Addressing Supply Chain Challenges in the COVID-19 Era

by Hank Boerner – Chair & Chief Strategist, G&A Institute

Since the concept of a “new world order” helped to usher in a new era in global trade some 30+ years ago with the end of the Cold War, barriers to trade have continued to tumble. “GATT” (the “General Agreement on Tariffs and Trade” continuing rounds of global trade talks that began in 1947 under United States leadership) gave way to the World Trade Organization (WTO) in 1995.  New rules were applied, and trade continued to become “more liberalized”.  Corporate interests responded with dispersal of many their operations.

Large manufacturing companies spread out their sourcing to many new areas of the world, building a substantial network of suppliers in far-off lands. Mid-sized and smaller firms followed the example and began to source globally.  Manufacturing moved from “home country” to be situated in many other countries over time.

As companies set up their operations in many countries and sourced almost everywhere on the globe; fleets of cargo vessels plied the seas with stacks of containers on their decks.

Result:  today’s diverse, complex, spread out networks of tier one, two and three suppliers, and non-home country factories and facilities — many in China and East Asia and Pacifica nations — have dramatically changed the face and very nature of “home country companies” (such as those based in North America and Western Europe).

Therein, we find the risk!  Today we present two commentaries for you on today’s global supply chains and how to make these more links less risky and more sustainable — and to address the inherent risk in the global supply chain mix.

Writing in SupplyChainBrain, David Cahn suggests “…it is essential for companies and their supply chains to realize that customers prefer to engage with organizations that are focused on environmental sustainability. Significant opportunities exist for leveraging people, processes and technologies to achieve operational efficiencies.”

He suggests five steps in “the Pursuit of Sustainability” that spans the corporate enterprise.  His five areas “ripe for improvement” include: sourcing; manufacturing; recycling; packaging; transportation. There are numerous tips in each of the categories that may be of value to your organization in his commentary.

Author David Cahn is global marketing director for Elemica, a Digital Supply Network for manufacturers that automates and provides visibility into supply chains.

Visibility and understanding the risks inherent in supply chains is important and our second commentary for you comes from our colleague Pam Styles, who poses the question:  “what’s in your supply chain mix”?

The COVID-19 pandemic has exposed countless concerns for corporate managers, and for investors and providers of capital — including global supply chain management issues, Pam writes.  And, she suggests, ESG/sustainability practitioners may be able to offer unique vantage to assist the debrief in collaboration with company supply chain experts and management teams.

Her comments are directed at investor relations officers (IROs) who are on point to answer analyst and investor questions about supply chain risks and issues as well as to corporate ESG practitioners.

Pam concludes: When it comes to Sustainability – climate change is important but supply chain is urgent.  Pam is a long-time Fellow of G&A Institute and a valued collaborator on client projects. She is a long-time member of NIRI and the NIRI Senior Roundtable.

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The Pursuit of Sustainability Spans the Enterprise
Source: Supply Chain Brain – These days, it’s essential for companies and their supply chains to realize that customers prefer to engage with organizations that are focused on environmental sustainability. Significant opportunities exist for leveraging…

Corporate ESG Stakeholders – Supply Chain Management – What’s in Your Supply Chain Mix?
Pam Styles commentary in G&A Institute’s Sustainability Update blog:
Does your company regularly review and remediate identifiable aggregate risks across the company’s supply chain and associated third-party relationships?

 

Corporate ESG Stakeholders – Supply Chain Management – What’s in Your Supply Chain Mix?

By Pam StylesG&A Institute Fellow

The current COVID-19 pandemic has exposed countless concerns, including (global) supply chain management issues near the top of the list.

Public and private-sector professionals and officials are soon to be attempting to get economies back up and running. Following Herculean and likely imperfect restart efforts, it will be important to debrief supply chain systemic failures and risks that have been exposed during the pandemic crisis.

ESG/Sustainability practitioners may be able to offer unique vantage to assist the debrief in collaboration with company supply chain experts and management teams.

Well-established ESG tracking practices and voluntary reporting frameworks, such as GRI (est. 1997) and CDP (est. 2000), could possibly be used to expand internal information sharing and analysis to augment internal supply chain risk assessments, monitoring and oversight capabilities.

ESG reporting frameworks are not necessarily a perfect fit or infallible, however they could potentially provide existing information platforms from which to add and/or improve accessible reporting, analysis and assessment, and executive leadership observation in a multitude of strategic (multi) sourcing risk assessments and repositioning exercises to come.

As we all try to learn and make important changes going forward, important questions to ask:

What do you know about your company’s suppliers’ supply chain, their suppliers, and so on?

The Business Continuity Institute, Zurich Insurance Company and others have been raising the red flag for years that too many companies do not have full visibility of their supply chain, nor the ability to fully track components through the full vertical supply chain.

Just a few recent examples of how reality has suddenly struck some pharmaceutical, consumer products and electronics companies (the list of other sector impacts can go on):

  • U.S. Pharmaceutical supply chain dependencies on China were well known at high levels prior to COVID-19, but effectively nothing was done about it and consumers were unaware of the looming risk.
  • Consumer Products giant Procter & Gamble indicated 17,600 products could be affected by Coronavirus in China.
  • Apple is dealing with pandemic-driven supply chain and sourcing woes.

Back in 2008 PwC published a fascinating paper about German companies supply chain sourcing practices in China, in which it suggested companies take a closer look at their KPI’s.

Who should raise warning flags and influence corrective supply chain action?

Supply chains can be very complicated with many layers or tiers, all the way down to original raw materials source. Aggregate supply chain geographic risk management is surely challenging.

As a specialist at well-known Gartner Supply Chain observed, “COVID-19 should be a wake-up call to boards of directors, CEOs and supply chain leaders that being well prepared for disruptions, regardless of their cause, is not an optional extra. It is a business necessity.

Companies are learning painful lessons in the shortcomings of legal boilerplate risk disclaimer language in situations like today’s. These lessons should compel executive leadership and Boards to step-up their efforts and investment in overseeing supply chain strategy and active risk management mitigation.

