U.S. Senators Blanche Lincoln and Mark Pryor today introduced a bipartisan bill designed to drive energy efficiency improvements in the supply chain of all businesses, especially small and medium-sized ones. The bill -- the Supply Star Act of 2010 -- would build on the Department of Energy's Energy Star program and on best practices in industry and research communities to give companies access to resources needed to maximize supply chain efficiency.
Senators Jeff Bingaman (D-N.M.) and Scott Brown (R-Mass.) also sponsored the bill.
"Small businesses in Arkansas stand to make great gains with the tools and incentives offered by the Supply Star program," Lincoln said. "With additional resources to help them increase their overall energy efficiency -- from the manufacturing to transporting of goods -- these small firms will have the opportunity to save money and invest additional capital into hiring more workers. Importantly, by increasing their energy efficiency these businesses will be able to lend a benefit to the environment and economy as a whole."
"From smarter packaging to more efficient transportation routes, companies can achieve tremendous energy savings along the supply chain," Pryor said. "Our bill provides the opportunity for businesses who want to lead the way for a more energy-efficient future. The result is a win-win for companies, their customers and the environment."
Many companies are looking for ways to improve the efficiency of their supply chain, which includes materials, manufacturing, packaging, transport, use/disposal of goods and so on. They are doing so largely because it is good business. Decreasing energy use in the supply chain can significantly lower costs. However, these efforts face hurdles, especially small companies, which can limit implementation. These hurdles include a lack of analytical tools and information for important parts of their operations. Overcoming these challenges requires resources and access to information that is often unavailable (or unaffordable) to smaller companies.
The Supply Star program would provide companies with financing, technical support, training and sector-wide networks to help improve their supply chain efficiency. The program also would provide public recognition to businesses which achieve the greatest efficiency improvements, rewarding them with a marketing tool that will help consumers make informed purchasing decisions.
A one-page summary of the bill is attached.
Companies today are facing pressure from many fronts - customers, stockholders, business partners, and regulators - to improve their energy performance in hopes of maximizing profit, minimizing environmental impact, and shielding themselves against the price volatility of fuels. Nearly 90% of a company's energy use can come from its product supply chains, making supply chain efficiency -- encompassing the raw materials, manufacturing, packaging, transport, use, and disposal of goods -- of significant importance in the transition to a more energy efficient marketplace.
For these reasons, many corporations are examining their supply chain efficiency, not only as part of corporate social responsibility programs, but because it makes good business sense--decreasing energy use in the supply chain can lead to significant cost reductions. Wal-Mart's Supplier Energy Efficiency Project produced $220,000 in energy savings through efforts such as a 28% decrease in energy consumption in 20th Century Fox's DVD supply chain.
However, these efforts face hurdles -- especially in small companies -- that limit their widespread implementation. Such hurdles include a lack of information and analysis tools for important parts of far-flung supply chains, which often lie far upstream or downstream (and therefore out of sight) of a particular firm, as well as a lack of leverage to drive global suppliers toward more efficient practices. Overcoming these challenges requires significant resources and access to global information that is often not available to any one single firm.
SUPPLY STAR PROGRAM
The Supply Star Program builds on the Energy Star Program, as well as existing best practices in industry and the U.S. and international community, to drive widespread improvements in supply chain energy efficiency by partnering with industry to provide:
Support: technical support (in the form of databases, benchmarking tools and best practices), financial incentives, particularly for small and medium businesses, as well as training and networks to aid businesses seeking to significantly improve their supply chain efficiency. Financial and technical support is key as we try to get beyond the largest companies into all sizes of companies implementing supply chain energy efficiency programs.
Recognition: Public recognition for those businesses that achieve the highest supply chain efficiency standards. The recognition of companies is important, as it gives them something tangible and credible to use in external communications about all of their good work, and gives consumers an easy way of seeking out good actors.
Information: tools for consumers and business to incorporate product supply chain efficiency in their purchasing decisions. Driving increased consumer awareness and knowledge is a critical piece of motivating widespread improvements in supply chain practices.