Switzerland-based internationally recognized supply chain expert Paul Gooch (also Founder and Managing Director of The Logical Group) shares his thoughts on thehistoric challenges the chemical industry’s supply chain has faced in becoming greener and what’s enabling recent progress.
Shippeo: It seems that there is a call for "greener chemicals supply chains" gaining momentum. When did the shift towards sustainability in petrochemicals happen and what sparked it? Especially beyond the typical commercially driven search for better efficiency and more productivity.
Paul Gooch: The sustainability debate has been around for many years for the chemical industry. Over the past half-century, a series of major accidents involving the chemical industry (e.g. Flixborough 1974, Seveso 1976, Bhopal 1984) and marine incidents and accidents (e.g. Torrey Canyon 1967, Amoco Cadiz 1978, Piper Alpha 1988, Exxon Valdez 1989) had contributed to the chemical industry initiative ‘Responsible Care®’ which started in Canada in 1985 and was progressively adopted around the world. The chemical industry’s public image was ranked third worst behind the nuclear and tobacco industries and was constantly the target of Green Peace and WWF, so there was plenty of incentive for the industry to drive change. The Sustainability External Advisory Council (SEAC) was founded in 1992 by Frank Popoff (former Dow Chemical CEO and Chairman) and was the first of its kind in the petrochemical industry. In addition, there is a book on my shelf entitled ‘Driving Eco-Innovation – A breakthrough discipline for innovation and sustainability’. It was authored by a previous boss of mine at Dow (Claude Fussler) and was published in 1996…so the debate has been around for a while. But certainly, more recently public pressure has been mounting for the industry to tackle plastic waste and this has led to the creation of the Alliance to End Plastic Waste with all the major petrochemical companies participating.
Shippeo: In your experience, who are the leading organizations and companies instigating this change and how are they going about it?
Paul Gooch: I believe that it is through companies collaborating that is most impactful in making supply chains greener and reducing carbon footprints... One example from Switzerland is the project ‘Cargo Sous Terrain’ (www.cst.ch) founded by a group of large Swiss companies with the aim to move cargo below the surface in tunnels. This is a true approach towards a greener supply chain. The same goes for multinational companies organizing themselves to work on concepts to positively impact the environment. It is not all about the physical movement of products. It includes the use of new technologies to optimize the cargo flows as well.
Shippeo: Many technologies have been, and are still being, developed and all seem to point towards sharing more data (IOT, AI, analytics, Big Data). What role does data play in developing a greener supply chain?
Paul Gooch: I believe it is key for a greener supply chain. New technologies and the ability to understand information and data better by accessing large data lakes and Big Data will create optimization potential in all aspects. It provides useful insights that can be implemented into the physical supply chain with the goal to reduce redundancies etc. Blockchain technology may play a big part in supply chain optimization and contribute to a greener supply chain.
Shippeo: Most companies are still reluctant to share their data. What are the main drawbacks and how can we overcome them in order to build a ‘virtuous’ network?
Paul Gooch: There are historical reasons why companies are reluctant to share data such as antitrust cases which make companies very cautious…and indeed they have policies in place to restrict collaborative activities. American companies, in particular, have very strict guidelines. There have been numerous attempts over the years to try to foster collaboration, and there have been successful examples within the realm of FMCG (e.g. common warehousing and optimal loading of trucks to retail outlets), but they appear to be the exception. The European Union is positively disposed to collaborative initiatives which have an environmental benefit. In the chemical industry, the debate has often started positively but it always reaches a point where self-interest and competitive advantage prevails.
Shippeo: The EPCA (European Petrochemical Association) reports present an array of opportunities to develop sustainability within the supply chain industry. How can transport and logistics support this transformation?
Paul Gooch: The logistics industry has taken many steps to enhance sustainability, including increased use of inter-modal transportation, by rail or short-sea, using state of the art equipment with better fuel economy and lower emissions, and by offering pipe-lining solutions to reduce variability, inventory buffers, and more efficient use of equipment. Unfortunately, for the reasons outlined above, the chemical industry has not always been an active partner in these initiatives
Shippeo: How can real-time visibility support circularity and help develop a greener Supply Chain?
Paul Gooch: By using solutions providing real-time visibility and predictive information, companies’ will be able to better plan their supply chain and transport moves. This should lead to less expedited freights by air which ultimately will lead to less CO2 emissions. In general, the better the visibility, the more possibilities companies’ have to optimize their freight moves and therefore create a greener supply chain.
Shippeo: In conclusion, how can petrochemical companies maintain competitiveness whilst developing circularity. Can recycling be economically viable and could it become a competitive advantage)?
Paul Gooch: All the quality, safety, and security initiatives adopted by the industry over the years have had a common result. They improve efficiency, reduce costs and usually have a sustainability benefit. Dow Chemical ran an initiative many years ago called WRAP. Waste Reduction Always Pays. Chemical industry initiatives to reduce energy consumption have reduced costs and also benefited emissions.
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