Does your company regularly review and remediate identifiable aggregate risks across the company’s supply chain and associated third-party relationships?

As recently pointed out in a COVID-19 related article by another G&A Institute Fellow, Daniel Goelzer, “Internal auditors are missing key risks.” He went on to observe,

“The Institute of Internal Auditors (IIA) has released its annual survey of Chief Audit Executives. The 2020 North American Pulse of Internal Audit “reveals serious gaps in internal audit’s coverage, with audit plans deficient in key risk areas.”

“For example, the IAA found that almost one-third of respondents did not include cybersecurity/information technology in their audit plans. In addition, more than half did not include governance/culture or third-party relationships, and 90 percent did not include sustainability.”

Postulating that the professional supply chain management tools kit is loaded with granularity to boggle the mind, it is fair to suggest the possibility that the many different tools may inadvertently complicate aggregate risk assessments.

Thus, we should think about whether there might be an opportunity for ESG/Sustainability professionals to constructively share their inherently top-down vantage and tools kit to assist companies with additional angles for risk assessment and oversight.

Brainstorming how the growing mainstream ESG/Sustainability field can help:

One gets a strong sense that professional supply chain experts across the board are now committed to re-engineer their collective body of knowledge and management resources to truly understand–down to the last pharmaceutical raw ingredient source, medical gear and equipment–the geographic and geo-political risks of their companies’ product vertical manufacturing and supplies.

First, let’s acknowledge that professional supply chain experts have a lot of knowledge, skills and complex management tools at their disposal that those outside their discipline know little about.

Second, kudos to the U.S. Army Corps of Engineers for their brilliance and ingenuity. Their recent reminder to all of us that, when a problem is large and complex and a fast solution is needed, it’s worth remembering the “keep it simple” concept.

Their challenge: emergency need to rapidly expand hospital bed and critical care capacity in multiple locations across the country.

Their solution: work with the infrastructure already there – large convention centers, empty hotels, and the like – and quickly retrofit them to meet the hopefully short-term surge capacity needs.

So now let’s apply the “keep it simple” concept, to think about what infrastructure we already have that can be efficiently and effectively adapted to immediate re-purpose, constructive to supply chain risk management.

Pre-dating the world’s awareness of the coronavirus COVID-19 crisis, the Global Reporting Initiative (GRI) stated in an article published November 15, 2019, that it “recognizes that joining the dots between corporate reporting and the practical changes needed to promote transparent supply chains can be challenging.”

In that same article, GRI announced its new two-year business leadership forum to help businesses work through challenges to bridge the gap between supply chain management and reporting. Your company may already use or be familiar with the GRI reporting framework.

Specific to supply chain, you might take another look at three GRI KPI sub-series: 204 – Procurement Practices, 308 – Supplier Environmental Assessment, and 414 – Supplier Social Assessment.

GRI is the oldest and most widely recognized voluntary ESG/Sustainability reporting framework and provides a wide range of supply chain related leadership interaction. It has alliances and synergies with the ISO certification standards and CDP, among other organizations.

Hence, GRI could be a robust resource to turn to for facilitating internal supply chain risk discussion, brainstorming and improvement.

CDP, originally known as the Carbon Disclosure Project, has grown beyond carbon to include a host of other key sustainability topics including supply chain. Several germane excerpts from the CDP Supply Chain Report 2018-2019:

  • Companies’ supply chains create, on average, 5.5 times as many greenhouse gas emissions as their own operations. (This hints at the veritable iceberg of suppliers beyond the companies’ direct control.)
  • Having a single, common disclosure platform is also proving to be beneficial. Amongst program members, 63% are currently using, or considering using, data from CDP disclosures to influence whether to contract with suppliers or not.
  • Managing supply chain risks, impacts, and capturing opportunities for sustainable value creation is complex. However, the fundamental steps are common across all organizations: understanding, planning and implementing. Learning from outcomes is essential in order to deepen and broaden the value of a Supply Chain strategy.
  • This year a record number of companies submitted disclosures on climate change. CDP supply chain members made requests to 11,692 suppliers, with 5,545 responses received from businesses headquartered across 90 different countries. This is a 14% increase on the 4,858 responses received in 2017.

Taking inspiration from the U.S. Army Corp of Engineers, a serious question to ask is whether either or both the existing GRI and CDP reporting and data analysis infrastructures could be used (1) ingeniously for a foundation from which to build or expand distance and country concentration inputs to provide additional foundation for sourcing risk analysis and oversight capabilities for companies, as well as (2) to facilitate improved global commerce and public stakeholders supply chain risk awareness?

Concluding Encouragement

To ESG/Sustainability practitioners:

Your reporting frameworks, databases and analytical tools may be well-positioned for collaborative solutions to help companies identify and address deep-tier supply-chain risks — both immediate (public health/safety) and longer-term (climate change) — that can and should now rise to a higher level of scrutiny.

When it comes to Sustainability – climate change is important, but supply chain is urgent.

Pamela Styles – Fellow G&A Institute – is principal of Next Level Investor Relations LLC, a strategic consultancy with dual Investor Relations and ESG / Sustainability specialties.

Principles to Guide Company Managements in the COVID-19 Era from the World Economic Forum (WEF) – The “Davos” Leaders

G&A Institute Team Note
We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the coronavirus emergency.

This is post #13 in the series, “Excellence in Corporate Citizenship on Display in the Coronavirus Crisis.”  #WeRise2FightCOVID-19   “Corporate Purpose – Virus Crisis”  –  April 7 2020 

By Hank Boerner — Chair & Chief Strategist – G&A Institute

The World Economic Forum – “Davos” – issued principles on April 1st on Corporations and the Upholding of Stakeholder Principles in the Virus Crisis

Leading CEO’s around the globe got a communication from the World Economic Forum (“Davos” in shorthand) urging the following of Stakeholder Principles in the COVID Era.

The business community’s contribution in the global pandemic, say the leaders of the WEF “Covid Action Platform”, is to be leaders of responsiveness and stewards of resilience.

