixed term parliaments every five years. The last general election was held on 7 May 2015, and the next due on the first Thursday in May 2020.” Of course we now have one on 8th June 2017 as 2/3rds of Members of Parliament voted to support the call by Prime Minister May on 18th April 2017 (no April fool!).

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Doing the right thing for a sustainable future – 2020 vision is the new supply chain imperitive

sustainability

Poster courtesy Penn State 

Doing the Right Thing, Doing Things Right: Sustainability and Supply Chains

Effective organization requires a focus on doing the right thing. Supply chains are at the center of global trade. Efficiency has been a key focus to improve profitability across the supply chain. This requires organizations to do things right with a focus on lowering supply chain cost. This is of paramount concern to ensure that operations are as efficient as they can be. However, it is only one side of the coin. There is a corollary to this which is that organizations have to do the right things to manage their supply chain effectively. As I say in my Supply Chain Strategies book “Organizations need policies, procedures, and systems to deliver effectively. These three factors need to be sufficiently flexible to respond to the customer if they are to be effective.”[1] It is incumbent that organizations have 20:20 vision and not myopic vision when it comes to both doing things right and doing the right thing.

Those managing end to end global supply chains have an enormous responsibility to preserve and sustain natural resources for future generations. The scientific evidence informing global warming due to human intervention is convincing.

scm-book-cover“The concept of sustainable development has been debated since publication of the Brundtland Report (1987) and the Rio Declaration (1992) following on from the Earth Summit in the same city in 1989. The Brundtland Report noted that ‘critical global environmental problems were primarily the result of the enormous poverty of the South and the non- sustainable patterns of consumption and production in the North’ thus, making the distinction between the developed and developing world. It called for a strategy that united development and the environment, which is now described by the common term sustainable development (World Commission on Environment and Development, 1987).” Hines (2014:323)

Policy Measures

The Rio Declaration (1992) and the Kyoto Protocol (1998) called for action on production patterns that showed increasing toxic waste emphasising the need for renewable energy sources, recognising a growing shortage of water and calling for more sustainable public transport systems.

The largest emissions of greenhouse gasses (carbon dioxide, methane, nitrous oxide, sulphur hexafluoride) and two gases arising from these, hydrofuorocarbons and perfluorocarbons, come from emissions in the industrialised countries of the USA, EU, Russia, China, Japan and India.

The Stern Report (2007) noted that irreversible damage was being caused to the natural world and the ecosystem. It was estimated that there were 30,000 major dams preventing flooding of fertile land to sustain food production for an ever growing global population; in 1750 there were none of any consequence.  As indicated in my book:

 “Water usage has increased from around 1,000 km 3 per year in 1900 to nearly six times that quantity by 2000; fertilizer consumption has increased from a zero base to 300 million tonnes in the same time- period. There are now over 700 million motor vehicles where there were virtually none at the start of the twentieth century and CO 2 emissions have risen by 22 per cent between 1980 and 2000. Furthermore, since 2000 they have tripled over the average from 1990–99.” Hines (2014).

While governments can do much by setting a policy agenda the practice is part of everyone’s responsibility to do as much as we can by doing the right things. We do so in small ways in our domestic lives by recycling waste materials. However, if we manage organizations and especially large organizations we are able to do much more.

Practice

Interventions at every stage of the supply chain can contribute to a better world, one that is sustainable in the sense it is defined in this paper. Establishing and maintaining governance throughout each of the supply chains managed is the starting point. This ensures that partners in the network have a responsibility to be compliant in order to maintain their place in the organization supply chain. This has a dual function to educate and to raise supply chain standards that will achieve a sustainable future. The critical role of first tier suppliers has been identified as an agent of change to achieve this.[2] This may be limited by the resource availability of the lead organization, their abilities and commitment to the ‘triple bottom line’, the power they have to exert on the lower level suppliers and their alignment of the procurement and purchasing activities with sustainability.   Some have argued that it needs to go further than compliance to commitment. [3]

Sourcing strategies need to balance the twin aim of being efficient by lowering cost to ensure profitability but not at the expense of sacrificing sustainable futures if it requires doing the wrong thing. In our changing world customers and consumers are becoming more aware of the need to manage end to end supply chains effectively to be clean, green and sustainable.

Recent research has identified a supply chain position paradox [4]which effectively means that those organizations further down the supply chain that is those closer to the consumer are more likely to invest in supply chain sustainability. One important reason for this is that these organizations are more visible to consumers and are more likely to receive a backlash from them.

