In Africa and at Home, Supply Chains Are Getting Kinder and Greener
May 2009
STANFORD GRADUATE SCHOOL OF BUSINESS—Hailed as “Heroes of Global Health” by Time magazine, Andrea and Barry Coleman are making sure that millions of people across Africa are receiving regular, reliable health care, sometimes for the first time in their lives.
Many die in Africa from easily preventable “Medieval” diseases such as bubonic plague and cholera, Barry Coleman told a Stanford audience, simply because health workers do not have any reliable way to transport blood samples, medicines, and information. In the late 1980s, he and his motorcycle-racing wife Andrea noticed that motor bikes intended for use in the delivery of health care in Africa were not being used because they had broken down—in some cases needing mere $3 oil filters. They knew they had to put their own pedal to the metal.
The Colemans had stumbled upon an infrastructure and supply chain problem par excellence. They shared their story at the Advancing Socially and Environmentally Responsible Supply Chains Conference at Stanford last May 21 apply.
The British couple went to work creating Riders for Health, which they registered as an independent NGO in the UK in 1996, and the expert systems they developed for managing vehicles in difficult conditions are now used effectively across Africa. Riders started out by managing others’ bikes and trucks, but then obtained financing to purchase and maintain its own fleet of motorcycles, ambulances, and trekking vehicles. “Sticking to one focus and core competence has been vital to our work,” said Andrea Coleman.
Riders now employs 230 people, running more than 1,274 vehicles and keeping health and community workers from a variety of organizations “on the road”—from ministries of health to small community groups. The organization has programs in the Gambia, Zimbabwe, Nigeria, Kenya, Tanzania, Lesotho, and Mozambique. By engendering pride among their workers, all of whom are local to their regions, the Colemans have also been able to prevent costly problems such as the theft of fuel and parts, and the misuse of vehicles for personal use.
The organization has been making considerable inroads into improving health care throughout the continent. In 2002, after Riders began operating in the Gambia, for example, there was a 261 percent increase in diagnoses of diarrhea, a 75 percent increase in diagnoses of acute respiratory infection, and a 55 percent increase in the diagnoses of malaria over the previous year. Similarly, the immunization rates amongst infants have risen from 62 percent to 73 percent. In many of the regions in which Riders operates, malaria and infant mortality have been on the decrease.
“We’re the only people addressing this logistical supply chain problem in Africa,” said Barry Coleman. Added Andrea, “In 20 years we want what we’re doing to be a regular part of development work across the continent.”
Reducing Waste and Energy Consumption in American Firms
Closer to home, various U.S. companies are also diligently working to make the supply base more socially and environmentally responsive. At last month’s supply chain conference, PepsiCo director for sustainability and technology Tim Carey reported on efforts his company has been engaged in to preserve forests and lessen the carbon footprint of its suppliers. The food and beverage firm has spent the last decade reducing the amount of water and energy its affiliated factories use by 30 to 50 percent, which has included installing solar panels in California. It has also required all suppliers to be Rainforest Alliance-certified––which means providing fair wages to employees and not using pesticides, for example. Next steps for the company include requiring that supplier-provided paperboard cartons be made from sustainably harvested wood.
Craig Cuffie, VP of supply chain operations at Intuit, discussed how the software firm has reduced its carbon footprint by enabling all of its employees in facilities around the world to work at home one week a month, thereby lessening the amount of automobile exhaust released into the atmosphere. In its supply chain, the company has mandated the use of more sustainably harvested paper in everything that goes into its product boxes. It is also considering moving its products, such as Quicken and Turbo Tax software, online so that packaging may be eliminated completely. He and others acknowledged that while this will result in less paper consumption, it will increase customers’ electrical usage––a problem the firm is only just beginning to address.
Cuffie stressed that Intuit considers how any solution involving sustainability must meet needs of customers, employees, and stakeholders, including suppliers. The company’s move to use biodegradable plastic––and less of it––in packaging, for example, has resulted in a decrease in waste and has created economic and emotional wins for all parties.
The Intuit executive noted that cost increases associated with using more environmentally friendly paper have been offset by using cheaper inks. Panelists observed that to overcome higher sustainability-related costs in one silo, providing visibility into the entire lifecycle of a product or organization often reveals a total net savings to the company in the end. Tim Carey reported that the money to install solar panels at PepsiCo’s Fullerton, Calif., warehouse has more than been recuperated by the warehouse’s own ability to sell electricity back to the electric companies at a profit. He noted that the company’s overall conservation efforts have resulted in a yearly savings of almost $30 million.
Panelists considered how marketers could capitalize on companies’ switch to sustainable resources in the area of paper and energy, in part by working in partnership with suppliers and retailers to secure preferential placement in stores to increase sales. Carey noted that PepsiCo’s cooperative work with grocers to get more prominent shelf space for products with a marketable sustainability theme has proved successful. Panelists suggested that companies also may want to think about reframing services, such as grocery home delivery, as initiatives designed to save the earth’s resources and reduce pollution.
Panelists also discussed ways of helping suppliers become more sustainable, such as providing greater access to capital to organic farmers and working to secure stimulus money for them from the U.S. government. Carey reported that PepsiCo is working with farmers in drought-stricken areas of India and China to train them in irrigation techniques that use less water. The company also provides suppliers with tools they can implement to reduce the energy and water consumption in their factories. Cuffie said that, in the end, challenging suppliers to produce products more sustainably often provides an incentive for them to innovate and improve their own productivity.
The Advancing Socially and Environmentally Responsible Supply Chains Conference was presented by the Stanford Global Supply Chain Management Forum and the Center for Social Innovation at the Stanford Graduate School of Business.
—Marguerite Rigoglioso