And — to cooperate and collaborate in managing the corporate community’s response to help society deal with the global emergency and work towards economic recovery.

To those ends, the platform Stakeholder Principles set out for business leaders are:

  • To employees, our principle is to keep you safe.
  • To our ecosystem of suppliers and customers, our principle is to secure our shared business continuity…to keep the supply chains open and integrate supply partners in the firm’s business.
  • To our end consumers, our principle is to maintain fair prices and commercial terms for essential supplies.
  • To governments and society, our principles is to offer our full support…standing ready with resources, capabilities and know-how.
  • To our shareholders, our principle remains the long-term viability of the company and its potential to create sustained value.

And…we must also maintain the principles and we must continue our sustainability efforts unabated, to bring our world closer to achieving shared goals, including the Paris climate agreement and the UN SDGs agenda.

By doing all we can, say the WEF leadership, and coordinate our work, we can ensure that our society and economy get through this crisis – and we can mitigate the impact on all of our stakeholders.

The signatories of the letter to CEOs:

  • WEF Founder Klaus Schwab (he’s executive chair);
  • Brian Moynihan (CEO of Bank of America and Chair of the WEF International Business Committee);
  • Feike Sijbesma (Royal DSM, Special Envoy on Coronavirus, Dutch Government) , and Jim Snabe (Chairman, Siemens and Maersk), the Co-Chairs of the WEF Impact Committee.

The WEF leaders stress that CEOs should continue to embody “stakeholder capitalism” to help secure a common prosperity.

CEOs receiving the letter were asked to support the WEF global effort to manage the economic impact in the COVID-19 era.

Link to the Covid Action Platform document: http://www3.weforum.org/docs/WEF_Stakeholder_Principles_COVID_Era.pdf?mod=article_inline

The WEF also circulated a 6-page “Workforce Principles for the COVID-19 Pandemic – Stakeholder Capitalism in a Time of Crisis” white paper. This is especially timely as corporate HR managers and others focus on Human Capital Management (HCM) in a time of crisis.

Link: http://www3.weforum.org/docs/WEF_NES_COVID_19_Pandemic_Workforce_Principles_2020.pdf

Our December 3, 2020 profile of the World Economic Forum (WEF) / Davos conveners with focus on Corporate Citizenship topics is in the blog at: http://ga-institute.com/Sustainability-Update/the-world-economic-forum-on-corporate-citizenship-topics-with-focus-on-the-fourth-industrial-revolution/

G&A Institute Team Note
We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.

New items will be posted at the top of the blog post and the items today will move down the queue.

We created the tag Corporate Purpose – Virus Crisis” for this continuing series – and the hashtag #WeRise2FightCOVID-19 for our Twitter posts.  Do join the conversation and contribute your views and news. 

Do send us news about your organization – info@ga-institute.com so we can share.   Stay safe – be well — keep in touch!

Is There a Trend of Greenwashing in the Fashion Industry?

By Reilly Sakai – Sustainability Analyst at G&A Institute

Despite being identified by some as one of the top contributors to impact on society’s environmental and social issues, on close inspection we could say that the fashion industry continues in 2020 to lag behind other sectors when it comes to a close review of the industry’s sustainability efforts.

The positives: Some major apparel industry players have or are attempting to create strategies and initiatives to reduce plastic and improve the sustainability of their supply chain.

However, in reviewing industry performance overall, it can be difficult to parse through which initiatives are actually making a difference — and which are simply an example of greenwashing, especially given the lower rate of disclosure of ESG emissions by prominent companies’ reporting.

Solutions? What Steps To Be Taken?

So, we can ask, what steps must be taken now — both at the company and the consumer level?

We can ask this question: Is it possible for an industry that so depends on continuous consumption of its products (clothing) to become more sustainable?

The fashion industry is reported to be responsible for more carbon emission than all international flights and maritime shipping combined — “producing 10 percent of all humanity’s carbon emissions” (source: UNEP, 2018).

The apparel industry is also the second-largest consumer of the world’s water supply — after fruit and vegetable farming, which can be very intensive in terms of water use (source: Thomas Insights, 2019).

And, among the challenges, it’s reported that up to 85% of textiles end up in landfills rather than being recycled or upcycled (UNECE, 2018).

Between 2000 and 2015, clothing sales increased from 50 billion units to over 100 billion units, while utilization of clothing (the average number of times a garment is worn) dropped 36% during the same timeframe (Ellen MacArthur Foundation, 2017).

These figures are nothing to scoff at as various sectors and industries move toward less water use; less waste to landfill; more recycling and re-use, among many measures adopted throughout industries.

Is the Fashion Industry Drive to Sustainability Slowing Down?

And yet, according to the Pulse of the Fashion Industry report from the year 2019, sustainability efforts in the industry appear to be slowing down rather than accelerating to address these issues.

In GRI’s Sustainability Disclosure Database, there are currently 248 organizations that fall in the textiles & apparel sector worldwide. Put that in perspective of the total 14,476 organizations in the database.

That’s less than 2% of reporting organizations in the textile & apparel sector. In the sector, there are just 80 GRI Standards industry reports, vs 4,089 GRI Standards reports in the database as a whole.

Given the rate at which the global fashion industry has been growing (before the coronavirus emergency) – more people, more apparel, more income, etc) — we might conclude that companies in the industry have simply not been doing enough to offset their well-charted detrimental environmental impacts.

So what to do now? We know that the fashion industry is important in terms of global economic impact and employment, and creativity – while also being a top contributor to waste, greenhouse gas emissions, water pollution, and an array of other negative environmental factors.

Incentives For Changing – Lacking

Today, there aren’t major economic or societal incentives in place for apparel companies to make real changes.

It’s going to take a lot of time and effort, not to mention considerable investment, to switch factories in which clothes are produced and polluting or violating human rights and so on (to address key ESG issues).

And it’s also quite difficult to have real transparency at every level of the apparel and footwear global supply chain to help to ensure a more sustainable production process.

Consumer Tastes – May Make a Difference. Maybe.