Sourcing and procurement strategies have a central role to play in establishing criteria for sustainability. These strategies are closely linked to ethical trading arrangements. If supplies are to be procured from countries where their governments are less concerned with environmental standards and working conditions it cannot be right for global firms to exploit this situation in pursuit of profit alone.  There is a moral obligation to do the right thing. A point made over 250 years ago by Adam Smith. [5]

  1. Hines, T., Supply Chain Strategies: Demand Driven and Customer Focused2014, New York: Routledge.
  2. Wilhelm, M.M., et al., Sustainability in multi-tier supply chains: Understanding the double agency role of the first tier supplier. Journal of Operations Management, 2016. 41: p. 42-60.
  3. Foerstl, K., et al., Drivers of supplier sustainability: Moving beyond compliance to commitment. Journal of Supply Chain Management, 2015. 51(1): p. 67-92.
  4. Schmidt, C., G., K. Foerstl, and B. Schaltenbrand, The supply chain position paradox: green practices and firm performance. Journal of Supply Chain Management, 2017. 53(1): p. 3-25.
  5. Smith, A., The theory of moral sentiments2007 [1759], New York: Cosimo.

 

Fracking mess or sustainable success?

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Fracking is a hydraulic process of extracting energy from geological stores underground particularly gas and oil. The arguments for, suggest that it will add to cheaper sources of energy, is relatively efficient and is sited close to where it is consumed in most cases. Short supply chains and a quick fix to the energy shortages are driving interest. The downside is it requires large quantities of water and chemicals that replace the extracted gas. It is claimed that the process has produced earthquakes and concerns over this aspect remain. The technique has been developed since 1947 and it continues to develop whether it will provide enough energy to keep the lights on is debatable. Many people believe that a return to older sources of extraction and energy generation will be necessary to do that. Germany has invested in coal fired power to keep their lights on. So who’s right?

Most energy produced in developed and developing economies alike still relies mainly on coal. Oil is only number two. So what is the problem with Fracking?

Fracking it has been suggested risks tremors and quakes. However, more importantly it is expensive, not ecologically friendly, non-renewable and warms the planet rather than slow it down. The benefit suggested by proponents of Fracking suggests burning gas emits roughly half of the CO2 that coal would. Research suggests this is not so and the benefits illusory. Pumping water into shale to release trapped gas in the earth releases methane into the atmosphere and this is the problem. Burning coal although releasing sulphur dioxide and black carbon actually cools the planet and offsets the warming effect of the gas it generates by 40 per cent. Fracking would increase warming immediately and take about 100 years to be equivalent to coal.

So is fracking the way to go? The science might suggest not. The potential environmental cost is high while the potential benefits as a solution to medium and longer term energy demand suggest it will make a small contribution to the total energy requirements.

Oil supply in troubled waters!

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One of the biggest challenges facing all governments is energy. As energy exploration increasingly moves to difficult geographical terrain and is moved greater distances in larger volumes there are difficult challenges ahead. Do they have the technology? What is the real ‘cost’ of energy? How are supply chains managed? Are they sustainable? Do consumers care? And what are the environmental challenges?

New methods of exploration and extraction are necessary when oil is beneath ice. Increasingly large oil companies have faced these challenges daily in the Arctic. Technology is built on that developed for North Sea oil with drilling platforms on ice. The estimated cost of the BP ‘Deepwater Horizon’ disaster in 2010 in the Gulf of Mexico is $50 billion. When offshore oil wells blow out they can spue 50/60,000 barrels a day and it is all waste that needs cleaning up as governments with responsibility for the territory fight it out with the oil companies for compensation. Conditions in the Arctic are much more hostile than the Gulf of Mexico. When a spill occurs it is usually detected by satellite-mounted synthetic aperture radar (SAR). The technology is robust and works by bouncing radio waves from an orbiting satellite on the sea. In the Arctic SARs are less use because floating ice behaves just like an oil slick and it is unable to discriminate between them. The current technology is ineffective if there is more than 30 per cent ice cover. In this climate infrared or ultraviolet scanners are required because they can discriminate but they have to be carried and detected by ships or planes. Robot submarines known as Automated Underwater Vehicles (AUVs) are also pioneering detection.

As energy becomes more expensive the growing demand from global industry makes hostile environments more attractive propositions. Risk of disrupting supplies increases as distances become greater to transport energy from its original location to where it is consumed. These disruptions increasingly have included oil spills and the damage that causes to environments. Do consumers care about cost and which cost exactly do they care about? Usually the economic cost and seldom the social or environmental costs unless forced to do so through taxes. Taxation is a means to regulate industry but it is not easy. Boundaries and responsibilities are blurred. Enforcement is weak in neo liberal economies committed to free markets. Penalties are often watered down when it comes to oil. The politics of oil and energy is tricky.