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By Matt Pillar, Editor, Retail Solutions Online and Integrated Solutions For Retailers magazine

Last week I wrote about the synergy between Michaels' initiatives to both reduce energy consumption and remove expense from its bottom line by partnering with an energy management vendor. This week, with RILA's Envrionmental And Sustainability Compliance Conference right around the corner (Dallas, October 5-7, 2009), I thought we'd take a look at another retail operation that's an easy mark for both business efficiency gains and social/environmental responsibility initiatives. In virtually all retail environments, from mom-and-pop shops to worldwide chain stores, supply chain operations are rife with opportunity for efficiency improvement.

I talked with Donny Askin, CEO of product sourcing and trade management software provider Arigo, about how software solutions are helping retailers extract cost from the supply chain while feeding their sustainability efforts with PR-worthy fodder. The latter is important because, as Askin notes, "More important than compliance with any mandate, the market is what's driving demand for social responsibility." Askin's company specializes in providing end-to-end sourcing and supply chain solutions for retailers of private-label merchandise, and its portfolio includes some of the world's most well-known brands, including Home Depot, JC Penney, Staples, and Timberland. He says that these, and in fact most large retailers have woven sustainability into their corporate cultures, in no small part in response to consumer demand.

But what separates a promise of environmental efficiency and the actual making good on that promise is execution. In the case of global supply chains consisting of hundreds of sourcing partners and carriers operating thousands of trains, planes, ships, and trucks covering millions of miles a month, execution of efficiency initiatives is a daunting and data-intensive task. That's where solutions like Arigo's STM suite of software products come into play.

Askin says that at its core, his company's mission is to help retailers find the least expensive material that will provide the highest-quality product at the price point the customer wants. Social and environmental initiatives present the additional challenge of doing this in a responsible and eco-sensitive way. This requires data, and lots of it. Forecasting data, materials procurement data, manufacturing data, carton-level merchandise data, shipping and routing data, fuel consumption data, warehouse and DC receiving data, and of course, sales data. This data must be collected, evaluated, tracked, and reported on to best identify opportunities for efficiency gains. That's why Askin suggests that the ability to capture, process, and report on massive amounts of data is the most important thing you should look for in a trade management partner.

Supplier Collaboration, Compliance Reporting Are Key
Greener supply chains require a lot of supplier collaboration, making vendor compliance management a focal point. Where vendor compliance initiatives were once homed in almost exclusively on order accuracy, concerned retailers are now placing as much emphasis on container optimization to ensure fuller loads, fewer trips, and less fuel consumption. The collaboration required to enable this level of visibility and control is the subject of a new four-part videocast called Pride, Passion and Profit: The New Framework for Working Together in the Consumer Goods-to-Retail Supply Chain, sponsored by Compliance Networks. The series is focused on the work of Inez Blackburn, president of Market Techniques & Innovations and adjunct professor at the University of Toronto, and Matthew Deeter, founder of trading partner productivity consultancy Deeterwerks. Part one of the video series is available now; the remaining broadcasts will be rolled out through early December.

While Askin agrees that, due in large part to the economy, the energy given to eco initiatives has taken a bit of a back seat to that given to lowering the cost of goods sold, he also agrees that the two are often inextricably linked. "Initiatives that reduce waste from the supply chain will likely serve both masters — chief financial officers and chief sustainability officers — alike," he says.

In November, Integrated Solutions For Retailers will publish a special report on retail sustainability, culled from the work of Retail Systems Research in the Brian Kilcourse/Steve Rowen authored report, "Real-World Green: The Role of Environmental Savings in Retail." Stay tuned for that, and in the meantime, let me know how your green initiatives, supply chain or otherwise, are going. E-mail me at matt.pillar@ismretail.com