Moreover, while many consumers are now starting to buy what they believe to be the more sustainable products in many categories including fashion, very few consumers are apparently willing to pay more for them — or have the time or means to investigate every company’s sustainability initiatives and track record before making their purchase (Source: Pulse of the Fashion Industry, 2019).

Since it’s so much quicker and cheaper to do, companies instead may turn to marketing messaging that tells their customers that they are working towards a more sustainable future — without actually doing much or even anything in reality.

What Leading Companies Are Doing – the Positives

There is good news.  The “we are sustainable” message has begun to sell well and customers have been moving to certain apparel brands that are promoting a sustainable vision — without the buyer being able to (at point-of-sale) fact-check a company’s claims. That is the reality of at-market sales.

We can begin by taking a look at Everlane, which touts “radical transparency,” but doesn’t actually divulge the name of the factories in which its garments are produced.  So we don’t know what is going on there.

Patagonia, on the other hand, is considered best-in-class, offering repair and buyback programs in order to promote a circular economy, and has a multitude of policies and systems in place to ensure they’re doing everything they can to protect the environment and people who work at or interact with the company.

Nike, similarly, has done a lot to improve their supply chains over many years, using innovation as a driver for sustainability.

Rather than increasing factory audits to ensure that workers are wearing protective gear, Nike engineered a non-toxic glue so protective gear is no longer needed.\

Nike’s flyknit sneaker vastly reduced the amount of material needed to construct a shoe, meaning lower costs and less waste.

Other brands, from Adidas to Puma, have followed suit.

On the luxury end, Eileen Fisher has been a staple of sustainable clothing for decades, sourcing environmentally friendly materials, offering a buyback program, upcycling old materials into new garments, and sharing the wealth with all of her employees by offering a comprehensive ESOP.

Looking to the Future to Protect the Planet

With our Planet Earth’s environmental situation growing ever more dire, it is critical for the fashion industry — now! —  to encourage and make major changes — but convincing individual corporate leadership that this is a worthwhile investment is no small feat.

Because of the higher costs typically associated with implementing sustainability initiatives (or at least the perception of higher cost), overhauling a company’s entire supply chain is quite challenging.

Many fashion companies do not find it feasible in this competitive pricing environment to raise their prices or cut into their margins, especially when they continue to see the industry growing at such a swift pace year-over-year.

Perhaps more and more companies will consider Nike’s successful approach. That is, increasing spending in R&D as opposed to marketing, which has major potential to decrease costs and increase margins in the long-term, while improving their ESG efforts at the same time.

In my opinion, it’s going to probably take some form of public sector intervention or a mass consumer revolution or some similar dramatic action to influence the bulk of the fashion industry to move toward a truly sustainable future – and one of those things might happen sooner than later.

The leaders in corporate sustainability in the industry will be the major beneficiaries when the tide turns.

* * * * * * * * *

Reilly SakaiReilly Sakai is a sustainability analyst at G&A Institute; she began her work with us as one of our outstanding analyst-interns in grad school. She is completing her MBA program in Fashion & Luxury at NYU Stern School of Business, where she is specializing in Sustainable Business & Innovation, and, Management of Technology & Operations. She has been working with NYU’s Center for Sustainable Business on an independent study that explores environmental sustainability in apparel manufacturing.

Important Crisis Talk About PPE – Personal Protective Equipment – Excellence in Corporate Citizenship #3

by Hank Boerner – Chair & Chief Strategist – G&A Institute and the G&A team   — continuing a new conversation about the corporate and investor response the coronavirus crisis…continuing the second week of the conversation…   Post #3 – March 23 – first of two 

Introduction
These are the times when actions and reactions to crisis helps to define the character of the corporation and shape the public profiles of  each of the corporate citizens. For companies, these are not easy times.

Many important decisions are to be made, many priorities set in an environment of unknown unknowns — and there are many stakeholders to be taken care of.

The good news:  Corporations are not waiting to be part of the solution – decisions are being made quickly and action is being taken to protect the enterprise.  This is no easy task while protecting the corporate brand, the reputation for being a good corporate citizen, watching out for the investor base and the employee base — and all stakeholders.

What are companies doing? How will the decisions made at the top in turn affect the company’s employees, customers, hometowns, suppliers, other stakeholders? Stay tuned to our continuing commentary.

* * * * * * * *

Important Crisis Talk About PPE – Personal Protective Equipment

About those face masks…”PPE’s” for this conversation include protective clothing, gowns, face shields, goggles, face masks, gloves, and other equipment designed to protect the wearer.

These could be those PPEs especially designed for medical use (such as for use in surgery or dentistry) that are fluid-resistant, loose-fitting and disposable, for example. Many of the devices are regulated such as by FDA, or reviewed and registered with the agency.

Or the N95 that many refer to could be the ubiquitous industrial mask, tye disposable type, used in many industries.  It’s important to note that the medical version (“S”) is desperately needed in the medical crisis, of course.

And the corporate sector is stepping up to fill the gaps.

Many PPE items are in short supply. Right now, FDA is collaborating with manufacturers of surgical masks and gowns to “better understand” the supply chain issues related to the outbreak, and to deal with widespread shortages of products.

The U.S. government has strategic stockpiles of surgical (medical) N95s filtering facepiece respirators that exceed the manufacturers’ recommended “shelf life” — and so the Agency is considering whether or not to release the equipment during the crisis.

The good news is that many of the devices tested should provide the expected level of protection to the user. This varies by manufacturer and shelf life.

Manufacturers identified by CDC in its communications include 3M, Gerson, Medline/Alpha Portech, Kimberly-Clark, and Moldex. Other makers include Cardinal Health, Ansell, DACH, CM, Hakugen, Shanghai Dasheng, Yuanqin, and Winner. The CDC is providing guidance at: https://www.cdc.gov/coronavirus/2019-ncov/release-stockpiled-N95.html 

(Note: Kimberly-Clark also produces toilet paper, towels and diapers – items flying off consumer shelves these days.)

The N95 industrial mask is a different situation than the “s” model designed for medical use, since the N95 model is made for industrial and construction use (as examples) and not for medical care.

