Greener Supply Chains a Hot Topic

PALO ALTO, Calif. — The acquisition of Burt's Bees presented a new set of supply chain challenges for Clorox, its new owner.

Small-scale producers represent the bulk of suppliers for Burt's Bees, which makes natural personal care products. The supply chain also relies on plant-based materials, which can vary in performance, cost and availability, according to Tim Bailey, vice president of product supply for Clorox.

Bailey and others described on Tuesday the perils and lessons learned from trying to manage supply chains that often cross geographic, ecological and cultural boundaries during a one-day conference sponsored by the Stanford Global Supply Chain Management Forum. The forum, begun in 1995, strives to identify and share best practices and innovation in supply chain management.

For Clorox, sourcing materials for Burt's Bees and its new Green Works brand line demonstrated the need to adapt to the complexities of a plant-based supply chain. The company had to expand its supplier base since many of the materials aren't produced on a massive scale.

"We're actually talking about the local folks in South Africa who are managing these (bee) hives," Bailey said while describing its bees wax suppliers.

The growing demand for natural and environmentally friendly products has left the company working to secure future raw materials because in some cases, the availability of materials isn't currently sufficient to meet this demand. For instance, the company knows how to make a biodegradable and compostable trash bag but faces limitations because only one plant in the U.S. makes the needed resin.

Resources, the company recognizes, are finite and face price volatility. From internal surveys, the company knows its customers will pay 10 to 15 percent more for greener products, but it's not sure if consumers will pay up to 30 percent more if its supply chain encounters problems.

The company's push toward sustainability arose from its identification of four mega-trends in the market: health and wellness, multi-cultural, convenience and sustainability. In the sustainability area, three growth initiatives emerged.

The company's acquisition of Burt's Bees represents one initiative, followed by its Brita brand -- which has benefited in recent months because of a bottled water backlash -- and the launch of its Green Works brand, which has been endorsed by the Sierra Club.

Sustainability efforts represent great market opportunities, Bailey said. And initiatives have energized and motivated the company's employee base.

"As we view the 'war on talent,' and there certainly is ... this is one of the things that will help us win," he said.