July 2006 | News | Trends

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Put more than 700 supply chain executives in one room for an executive conference, and you'd expect the dialogue to center on such topics as reducing inventory, increasing visibility, speeding global distribution, and other standard best-practices fare.

You'd also expect the keynote speaker to be a supply chain luminary or respected old-guard business leader.

But the main topic up for debate at the AMR Research 2006 Supply Chain Executive Conference, however, was whether or not the supply chain can save the world.

And the keynote speaker at the conference, which took place May 31 to June 2 in Scottsdale, Ariz., was former President Bill Clinton, a Democrat whose approval rating among right-leaning supply chain professionals was probably never sky high.

No, supply chain execs haven't gone soft, but rather have realized that because of today's globally interconnected marketplace, socioeconomic problems that lead to global instability eventually trickle back to the bottom line, says Tony Friscia, CEO of Boston-based AMR.

Using the supply chain to address a variety of global issues—such as effective humanitarian relief, distribution of medication to third-world countries, delivering clean water, and finding and deploying new and alternative energy sources—is ultimately smart business.

"Because of the globalization of the supply chain, as companies expand their capabilities, global problems will become one of the limiting factors to growth," explains Friscia. "Successful companies will learn to grow their business and solve problems at the same time, not because they are do-gooders, but because it's in their best interest to do so."

The Interdependent World

The supply chain revolution that has occurred over the past 10 years has spawned a new, highly connected and interdependent global economy with practitioners that have the knowledge to change the world, said Clinton.

"Every citizen of the world should be able to ask and answer three questions: what is the fundamental nature of the 21st century, what should it be, and how can we get from where we are to where we want to go?" said Clinton at the start of his 90-minute address.

The current "unequal and unstable" nature of the world can morph into an "integrated global community that has shared opportunities, responsibilities, and values" through collaboration among business, government, and nonprofit organizations such as the Clinton Global Initiative (CGI), he stressed.

This is where supply chain professionals play a role. "I like what you do—organizing supply chains and thinking about distribution networks," Clinton told the audience.

He cited CGI's efforts to overhaul the AIDS drug supply chain in Africa and other third-world countries as an example of how supply chain expertise can be used to solve international problems. By getting drug companies to embrace a high-volume/low-margin strategy in exchange for prompt payment, CGI's AIDS medication program has helped give access to more than 25 percent of the people requiring AIDS medication around the world.

"I looked at the pricing structure of AIDS medication and how the delivery was organized and it didn't make sense to me. By paying attention to the way it is distributed, now the money can go a lot further," Clinton explained.

Clinton named global agriculture, alternative energy, and clean water as other areas where the supply chain industry can help shape the way markets are organized and the way goods and services are distributed to positively effect change. Doing so can help "make a world of more partners and fewer enemies," said Clinton—a concept that surely rings true with partnership-driven supply chain managers.

But how does corporate America feel about this? Presentations from supply chain leaders echoed Clinton's theme of "making money and doing good," and stressed the profit potential of entering the developing world on a humanitarian level, then being able to tap consumers in those markets as they become financially secure.

Procter & Gamble, for example, developed a program to bring clean water to more than one billion people, and was an early responder in Hurricane Katrina relief efforts.

P&G's Keith Harrison, global product supply officer, and Cath Malseed, director, coffee product supply (who spearheaded P&G's post-Katrina supply chain recovery efforts), explained how the company's ability to create customer-driven supply networks allows it to build business processes it can use to serve underdeveloped regions and rebound quickly from supply chain disasters.

Hewlett-Packard's Gilles Bouchard, executive vice president of global operations and IT, demonstrated how the company's commitment to reducing waste of natural resources led to an ROI-producing global program that recycles computer equipment, rechargeable batteries, and printing supplies.

HP now gets 50 percent or more of the metals used to manufacture its new products from its recycling program. As a result, the company reduced its manufacturing costs by spending less on expensive raw materials, Bouchard explained.

Tackling the problem of global infrastructure needs proved a valuable business proposition for Siemens, explained Christi Pedra, COO of the company's SiemensOne project. Through SiemensOne, the company works with businesses and governments worldwide to deliver infrastructure projects focused on water, power, mobility, security, health care, and automation.

Pedra highlighted several SiemensOne efforts, including a project to create wastewater recycling systems in Toluca, Mexico, for a DaimlerChrysler production facility. The system has allowed DaimlerChrysler to continue operating in the area, employing and aiding the local economy without draining the region's valuable water resources.

Doing Good, With an Upside

Throughout the conference presentations, an underlying theme emerged: altruistic efforts and business and supply chain profitability are no longer mutually exclusive.

"Being involved in these types of activities provides companies a broad opportunity to gain advantages on the cost side, and to develop new markets that are willing to work with them. They do not see humanitarian efforts as only a marketing tool any longer," says Friscia.

One thing is clear, however—lending supply chain expertise to socially motivated projects is best received by executives when a clear business upside exists.

Clinton summed up the need to convince companies they can make money in order for them to react to global social issues: "If I were 25 again, I would get an MBA, go into clean energy, and save the world on the way to making a billion dollars."

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