In a crisis such as this one, “something” would be better than nothing, or having medical workers fashion masks out of materials to try to be safe.

The “perfect” solution here would be the enemy of the good, as the saying goes. And so millions of N95 are pressed into action and industry is responding with donations.  And companies are in high gear to produce masks.

Background: With the masks generally in short supply, the Centers for Disease Control (CDC) is saying that the usual N95 respirators are not recommended for use by the general public to try protect themselves from respiratory diseases, including COVID-19. Also, people who are well should not be using surgical (face) masks to protect themselves from the virus.

Worn properly, the surgical mask (the “s”) can help to block large-particle droplets, splashes, sprays or splatter containing viruses or bacteria – but not small particles in the air transmitted by coughs, sneezes or medical procedures because of the loose fit (face mask, on the face). And the masks are suggested to be used just once and then discarded.

N95 Respirators generally are protective devices designed to achieve a fit tight and serve to filtrate airborne particles, exceeding the protection of the face mask. The design forms a seal around nose and mouth – as explained, there are both industrial and surgical version.

The industrial version is used in construction, food preparation, manufacturing, etc. The surgical version is the N95s, tested for various medical applications. Manufacture of these devices is regulated.

The N95s is in great demand for healthcare workers and the CDC is urging “conservation” of surgical masks and gowns (such as use of reusable gowns vs. single use) while supplies are being made available to medical professionals.

* * * * * * * *

3M – 24/7 Production Lines In Action

The company is the largest producer of the N95 respirator face mask – the global output was just upped to the target of 1.1 billion or 100 million monthly. Inside the U.S. the company makes 400 million-plus N95’s in a year. Investment is now being directed to produce 30% more over the next 12 months.

The company is advising consumers not to show up in stores for the masks  – production should be directed to the front lines, those caring for coronavirus-infected patients.

In response to the crisis, 3M is striving to produce 100 million masks per month going forward (the global output). Current production is 35 million per month. Healthcare workers will receive 90% of the production, and the rest will go to other sectors of the economy (like food, energy, pharm companies).

This week 500,000 respirators are going to sent to New York State/City and Seattle. The company also produces hand sanitizers, disinfectants and filtration solutions, and is working with government officials, customers and distributors worldwide to address the supply issue.

* * * * * * * *

Honeywell is expanding production of masks at its Smithfield, Rhode Island eye protection products plan to make N95 masks – and hiring 500 workers immediately to support the effort. The products will go to the U.S. Department of Health and Human Services for the national stockpile. (VP Michael Pence talked about this in the weekend briefing – orders for “hundreds of millions of masks” were placed through the Federal Emergency Management Agency.)

* * * * * * * *

Dr. Anthony Fauci (head of NIH Allergy and Infectious Disease) said fresh supplies of masks will be reaching medical professionals in days, not weeks.

Note that the U.S. Congress expanded the U.S. PREP Act to ensure both types of N95 respirators will be available to hospitals and healthcare workers.

* * * * * * * *

Challenge: Mike Bowen, principal of Prestige Ameritech (a mask maker in Texas), told The New York Times that 95% of face masks are made outside of the U.S. including by U.S.-headquartered companies that moves production offshore. He’s getting 100 calls a day now for his products.

Challenge: Even for those companies making masks in the United States, we cite the example of Strong Manufacturing in Charlotte, North Carolina, making of 9 million masks each month. The raw materials come from Wuhan, China – ground zero of the coronavirus outbreak. The materials are not arriving (yet) – the boxes are on the dock in China.

Challenge: Just one facility here in New York City (the Columbia-Presbyterian system typically would use 4,000 N95 makes per day — and is now using 40,000 per day and expecting to double that in the crisis.

 * * * * * * * * 

And so — the Corporate Sector Responds

Apple:  CEO Tim Cook is going to donate millions of masks to healthcare workers in the U.S. and Europe (according to his weekend Tweet) – Vice President Michael Pence said that on the weekend White House Task Force briefing and the company CEO then confirmed this:

“Our teams at Apple have been working to help source supplies for healthcare providers fighting COVID-19. We’re donating millions of masks for health professionals in the US and Europe. To every one of the heroes on the front lines, we thank you” (CEO Tim Cook).

Tesla – CEO Elon Musk donated a truckload of PPEs (masks, gowns etc) to a UCLA Health center in California. We know this from Twitter tweeting. Musk told California Governor Gavin Newsom that 250,000 masks will be donated to California hospitals.

Hanes Brands – President Donald Trump at the weekend briefing talked about Hanes, the clothing maker, that is retrofitting factories to make face masks. The goal is to make 1.5 million masks a week, and working with Parkdale Mills America (they make the yarn for Hanes) and a consortium of companies, will ramp up to 5-to-6 million makes every week.

The company’s experts in supply chain and product development worked with the U.S. Department of Health and Human Services to develop the products and FDA has given its approval to masks that are not the traditional N95 but a prototype that can be used in N95s are not available.

The Hayner Hoyt Corp, a local company doing construction work at St. Joseph Health, in Syracuse (upstate New York) donated 1,200 face masks to the hospital. “I encourage other construction businesses and construction supply companies to see if they have any PPE that they can give to our healthcare providers during this critical time,” says the firm president, Jeremy Thurston. The hospital itself has reached out to doctors, dentists and vet offices to ask for donations of masks, gowns, eyewear, thermometers and other PPEs – something we will be seeing all over the nation to help to meet local shortages.

* * * * * * * *

G&A Institute team note: We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.

The new items will be posted at the top of the blog post and the items today will move down the queue.

We created the tag “Corporate Purpose – Virus Crisis” for this continuing series – and the hashtag #WeRise2FightCOVID-19 for our Twitter posts.  Do join the conversation and contribute your views and news.

Send us news about your organization – info@ga-institute.com so we can share.   Stay safe – be well — keep in touch!

