By Randy Lewis and Joe Tillman
Don’t look now but there’s more to the cottage industry that’s corporate social responsibility reporting (CSR) than just setting recycling, reduced energy usage and other related sustainability goals.
What about sustaining the brand? And what about social responsibility beyond the environment—to your workforce, your partners and the community?
When the sustainability revolution took shape in the early part of the last decade, for many distribution centers and warehouses the focus was on how to be green—without costing a lot of money. Recycling plans were implemented to properly dispose of waste, light bulbs were changed to energy efficient LEDs, or facilities layouts were altered to reduce travel times by battery powered forklifts. For many companies it was driving environmental initiatives that had a direct impact on their ROI (return on investment).
Over the years several reports have found that favorable sustainability perception has been more positively correlated with companies that show strong elements of social sustainability as part of their “way of doing business” rather than a single-minded focus on environmental sustainability.
However, few companies focused on the people part and helping them be the best they can be. That was until 2007, when Walgreens opened its distribution center in Anderson, South Carolina with a goal to employ more than 40 percent of the workforce there with disabled people.
The overall goal of CSR is to embrace responsibility for a company’s actions and encourage a positive impact through its activities on the community, customers, environment, employees, and shareholders. In essence, CSR is a guide to what the company stands for and will uphold for its customers.
While CSR was a term first coined in the 1960s and early 1970s, its popularity in the industry did not expand until the late 1990s. It was during the 1990s that the focus on environmental stewardship started taking shape in the supply chain area.
Distribution and warehousing are not industries that many first think about when considering how to solve the world’s problems. But, several companies are changing that view: Walgreens, Lowe’s, Best Buy and Toys R’ Us, to name a few.
While 2007 does not seem so long ago, in terms of CSR’s evolution and development it’s practically the dark ages, which is why Walgreen’s approach for its new DC was ground-breaking and worthy of note.
Walgreens takes a five-pronged approach to social responsibility, giving equal weight to community, environmental sustainability, diversity, supplier diversity and disability inclusion.
On the supplier diversity front, many companies such as Apple, Xerox and P&G have supplier diversity programs, but Walgreens actually issued an annual report on that specific subject in 2010. The company says Supplier Diversity, “isn’t just good business; it’s good for business. When Walgreens began its supplier diversity initiative, the goal was to increase the purchase of goods and services (also known as “spend”) from diverse and small businesses. This objective has grown into a winning initiative that is strengthening not only Walgreens business, but the communities represented by diverse business owners.”
Walgreens says its goal is to spend at least $1 billion annually with diverse suppliers. For example, the Community Corner program, which began in 2010 featuring African-American suppliers in 1,180 stores generated a 12 percent increase across the total chain in sales among its 17 featured products, and an estimated 42,000 consumer baskets contained at least one of those featured products. Sales of those products increased by about 9 to 43 percent year-over-year.
Walgreens is a passionate and driving force in the warehousing industry on social sustainability issues, particularly with its disability inclusion program. It is ensuring the company’s social responsibility vision, and especially the best practices learned from their hiring program that was implemented in the Anderson South Carolina DC (Distribution Center) in 2007, is being replicated by others in the warehousing and distribution space.
The $175 million, 700,000-squarefoot facility, employs about 335 workers, 47 percent of whom have a physical or cognitive disability like autism or mental retardation. The program is about giving people a chance to prove themselves. People with disabilities die a death of 1,000 cuts. The unkindest cut is the belief that people with disabilities cannot do the job.
Since 2007, Walgreens has spread the program to other DCs and warehouses in its network. Then in 2012, Walgreens moved from the backroom of warehouses to the storefront by developing a program to hire people with disabilities to work in the more than 8,000 Walgreens stores across the United States.
In addition, companies such as Lowe’s, Best Buy and others have journeyed to Walgreens’ Anderson South Carolina DC to learn how to implement and lead a disability inclusion program in their warehouses. Lowe’s has been one of Walgreens greatest partners in developing and leading the change that is now occurring in the distribution and warehousing industry – a true focus on improving the lives of their employees and community.
However, with the ever-changing landscape of leadership in companies those are passionately driving social initiatives and the fact that CSR is still going through growing pains, who will take up the social responsibility banner with the same drive and passion? Who will keep alive the social part of social responsibility?
It could be the younger generation of professionals in the supply chain industry as they rise through the ranks into positions of influence. Generation Y, also known as the Millennial Generation—basically those born from the latter 1970s or from the early 1980s to the early 2000s—apparently see business playing a major role on societal development.
In 2011, a Deloitte Touche Tohmatsu survey “Business Society – Millennial Survey 2011” found that 92 percent of millennials believe that a company’s success should be measured by more than profit, and more than 50 percent said they think businesses would have a greater impact than any other societal segment—including government—on solving the world’s biggest challenges.
The Harvard Business Review Stat, which showcased the survey said: “In a survey of more than 1,000 of its employees born after 1981, Deloitte Touche Tohmatsu found that when respondents were asked to name three terms that encapsulate the purpose of business, 51 percent cited societal development and only 39 percent cited profit.”
For fans of CSR, those are some heartening numbers.
[box type=”shadow” ]Randy Lewis is past senior vice president of Supply Chain and Logistics for Walgreens in Deerfield, Illinois. He was responsible for the design and operation of Walgreens supply chain network including operations, engineering, IT systems, and inventory management. In addition to imports, Lewis oversaw Walgreens’ domestic network of fifteen automated distribution centers and one of the U.S.’s largest private fleets to supply its 7,000 stores throughout the U.S. and Puerto Rico.[/box]
[box type=”shadow” ]Joe Tillman is a senior researcher with Supply Chain Visions, a boutique consulting firm specializing in supply chain management. His keen interest in all thing supply chain and his high-energy approach to life find him authoring articles for industry publications, a blog “The New Generation” for DC Velocity magazine, a subject matter expert for APQC–a not for profit benchmarking organization–and speaking at numerous industry events. Joe is the lead co-author to the Warehousing Education and Research Council’s influential annual benchmarking study, “DC Measures.” He is certified in transportation and logistics by AST&L and SCOR-Professional certified by the Supply Chain Council. As a practitioner, Joe has extensive operational experience in import and regional distribution centers while working for Wal-Mart Logistics. He has an in depth understanding and knowledge of order management and fulfillment techniques.[/box]
 See “Perception Versus Reality in Sustainability Performance,” (Dec. 2012), available at http://www.sustainablebrands.com/news_and_views/articles/perception-versus-reality-sustainability-performance?utm_source=newsletter&utm_medium=research&utm_campaign=dec20
The article cites this study by brandlogic and CRD Analytics, “Learn from the Leaders: 2012 Sustainability Leadership Report,” available at http://www.sustainabilityleadershipreport.com/
Also see the The Hartman Group’s 2007 study, “Sustainability from a Consumer Perspective,” available at http://www.fmi.org/docs/sustainability/hartman_group_sustainability_fmi_task_forceBEFD066AFCD9.pdf?sfvrsn=2
 Walgreens Annual Report “Nurturing the Business of Diversity” (2010). Report available at http://www.walgreens.com/images/pdfs/sr/Walgreens_Diversity_AR_2010_FINAL.pdf
 Deloitte Touche Tohmatsu “Business Society – Millennial Survey 2011” (2011). Report available for download at http://www.deloitte.com/view/en_GX/global/about/business-society/7db3b035c93d4310VgnVCM2000001b56f00aRCRD.htm?id=gx_tw_130212_1505