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Pharmaceutical Manufacturing and Packing Sourcer

The Cost of Green

There is evidence that business in general does not value environmental impact and sustainability within their pipelines as highly as we have come to expect. However, companies still feel their green credentials are worthy of mention, and are clearly working hard to maintain them and expand their impact

With the recent difficult market conditions and an industry just emerging from recession, it would be reasonable to assume that ‘soft’ business functions, such as corporate social responsibility (CSR) and reduction of environmental impact, would take a backseat to more central considerations. Just as the importance of reducing emissions and environmental damage came to the fore with the 2009 United Nations Climate Change Conference in Copenhagen, a shrinking world economy was hitting the headlines, and ‘downsize’ and ‘streamline’ became the unwelcome buzzwords of the moment. The conference was considered something of a failure in terms of its ability to reach an agreement between nations on CO2 emissions (1); nevertheless, its sustained presence in newsreels surely brought the issue to the attention of buyers and sellers across the globe. It served to highlight an ongoing question in the commercial world: are green credentials valuable? Or is the benefit of that extra, immeasurable amount of business gained by being ‘green’ outweighed by the costs of avoiding cheaper, less environmentallyfriendly methods?

Within the pharmaceutical supply chain, this question is complicated further. Inherently, transport itself is an environmentally unfriendly activity, so it is difficult for a logistics provider or cargo company that uses many tonnes of fuel per year to present itself as a green option. Of course, being able to demonstrate a stronger environmental agenda than one’s competitors should confer an advantage, but any difference will be relatively small in the context of the vast amounts of greenhouse gases being produced by supply chain elements such as manufacturing, refrigeration and air transport.

Is it Worth Being Green?

Research does seem to back up the idea that business may not be too worried about the environmental record of where its goods and services are coming from. Commissioned by marketing agency TriComB2B, a research study through the University of Dayton’s School of Business Administration polled 448 influencers or decision makers from a range of business sectors (2). A key aspect of the research was to establish the relative importance of three key components of the businessto- business purchase process: safety features, energy efficiency and green supply chain. The survey returned some interesting results (see Table 1).

Perhaps the most telling figures relate to the ‘green’ supply chain – more than half of respondents (29 and 27 per cent, first two columns) took environmental impact into consideration in 20 per cent or less of their purchases. Safety and energy efficiency were clearly considered to be more important – factors which can be seen as having a more direct impact on costs and brand reputation.

Indeed, Chris Eifert, Principal at TriComB2B, states: “While energy efficiency cannot be overlooked because of its close relationship to operating costs (which ranked highly as a purchase consideration in other areas of the research), the results of our research indicate that the less tangible benefit of buying a product with a ‘green’ supply chain is a significantly less important factor in the purchase decision.”

The Industry’s Take

In light of evidence highlighting the relative lack of influence environmental considerations have on supply chain purchasing, the motivation of pharmaceutical logistics providers to promote their own ‘green’ activities does not appear immediately obvious. Nevertheless, several operators are keen to demonstrate their credentials in this field, and are thinking about ways to reduce the environmental impact of their products.

“I believe that many businesses are starting to take action to reduce their carbon footprint and also improve the efficiency of their supply chain” says Jim Hardisty, Managing Director of Goplasticpallets.com. “In the pallet and container sector, one way businesses can reduce their carbon footprint is by opting for reusable packaging solutions... By using returnable packaging systems, businesses can significantly reduce the volume of packaging they use – since multiple layers of throwaway packaging are no longer required – and reduce packaging waste.”

Others have also taken the impact of their transportation solutions into consideration. “When looking at your green credentials, it is important to ask ‘what is green?’” explains Roland Nicholas, Product Manager for SCA Cool Logistics. “For some providers, the packaging itself is all that is considered. However, by providing packaging that is created from biodegradable and compostable materials, it does not necessarily mean in the long-term this will tick the green credentials box. Being ‘green’ has a far greater landscape of opportunities. [It is important] to offer our clients a full service and complete solution for delivering their products globally, specialising in the design, test and qualification of temperature controlled packaging solutions. This offering provides multiple dimensions and opportunities for us to reduce [our clients’] impact on the environment.”

Clearly then, there is an awareness among logistics suppliers that clients themselves have certain sustainability requirements as part of their own branding and business ethos, and that these requirements are relevant across the full scope of a logistics company’s operations. Nicholas goes on: “A global provider...can strategically look to maintain and exceed a client’s expectation in environmental considerations, by looking at the whole picture, and asking questions such as, can we use local hubs and local sourcing? Can we offer our clients a package where they are able to reuse or ‘rent’ packaging instead of the product being discarded after only one use? What are the number of roads driven, and how many miles does the reusable system need to travel before it returns to its point of origin? All these, as well as reducing the time and energy used in the design and testing phase by using simulation technology and having a passion for being environmentally friendly are taken into consideration for us to truly be able to deliver green solutions.”

The desire within the industry to deliver on environmentally conscious and sustainable targets appears to be growing. Karen Adams, Senior Product Development Engineer alongside Nicholas at SCA, adds: “The industry has now got to a place where being green is a unique selling point against the competition. Green solutions regarding recyclability, carbon emissions and energy cost are being taken more seriously, and the cold chain is one part that can be re-evaluated from a green standpoint. Despite today’s consumers being more price-sensitive, many do still pay attention to packaging and the message that it communicates.”

Adams’ comment certainly clarifies that businesses do care. Furthermore, we are seeing extensive efforts from all logistics sectors to promote the idea of more environmentally friendly operations, including regulations and programmes from industry bodies such as IATA (3). The real question is whether the concern for green credentials comes from genuine concern on the part of the company management about its environmental impact, a realisation that being more sustainable can lead to lower costs in the long run, or a marketing strategy to improve the brand and ultimately increase revenue.

In the short term, it may well be the case that it doesn’t matter. Ken Lukes, responsible for Business Development at Inmark, states: “Green credentials are primarily used by corporations to appear that they are ‘green’. However there is no real enforcement of organisations with regard to those who claim to be green and those that are not, and I am not suggesting there should be. The truth is that being green has more to do with the earth’s diminishing oil reserves and the conservation of energy which fuels our economy. Alternative energy forms such as solar, bio-fuels or hydrogen might prove to help, but none of them can generate the power of fossil fuels. The fact is we really do not understand yet how to power the global industrial economy without fossil fuels. Overall green credentials or the claim of green credentials is a positive step in the right direction. The awareness of our changing world will prepare us for the demands of a changing world.” Perhaps then, despite evidence of companies placing relatively little value on the sustainability or ‘green-ness’ of transport-related products and services within the life science sector, all signs of interest in a greener image point the way to future developments.

References

  1. Monbiot G, Copenhagen negotiators bicker and fi libuster while the biosphere burns, The Guardian 2009, http://www.guardian.co.uk/ environment/2009/dec/18/copenhagennegotiators- bicker-fi libuster-biosphere; Gilligan A, Copenhagen Summit ends in blood, sweat and recrimination, The Telegraph 2009, http://www.telegraph/. co.uk/earth/copenhagen-climatechange- confe/6845892/copenhagensummit- ends-in-blood-sweat-andrecrimination. html
  2. TriComB2B report, http://tricomb2b/. com/about-us/our-2011-b2b-research
  3. IATA Fact Sheet: Carbon Offset, www.iata.org/pressroom/ facts_fi gures/fact_sheets/pages/ carbon-offsets.aspx

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Chris Baker at PMPS
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