 

Advanced Manufacturing in the Era of Greater Corporate Sustainability – Here’s “Industry 4.0” From the World Economic Forum

by Hank Boerner – Chair & Chief Strategist – G&A Institute

The 18th Century British song title goes, The World Turned Upside Down. American legend has it that at the end of the War of Independence with the American colonists winning the conflict, the British military played the song with the apt title at Yorktown, Virginia as they surrendered.

We can apply that song title to important developments in the global world of manufacturing in the 21st Century. Important news from Davos is the basis of our commentary here.

The mantra Take, Make, Dispose has been the traditional approach of many manufacturing firms over the many decades of the modern industrial revolution.

It’s 110 years and counting since entrepreneur Henry Ford set up his modern factory in Detroit with the assembly line bringing the car to the factory hand — rather than the worker walking around to find the car and install his component.

Are we in now in Phase One of dramatic change? Phase Two? Three?  The World Economic Forum discussions center on Phase Four – as in, the Fourth Industrial Revolution. And part of that is the focus on achieving greater sustainability in industry.

Discussions and presentations at the WEF annual meeting in Davos, Switzerland always brings forth new ideas, new concepts, new approaches to topic areas such as manufacturing and production. 

The WEF Advanced Manufacturing and Production Initiative has been addressing many issues, including using data and 3-D printing and new materials to foster innovation, and supporting the widespread adoption of “inclusive” technologies.  What does that mean in practical terms?

Furthering the discussion that got underway in 2019, this year the Davos gathering’s participants were treated to a presentation focused on “Industry 4.0” for manufacturing a more sustainable world by a corporate CEO, whose ideas for “four simple solutions” that can help make the global manufacturing industry more sustainable. 

We bring you today CEO Ric Fulop’s “four” simple solutions:

First, the Desktop Metal CEO advises, companies can move to “tooling-free” manufacturing, eliminating scrap. Eliminating tooling can mean use of less parts and fewer products whizzing around the globe; only raw materials would be shipped, creating a more efficient supply chain. (And a more sustainable / less polluting global transport network for manufacturers.)

Second, the spreading out assembly of today can be consolidated, to achieve fewer, more multi-functional assemblies (meaning less parts to transport, saving energy, reducing emissions, saving money). Three-D printing can make contributions here, many experts say. More customization is also more possible with 3-D methods.

Third, “generative design” can open new ways to use artificial intelligence (AI) and mimic nature in some ways; 3-D printing is key here, because new design tools can help industry use fewer natural resources and manufacture lighter weight components for cars and airplanes – lowering carbon emissions in manufacture and long-term product use. And then…

Fourth, circular manufacturing and the use of new polymers moves us closer still to a process where parts are designed to fit into sustainable loops for re-use over and over. 

The Potential Impact on Vehicle Design & Manufacturing

Imagine a time (soon?) when automobile / vehicle parts and components live a very long life, to be used over and over in a line of future new vehicles, as well as live longer “first” lives upon manufacture and use.

Longer use is a fit with current practice — people are now keeping their autos much longer these days and this approach could stretch out vehicle use for years after purchase.

Think of “re-purchase” of your car, with parts and components being re-used in assembly along with the new toys and gadgets that impel us to purchase “the new”.

The post-WWII industrial approach of “planned obsolescence” would be going away. That does not have to mean that auto makers would suffer loss of market; there will always be the new new thing on wheels, but the parts etc may be in their second or third of fourth life!

Henry Ford, the Ford Motor Company founder, not only perfected the process of automobile manufacturing, he took advantage of, and helped to further advance, important materials and components of the car.

Henry Ford-Master Tinkerer

Think of the company’s use of metals / metallurgy; glass; paints; engine blocks; driveshaft components and innovations; fabrics & leather; electrical parts and systems; rubber (tires, fan belts); lighting systems — all present in the Tin Lizzy, the famed Model T, with millions of these cars and T-trucks putting Americans on the road to the future.

Materials in manufacturing are still key; various metals, ordinary and exotic, most long used in modern manufacturing, may over time give way to the use of advanced polymers that are more environmentally-friendly and perfectly suitable for the evolving circular economy. (They don’t rust or get tossed out too soon in the useful life.) Goodbye, auto graveyards at some point.

That old ’56 Chevy or ’69 Pontiac or ’40 Ford that you always yearned to have? Those cars’ future descendants may some day be assembled from parts that date 50 or 60 years back or so.

WEF Lighthouse Companies

The WEF’s concept of developing a network of “lighthouse” companies that would develop the way forward was unveiled in 2019.

Companies in such industries as chemicals, automotive, textiles, healthcare, and electronics would collaborate to develop more efficient processes along the lines outlined here.

The “Platform” developed by WEF today includes 130 organizations from 22 industry sectors, governments, academia and civil society working together. 

One of the participating companies is Desktop Metal; Founder/CEO Ric Fulop described for you the “four simple solutions” above — and in this week’s Top Story.

Top Story

4 ways the way we make things can change for a sustainable world    
Source: World Economic Forum – The way we make things is changing. But the Fourth Industrial Revolution isn’t solely about how new manufacturing technologies, like 3D printing, will benefit companies and consumers. It’s also about how industry can usher in a…

More on the World Economic Forum’s “Shaping the Future of Advanced Manufacturing and Production” is available at: https://www.weforum.org/platforms/shaping-the-future-of-production

Find this blog post interesting? I explored Henry Ford’s tinkering and the impact on America in a post: https://www.hankboerner.com/staytuned/the-21st-century-company-and-you-iteration-innovation-progress-and-the-now-very-familiar-disruption/

Fashion, Style, Brand and Sustainability Are Today’s Coupling Terms Now for a Growing Number of Consumers…

by Hank Boerner – Chair & Chief Strategist, G&A Institute

We’re all consumers of one type or another.

We buy a variety of food and beverages, the latest electronic products, and an assortment of apparel and footwear products as needed — or desired!. 

So the questions come to mind…

What are you wearing?  Is it fashionable?  Stylish? And sustainable (as a product you want or need)?  Sustainably and responsibly produced?  In a global (mostly invisible) supply chain that you could say with certainty is “well supervised and responsibly managed”?

