Reverse Supply Chain Spurs Business to Reduce Waste, Lower Costs

October 31st, 2007

I have repeatedly said that business, not government, will help us find our way out of the environmental crisis we find ourselves in at the moment. That’s because business sees many crises as new market opportunities, and is willing to seize on them. I don’t think it’s a case of preserving the environment versus doing what’s good for business, because business will find opportunities in the current environment to do what business does best — innovate. Thus the concept of the “reverse supply chain,” which is gaining traction. In the reverse supply chain, companies lower costs, increase customer service and help the environment by reusing nonproductive assets and waste. Nike, for example, takes the rubber soles from recycled footwear and turns them into playground surfaces. Other companies “re-manufacture” returned goods.

According to Third Eyesight, a consultancy that works with short-use consumer products, it’s not even primarily environmental concerns that are prompting reuse and recycling. “1) World wide economic environment has made cost saving initiatives more attractive in many industries (such as high tech and aerospace). 2) Better management of the reverse supply chain translates into a higher level of customer service and, consequently, higher customer satisfaction. 3) Industries and the enterprises within them are realizing that management of the reverse supply chain is a revenue opportunity. For example, GE Aviation makes more revenue for servicing its aircraft engines than it does when initially selling them. Companies are able to reduce their costs, increase revenue and increase customer service.”

In other words, there is value to be captured from waste. Companies are starting to think of waste as valuable, and thus will begin to design products and processes to manufacture without reducing the integrity of ingredients, such as water, so they may be reused more often.

No offense to government, but I believe government’s function is to protect, while it is business’s responsibility to advance us on the way to sustainability. I think creativity and innovation will do it.

Tags: environmental crisis reverse supply chain third eyesight waste

Entry Filed under: Sustainability, Corporate Responsibility