Letters

Environmental Issues Throw a Wrench in Supply Chain

I read "Journey to the Chain's End, and Back" (June, page 48) with great interest, and I fully agree that significant supply chain optimization opportunities exist. However, technological solutions are not the silver bullet. Core to any company's successful execution of supply chain initiatives is its ability to actually manufacture its products, and the need to maintain manufacturing flexibility is critical.
But a forgotten constraint within manufacturing is environmental compliance, such as production limitations contained in permits. Increasingly, production changes face myriad obstacles related to environmental compliance: public hearings on permit amendments triggered by the changes, tactics for mothballing or restarting plants (such as tradeoffs between selling greenhouse gas emissions "rights" freed up by reduced production versus future cost of repurchasing these "rights" to meet increased demand), and implications of expansions/acquisitions. Unless environmental issues are fully integrated into strategic planning, companies face a real risk of not being authorized to respond to customer needs in a timely manner, which means not responding to customer needs.
There are many environmental aspects all along the supply chain that can be detrimental if not given due strategic consideration. These same aspects can be turned into distinct competitive advantage if they are properly managed. It is unfortunate that environmental issues are not frequently considered within demand and supply chain solutions.