Do you identify yourself with the brand’s culture, ethos and sustainability and the praiseworthy efforts of the maker or the retailer in their declarations to the marketplace? 

Do you make sustainability a conscious buying decision?

A growing number of apparel & footwear brand producers/marketers are counting on “yes” answers to these questions.

In our monitoring of news and feature content from around the world and many prominent and not-so-prominent sources, we have been seeing a significant amount of content related to “fashion” and “sustainability” being coupled (as it, taken together as a given, like human nature (human + nature – a natural coupling).

The big bold industry and brand marketing names are part of the conversation: Victoria Beckham, Stella McCartney, Tommy Hilfiger, Gucci, and H&M are focused on sustainability and delivering the fashion + sustainability sales message in the coupling efforts (details in our story selections).

We’re presenting our “capture” of fashion and consumer-buying content this week in our Top Stories in the newsletter. 

In our constant monitoring we are seeing the trend in other consumer-facing areas of industry – in autos, toys, and a variety of food products and ingredients (palm oil, coffee beans, seafood/harvests of the seas).

The good news for society is that many more corporate leaders recognize the timely opportunity for their company to demonstrate that their company’s strategies and processes, and products & services offered in both consumer and B-to-B markets are “sustainable & responsible” … as now more frequently explained in the company’s sustainability report, in the 10-k, proxy statement, on its web pages…and on their products’ labeling. 

In this week’s Highlights newsletter we bring you a selection of the many news and feature stories focused on consumer marketing with a sustainability theme.

The range of coupled content (our product + sustainability) is growing by leaps and bounds and we try to select the most topical and informative content for you.

On coupling:  the best-selling author Malcolm Gladwells’s newest book is “Talking to Strangers”, a great read, we recommend. 

He explains why we are so overwhelmingly trusting of others (the strangers) as a basic human default and the concept of “coupling” — certain circumstances that can make certain assumptions, assertions and claims ring true for us.  

This comes to mind the acceptance of apparel, footwear and other brand marketers’ claims about “sustainability” in product and/or production. 

We are eager to invest belief in the claims. But do the facts support the claim?

Gladwell’s insights are terrific to contemplate as we receive the messages about sustainability from some brand marketers.

Top Stories

Fashion Brands Take Sustainability Further for Spring 2020
Source: Forbes 

Exclusive Q&A: Why Retailers Should Embrace Sustainable Supply Chains
Source: Retail Touch Points 

Why Sustainability Should Be Top of Mind for Retailers This Holiday Season
Source: Yahoo

Consumers want to buy sustainably—they just don’t know how
Source: Fast Company 

How Sustainability Became the Future of Retail
Source: Footwear News

Consumers Want to Buy Sustainably, but They Often Don’t
Source: Architectural Digest 

The Best 11 Brands for Sustainable Vegan Sneakers
Source: Love Kindly 

How can shoppers make sense of sustainable fish labels?
Source: The Guardian 

What Does “Sustainability” Mean to Manufacturers? Ingersoll Rand Helps to Explain Through Operations & Products

One of the long-term success stories in U.S. manufacturing is that of Ingersoll Rand, with history dating back to the 1870s as the Industrial Revolution gained great momentum in North America.

The company’s products were needed by other industrial revolution companies (such as compressors), by mining companies (rock drills), and in various elements (locks and more) of the b-to-b market.  When the Panama Canal was being built by the U.S., Ingersoll Rand drills were on the job. 

Over the decades numerous industrial companies were acquired, with technologies and products added – including such well-known names as Clark Equipment Company, Trane, Thermo King, Dresser-Rand, Harrow Industries, and others. In 2006 the company celebrated its 100th anniversary of listing on the New York Stock Exchange.

Today the company’s products are used in business and residential heating and air conditioning systems (HVAC), in the food industry, on golf courses (the familiar Club Cars), in temperature control (for transport), as well as the company’s plants turning out power tools, control systems and other equipment (there are 51 plants worldwide).

In 2014 at the UN Climate Summit the company announced its Global Climate Commitment to reduce GhGs from products and operations by 2030.  So – how is Ingersoll Rand doing today? 

Today’s Top Story is a Forbes interview with Rasha Hasaneen, VP-Product Management Excellence and Innovation (before joining the company she was at General Electric. The interview is authored by Joan Michelson, a ForbesWomen contributor) who talks with Rasha about “process” as well as products. 

Ingersoll Rand has “a holistic view of sustainable innovation”, helping the company to find common ground with customers, partners and potential recruits.  Keys to innovating with a “core value of sustainability” including (1) anticipating customers’ unstated needs; (2) performance comes first with sustainability a close second; (3) the focus is primarily on product portfolios; (4) the company is constantly innovating; (5) data helps make the business case for understanding the customers’ industries; (6) use the organization’s unique “language” to get support for innovation.

These “6 tips” explain, says Rasha Hasaneen, comprise the Ingersoll Rand approach to innovation.  The challenges to address in the era of global warming with record heat across the U.S. include design and production of HVAC systems (heating, ventilation, A/C) which account for half of the energy consumption in U.S. homes and 39% of commercial buildings.

The company explains “sustainability”:  At Ingersoll Rand, we integrate sustainability into the anatomy of how we help our customers success and how we run our operations.  There’s good information on the firm’s 2030 Sustainability Commitment and the challenges the company, customers and society faces here.

We note here that the two aspects of “sustainable” definitions used today in industry are involved: developing sustainable, long-term products for customers (such as innovative HVAC systems) and making those products sustainability — and to be sustainable and responsible as well in the language of ESG.

Note:  The company’s headquarters was for a long time in New York City, moving to neighboring New Jersey in the 1970s and then on to Davidson, North Carolina.  The company is now incorporated in Dublin, Ireland (that’s a clear sign for us of the impact of globalization of what we formerly considered to be our “national” businesses!).

