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| A flaxwood guitar, made by breaking down non-endangered European spruce and binding it with a special polymer. |
Old growth wood deforestation is a central concern in discussions of climate change (for more on forestry issues, check out our chapter on land use in Climate Change: What You Can Do Now). In 2009, talks at the Copenhagen Summit centered on that very issue, with participants struggling to balance economics, biodiversity, primary forest loss.
“Some environmental groups are pressing for conservation of old-growth forests—the most carbon-dense, and biologically-rich state of forests—to be the centerpiece of [reducing emissions from deforestation and degradation], while industry and other actors are pushing for "sustainable forest management" or logging using reduced-impact techniques to be the primary focus of [reducing emissions from deforestation and degradation].”
I have long believed that many of the issues that we now see with sustainability and risk in the supply chain are due to business spending the past two decades outsourcing processes and globalizing operations. The result is more complex supply chains with less visibility into sources of material. As Gibson Guitar Corporation found out, that lack of transparency can lead to trouble if you don’t get the wood you think you are buying or suppliers mislabel the raw materials. Although Gibson was never charged with any wrongdoing, federal agents disrupted manufacturing operations on the suspicion that Gibson had received illegally harvested and exported wood.
Getting more visibility over the supply chain—understanding who is doing what and how it can be verified—is a first step to making the supply chain more sustainable. That is why a recent story about Taylor Guitars buying an ebony mill in Cameroon stood out to me as a good sustainability and risk management practice. By purchasing the mill, Taylor hopes to gain more control over the sourcing and processing of ebony to ensure the wood is sources sustainably.
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| Taylor Guitar’s Cameroon-based ebony mill |
Given the recent trend of outsourcing, Taylor’s vertical
integration may seem like a questionable decision. But purchasing a critical
material supplier can pay off in the long run. First, Taylor is ensuring a
source of supply for a critical and constrained raw material, which will reduce
uncertainty in the future. Second, with a customer base that is fairly
sustainability savvy, there is a great risk if unsustainably or illegally
harvested wood found its way into a guitar. By taking control of the supply
chain, Taylor protects themselves from this risk.
The interesting aspect of this story is the role of customer
education in sustainability. Despite its name, ebony is not always a pure black
color, but there is a perception that ebony must have that dark color. Taylor
realizes that educating
customers about sustainable wood choices will lead to more sustainable
harvesting, less constraints in the supply of ebony, and no loss in guitar
quality. As
company founder Bob Taylor notes, “We need to use the ebony that the forest
gives us.”
I may not be the next Guitar Hero, but the supply
chain needed to make a quality guitar offers lessons for all of us. Gaining
visibility and control over your supply chain can help take sustainability
actions and reduce risk. Educating customers about the sustainability and
performance of the materials in the product can support implementation of
sustainability practices without losing the market. Who knew you could learn so
much from a guitar?
Interesting post.
ReplyDeleteJust to play devil's advocate with the Taylor piece, the question that most often arises in the present day when vertical integration takes place is, "what makes you think you know how to do that well?" I.e., what makes Taylor think they know how to run a mill (that, perhaps, has other customers in different businesses) well when they're in the business of making guitars? Unless they just legally own the business and allow someone else to manage it while setting aside the best pieces for guitar manufacturing, a decision such as this can be a poor one, at least financially, and must be strongly justified in more indirect economic terms or in "soft" terms, such as the sustainability argument
Still, it is an interesting and perhaps good strategy.
As far as mapping a supply chain, a recent example I heard was very head-scratching. Virginia ports rely heavily on exports of lumber to China. Those same ports then import many pieces of finished furniture... from China. In terms of economic comparative advantage, it makes sense. The southeastern US enjoys a significant advantage in forest resource production compared to China while China enjoys a documented advantage in labor rates, leading to lower cost of finished goods.
That all said, the supply chain makes a significantly worse environmental impact in a number of ways. The most obvious is the amount of sea-going transportation needed to literally circle the world with raw materials in one direction and finished goods in another. Less obvious is the extra amount of materials that must be harvested to produce more finished goods to hold in inventory as buffers against supply chain disruption. A possible fix for this could help not just the environment but also make economic sense.
The southeastern US is attempting to assert itself as a home-grown alternative to low-wage countries overseas. Removing the weeks and weeks of ocean-going transportation can make Total Landed Cost markedly lower via lower transportation cost, lower inventory holding cost, lack of import/export costs, etc. In addition, it would stimulate our own economy. Even shifting production to Mexico would allow companies to take advantage of less environmentally-unfriendly rail transportation (as compared to ocean transportation).
Environmentally-conscious decision making for businesses can also be economically-conscious... provided the right choices are made and the justifications are realistic.