As I searched through my supply chain contacts in preparation for some research I was kicking off, I came across the name Mark Servidio, Vice President Logistics & Environmental Affairs at Sharp Electronics. Mark’s title caused me to pause and think: If a company is serious about being green, it would likely have executives with titles similar to Mark’s.
I contacted Mark and he was gracious enough to talk to me, along with his colleague Dave Dwyer, the Director of Logistics & Environmental Supply Chain Planning. They told me that the corporate office of Sharp Electronics—the $33 billion Japanese consumer electronics company—has been concerned about green issues for some time. The company is now looking for its international divisions to become equally concerned.
In the US, one of Sharp’s big initiatives in this area was to become a member of the US Environmental Protection Agencies SmartWay Transport Partnership in 2004. Sharp was the program’s 40th member. If you’re not familiar with SmartWay, it is an initiative that includes shippers and carriers and its goal is to save energy and reduce carbon dioxide emissions. Carriers need to make their fleet more fuel efficient by doing things like adding equipment to their trucks and trailers to make them more aerodynamic, using advanced lubricants, reducing idling, and driver training. Shippers, in turn, agree to use US EPA SmartWay certified carriers at least 50 percent of the time.
When Sharp USA joined, only 28 percent of its carriers, representing 33 percent of total tons shipped, were SmartWay certified. The company let its carriers know that it had joined SmartWay and urged them to join too otherwise it would affect their future business relationship. Step by step, the percentage of SmartWay certified carriers increased. In the second year, 46 percent of Sharp’s carriers were certified and 79 percent of its tonnage went via certified carriers. Today, six years into the program, 100 percent of tonnage is moved via SmartWay certified carriers. This is quite an achievement when you consider that many of Sharp’s shipments cross the Mexican border and the company has been able to get Mexican carriers to become SmartWay certified too.
Along the way, Sharp has won the SmartWay Excellence Award four times, from 2006 through 2009. It is the only shipper to win the award four times. For some perspective on the award’s significance, there were 2,200 SmartWay members last year, but only 38 awards presented.
My colleague Adrian Gonzalez has commented that green is good for business because green projects with a poor ROI don’t get approved. In this case, that is not fully true. When companies reduce their carrier base, they often end up saving money in procurement. Dave told me that from an ROI perspective, this program is a “net zero change”—it has not hurt their bottom line, but it hasn’t helped it either. Apparently, SmartWay carriers are able to get a small premium based on their certification.
Sharp’s latest large initiative in this area is to increase the amount of goods it ships intermodal. This project has been good for the bottom line. In 2009, 8 percent of Sharp’s shipments were shipped intermodal. This year the percentage is close to 24 percent of shipments. According to Mark and Dave, the transportation savings have not been facilitated by improvements in forecasting or an increase in inventory. Sharp’s North American supply chain is fairly short. Finished goods land in Huntington Beach California. Meanwhile, a significant number of products go through final assembly in Mexico. With this supply chain, intermodal typically only adds a day.
One key to increasing intermodal shipments has been increased communication with Sharp’s retail customers. If a customer says they need a shipment to arrive at a particular destination on September 1st plus or minus one day, Sharp may call them and ask if it could it deliver on September 3rd instead and explain its goal of being greener. Often the retailer agrees to the change. How retailers will respond once the economy starts humming again remains to be seen.
This past May, Mark’s duties expanded to include Environmental Affairs. He and two other executives from Legal and Corporate Planning are part of this team. His responsibilities have grown to include recycling, ISO (quality standards), and corporate social responsibility.
In conclusion, it strikes me that if companies are serious about green/sustainability, they will create executive roles and titles similar to Mark’s and Dave’s, and give them performance goals related to not just costs and service, but also environmental improvements.