Top Story

6 Tips For Driving Sustainable Manufacturing From Ingersoll Rand
(Tuesday – July 16, 2019) Source: Forbes – As record heats spread across the U.S. (and the globe), air conditioning systems and the power systems they depend upon are getting a workout. These HVAC systems – heating, cooling and ventilation – are used 24/7 “account for…

Corporate Supply Chain Sustainability Strategies & Programs: Count as a Cost or Strategic Investment? Consultant to Large-Cap Companies Provides Some Helpful Answers for Corporate Managers

by Hank Boerner – Chair and Chief Strategist – G&A Institute

Question:  Does a corporate sustainability program “cost” (and thus shows up on the “expense” side of the ledger) or are there measurable “returns” on the investments that companies are making to develop or adjust strategies, assemble teams and launch sustainability programs? (Especially those that have set goals and where progress is measured and then publicly reported.)

We frequently hear this kind of discussion in the meetings and phone calls we have with corporate managers, especially those at companies where management is now considering what to do or perhaps just starting out on their sustainability journey. 

Senior managements often begin internal discussions with the questions for their managers:

Who is asking for this? What will this cost to respond? 
And where is the ROI for our efforts?

Working with client organizations we see the firms’ customers and clients asking their supply chain partners about their respective sustainability efforts and requesting extensive ESG information, directly of the firms (with detailed questionnaires) and through third parties such as EcoVadis and CDP Supply Chains.

The questions are coming faster and more detailed than in previous years.

The important customer with a range of sustainability-themed “asks” of course considers their supply partners to be part of their (the customer’s) overall sustainability footprint – and so the questions.   

Corporate sustainability leaders understand the importance of the “ask” and provide detailed answers to their valued customers.

If the questions internally at the supplier company are along the lines of: “why” or “who is asking” and “what will this cost us” or “what is the return”…consider: 

“Economic longevity and social and environmental responsibility are increasingly two sides of the same coin. Consumer surveys show that many favored brands are focused on sustainability.  And, removing waste and emissions from the supply chain goes hand-in-hand with efficiency…both boost the corporate bottom line.”

That’s some of the essence of a timely report – “Sustainability: The Missing Link” – that was authored by the Economist Intelligence Unit and sponsored by LLamasoft, an Ann Arbor, Michigan-based supply chain management software provider serving such clients as Ford Motor, 3M, Intel, Bayer, and Kellogg’s.

Highlights of the report and important background come to us this week from Supply Chain & Demand Executive magazine, with an interview with Dr. Madhav Durbha, Group VP at LLamsoft. 

The interviewer explores how sustainability considerations cause companies to think differently about their supply chains and examples of global companies are managing the triple bottom line.

The questions asked of Dr. Durbha by the magazine’s Amy Wunderlin

Why are many supply chains still doomed to inefficiency and environmental waste?  What are the top mistakes companies often make when trying to make their supply chain green? How many organizations strike a balance between profitability and sustainability despite current economic uncertainty? Why are addressing sustainability needs through the entire supply chain important? (There are more questions and more answers in the interview.)

An important take away from the interview: 

“As long as organizations think of cost reduction [efforts] and sustainability being at odds, they may be missing out opportunities to accomplish these dual objectives.”

There are numerous helpful hints for you in this week’s Top Story. 
SDC/Supply Chain & Demand Executive magazine, published by b-to-b media & intelligence company AC Business Media, covers warehousing, transport, procurement and sustainability, among many topics. Subscriptions to SDCExec.com are free. 

This Week’s Top Story

Profitability or Sustainability? It Doesn’t Have to be a Choice
(Wednesday – March 27, 2019) Source: Supply and Demand Chain Executive – Dr. Madhav Durbha of LLamasoft offers insight into why–with the proper tools–organizations don’t need to choose between profitability and sustainability, despite current economic uncertainty. 

Here is the link to the report: http://www2.llamasoft.com/Sustainability:TheMissingLink-NA

The Ethical and Sustainable Supply Chain – Some Thoughts on This For You From Forbes

by Hank Boerner – Chair & Chief Strategist, G&A Institute

Ethical sourcing” — we see that term used a lot by companies that are systematically addressing issues in their sourcing and supply chain management to better understand and address (and better manage!) the various issues that their investors, customers, employees, business partners, and other stakeholders care about.

What is “ethical” behavior, to be found in the layers-upon-layers of suppliers in the usual  corporate globalized sourcing effort?  How do we define this?

As we sometimes hear in the poetic notion, little things can have substantial impact; think of the the butterfly wings’ flapping and fluttering in Brazil that can have effects all the way north as expressed through the hurricane winds hitting Mexico and in the tornado whirlings on the American Gulf coast.

This “butterfly effect” (part of the chaos theory portfolio) has counterparts in the supply chains of companies sourcing from near and far lands.

An example shared:  Poor working conditions in the Bangladesh factories have been brought to consumer attention by United Kingdom news reports; the Asian-produced goods (such as T-shirts) end up on retailer shelves with “Spice Girl” branding.  Irony:  the shirts were part of the Comic Relief Event campaign staged to raise money for “gender justice” – and the Bangladesh female workers made 30 cents an hour under hostile working conditions (details are in our Top Story).

Writing for Forbes (brands), contributor Richard Howell’s shares his thoughts in our Top Story.  “Social, economic and environmental sustainability should be at the heart of every supply chain…” he writes.

He posits that consumers are looking to buy from companies that have a preferable design, sourcing, manufacturing, delivery of goods & services…and that operate assets and equipment in an energy-efficient, safe environment (for team members and the environment).  Howell spells these out in his commentary.

So – what is ethical?  Among other things, fair wages, better working conditions and gender equality in the global supply chain that is sustainable as well.

This week’s Forbes commentary is by contributor Richard Howells, a 25-year veteran of supply chain management and manufacturing who describes himself as “responsible for driving market direction and positioning of SAP’s Supply Chain Management and IOT solutions.”  He’s worked on systems for such brand-facing companies as Nestle, Gillette, and others.

This Week’s Top Story

Tell Me What You Want, What You Really, Really Want: A Sustainable Supply Chain
(Thursday – January 31, 2019) Source: Forbes – Social, economic, and environmental sustainability should be at the heart of every supply chain