Gauteng Business News

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LOGISTICS: Green Not a Priority for SA Business


Recent Gauteng Business News

A recent study into the supply chain and logistics practises of a number of industries in South Africa has revealed that more than 40% of the companies surveyed nationally are not implementing environmentally sustainable business strategies - thereby jeopardising their own long-term sustainability.

The Supply Chain Intelligence Report (SCIR) 2009, a comprehensive study into the supply chain and logistics practises of business in South Africa conducted by Terranova Research, saw over 200 senior company officials from both a strategic and chain perspective participate in the in-depth survey. All major industries in the country were represented, including the automotive, food and beverage, mining, construction, transportation and chemical sectors.

The results of the survey showed that a significant 41.3% of the companies that took part did not have, or had no plans to incorporate, metrics to measure their impact on the environment. The metrics (key performance indicators (KPIs) listed in the survey included energy consumption from supply chain operations; carbon emissions from supply chain operations; water consumption from manufacturing operations; infrastructure simplification and reverse logistics.

The industries that took part in the survey revealed the following results:

Automotive Industry

Just over one third of the respondents from the automotive industry reported that the environmental KPIs are not a current or future KPI. While this is an improvement on the total sample, it is still alarming that such a large portion of the automotive industry is not planning to implement sustainable business practices. When asked about specific environmental initiatives, just under half of the respondents said that metrics around water consumption and CO2 emissions are also not current or future KPIs.

Mining and Quarrying Industry

From the mining and quarrying sample, half of the respondents reported that the various environmental KPIs are not a current or future KPI, with energy consumption from supply chain operations, CO2 emissions from supply chain operations, water consumption from manufacturing operations, infrastructure simplification and reverse logistics not being business imperatives for the industry.

Oil, Gas and Chemicals Industries

From the oil, gas and chemicals sample of respondents reported that the various environmental KPIs are not a current or future KPI for them – an amount similar to that of the total sample. Despite this poor result from respondents in this industry, more than half of this group claimed that environmental issues are an important factor in making decisions for their business. Further research into this sector is required to determine which environmental KPIs this industry considers in their decision making besides the ones listed by SCIR.

Construction Industry

From the construction sample more than a third reported that the various environmental KPIs are not a current or future KPI – an improvement on the total sample. A third of respondents, however, listed energy consumption as not a current or future KPI and just less than half reported the same for CO2 emissions.

FMCG and Retail Industries

The FMCG (fast moving consumer goods) sector appeared to be only slightly more in tune with the market's concern about the environment. A third of the respondents reported no future plans to incorporate the listed environmental KPIs in their management systems. When questioned as to which factors are considered important when making decisions about new products or markets, more than half of FMCG respondents said that environmental issues are critical in decision making.

This could be attributed to many of South Africa’s FMCG companies being a part of multi-national groups, and therefore required to adhere to international standards. Alternatively, FMCG manufacturers may be more aware of the changing market and are trying to ensure the longevity of their relationships with their consumers.

Companies that want to get ahead of the rest and position themselves for long-term growth urgently need to start ‘thinking’ green and develop sustainable approaches to sourcing and supply chain management.

South African companies manufacturing products to be shipped overseas, or with mother companies abroad, are going to find it increasingly difficult to escape international pressure – particularly from the US and Europe – to monitor and report on the impact their operations have on the environment.

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