Last reviewed 17 June 2014
Rob Bell reports on a new supply chain initiative in Scotland.
Resource Efficient Scotland, in partnership with Scottish Engineering, has recently launched a Supply Chain Partnership (SCP) programme to demonstrate the practical, financial and environmental value that can be gained through the supply chain.
The programme is being delivered by consultancy Ricardo-AEA as part of Resource Efficient Scotland’s advice and support service programme, and aims to help large organisations (hosts) engage with their suppliers to identify and achieve cost savings through resource efficiency improvements.
Head of Resource Efficient Scotland Marissa Lippiatt said: “The SCP is focused on helping Scottish SMEs become more resource efficient and to practise the principles of the circular economy.
“We’re recruiting a number of large engineering manufacturing companies, and will work with their key Scottish suppliers on improving resource efficiency, then provide one-to-one support to identify opportunities for energy, raw materials and water efficiency.
“A new and important development to this programme is each participating supplier will be supported by a dedicated implementation advisor who will support the company to realise the financial benefits,” she said.
The advisors will, as their name suggests, provide implementation support. This could include access to finance, support on scoping and procuring a technical solution, such as a new boiler or lighting system, or development of a business case to gain management support.
Ms Lippiatt added: “These trained advisors will aim to focus effort on how to take practical action beyond just producing an audit report that identifies potential savings then sits on a shelf gathering dust.”
According to Jamie Pitcairn, Ricardo-AEA’s Director, the area of material scarcity is one where most organisations have, so far, taken little concrete action. He said: “Any large procurer of goods and services should be looking at these issues – but they probably aren’t.
“Material scarcity is also beginning to generate interest at board level as it features on the risk register of many organisations, so we’re piggy-backing on the appetite for change that will result. We’ll be using a fairly standard approach to supply chain partnerships, but with a much greater emphasis on implementation and using the circular economy in an attempt to drive higher awareness.”
For example, while with regard to recycling most organisations are doing the right thing, there is a need for a tighter focus.
Pitcairn said: “Over the last decade, recycling and material use has been overtaken by the carbon agenda, but now we’re beginning to see a shift in focus. As the risks associated with material scarcity become more apparent, we’re focusing on materials again.”
Resource Efficient Scotland and its partner organisations are intent on achieving as much in the way of measurable improvements in the performance of participating companies as possible. Pitcairn said: “We want to make it as easy as we can for organisations to implement change, by mentoring them through the process.
“What’s new about our approach is the combination of offering the services of an implementation advisor, and business support. We’ll also continue to work with clients, post-audit.”
Once the team has worked with a participant organisation through the issues of energy, waste, and resources, it will have access to 10 advisors based around Scotland, tasked with helping organisations overcome barriers to implementation through a range of measures:
procurement support of new solutions
access to finance
gaining senior management commitment.
From a global resource-use perspective, the principles of the circular economy and the greater resource efficiency promised by carrying out the recommendations of the audit on offer are vital and intertwined with the challenges of climate change.
Pitcairn said: “They are two of the biggest threats facing business and are intrinsically linked. The industrial sector is responsible for nearly one-third of global energy use, with most of this energy used to extract primary materials. Therefore, using less new materials and recycling more will make a considerable impact on both energy and resource demand.”
Increased resource efficiency trumps recycling by not requiring production of the materials suppliers provide to manufacturers in the first place. In addition, awareness is growing of the importance of this approach.
Pitcairn continued: “Over the last 10 years, carbon emissions across supply chains have been well documented, as energy is reasonably easy to measure. However, with rising commodity prices and awareness of resource scarcity heightening, due to the need to move towards a more circular economy, businesses are paying more attention to their raw materials use.”
Understanding the importance of the supply chain in achieving these goals – and gaining the kind of skills offered by the SCP in order to take effective action – is vital. The nature of the manufacturing sector means it is not only the most at risk, but also has enormous opportunities for cost savings and reduction of environmental impacts. Pitcairn says: “The manufacturing sector has the greatest exposure to material scarcity and price volatility. As such, it also has the most to gain.
“For most companies, especially manufacturing companies, suppliers are responsible for the majority of their emissions, so managing and reducing carbon and resource use in supply chains is vital to develop more sustainable business models. Many organisations are grappling with the challenge of measuring supply chain carbon emissions due to their long and complex supply chains.”
For Scottish companies, expert assistance in facing this challenge is now available. Scottish Engineering’s Chief Executive, Bryan Buchan, says: “Through its supply chain partnership approach, Resource Efficient Scotland is able to work with a large manufacturing business and its suppliers to identify those that could achieve carbon and cost savings by improving materials, water and energy efficiency.”
Resource Efficient Scotland Advice and Support Service Programme Delivery Manager, Anna Graham, says: “Supply chains provide one of the best opportunities to drive waste prevention, particularly through the way materials are used and transported. So not only will this SCP programme provide support to a host’s suppliers but, importantly, it will target opportunities to identify where waste can be prevented across the supply chain.
“To achieve this, Resource Efficient Scotland will provide specific support to identify opportunities to both prevent waste occurring across the supply chain and to identify opportunities to reuse or recycle materials.”
For host companies, working in close partnership with suppliers to ensure they maintain high environmental standards is essential to successfully reducing the business’ environmental impact. Ms Graham continued: “As the importance of environmental issues grows, having a supply chain that actively works to minimise impacts brings significant benefits, including improved competitiveness, business continuity and brand identity.”
In Scotland, compliance with new legislation regulating waste management, such as the Waste (Scotland) Regulations 2012, will also be simplified by supply chain action.
The Scottish Environment Protection Agency (SEPA) has described the regulations as being designed to “help Scotland become one of the most resource-efficient nations in Europe”. Environment Secretary Richard Lochhead says the regulations “represent a major step in delivering our vision of a zero waste Scotland”.
He said: “When properly managed, waste is a valuable resource, delivering both financial and environmental benefits for all of us. These regulations will help bring about a profound and frankly long-overdue change in how we regard and manage the waste we all produce.”
Resource Efficient Scotland says the SCPs facilitated through the programme provide an ideal opportunity for host companies to work with suppliers to ensure they are aware of relevant legislation, and gives them access to tailored support to help them comply. Participating suppliers also stand to gain significant benefits, as they will be provided with a tailored package of support to understand how much and where resources are used; identify how raw material, energy, water and waste costs are affecting profits; set appropriate targets to reduce resource use; identify simple ways to start reducing resource use and save money; bring about change; and benefit from improved skills and expertise.
Resource Efficient Scotland says: “Following suppliers’ resource-efficiency audit recommendations on how to improve performance, the indicative cost savings from taking action, and advice on how to comply with legislation, will be summarised in a resource-efficiency action plan. Support will then be provided to help implement the recommendations via one-to-one mentored training.”
The circular economy is coming, with the Scottish Government’s zero waste plans helping to drive change. The SCPs offered by Resource Efficient Scotland will give participants a real boost towards achieving much greater resource efficiencies within their overall operations.