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Lean thinking in supply chains and sustainable practices makes good business sense

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SmartBrief is partnering with Big Think to create a weekly video spotlight in SmartBrief on Leadership called “VIP Corner: Video Insights Powered by Big Think.” This week, we’re featuring Sir Terry Leahy, former CEO of Tesco.

Lean thinking, a concept developed by the Japanese car industry in the 1970s when companies needed a way to get more out of what they had to compete with Detroit, is applicable to retail’s supply chain and to sustainable practices within that supply chain, former Tesco CEO Sir Terry Leahy says. He says that lean thinking improves efficiency in retailers’ supply chains and allows companies to increase consumption while decreasing their use of natural resources including energy and water.

Leahy notes that a company that works more sustainably is executing a good business practice because it forces the company to pay more attention to wasting less and conserving more, which increases profits in the end. “When you conserve things, when you don’t waste things, when you’re frugal with the use of resources, actually you find that you can produce more for less cost, and that’s more profitable,” he says. “It’s good business sense.”

He says that Tesco adopted a sustainable business practice by setting goals that included cutting its carbon omissions in half by 2020 and cutting them completely by 2050, two goals that the company is on target to meet. To do that, Leahy says Tesco had to start with its stores because that is where most of the company’s carbon omissions came from. So Tesco outfitted its stores with new lighting and refrigeration systems, new glass and different power systems, and it started building stores out of wood. Leahy says the company also had to get its manufacturers, farmers and other pieces of the supply chain on board with the plan, and set a goal of reducing their carbon omissions by 30% by 2020.

Leahy points out that including sustainability in companies’ lean thinking practices also makes them more relatable to their employees. “They don’t like to waste things, throw things away. So they appreciate it when they see the organization trying to do the right thing,” he says.

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