Green supply-chain: incorporating sustainability and financial gain

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Today, along with regulatory compliance, operational efficiency and cost cutting (where reduced resource consumption of energy, water and waste lead to noticeable savings) - customer demand is driving businesses and suppliers to become sustainable. Procurement can play a key role in driving supply-chains toward sustainability, but will this strategy lead to profitability?

Green procurement refers to acquiring products, services, utilities, and work not based on the criteria of price/quality only, but also with considerations of minimizing environmental impacts, of fairness and social justice, and economic feasibility, now and in the long term.

The key drivers for greening the supply chain include:
• Logistical considerations – Distance: how far are the suppliers, and methods of shipping.
• Packaging.
• Resource utilization (suppliers usage of energy, water, natural resources, eco-systems, waste management, hazardous materials handling, etc.)
Carbon and waste in manufacturing are significant factors.
• The suppliers’ decision making processes and actions taken, along with considerations of not only economic factors, but also of environmental impacts and social responsibility.
• Achieving price stability.
• Transparency to the cost of materials, resources, and carbon, as well as their origins in the supply chain.

The ultimate green procurement is the avoidance of the purchase altogether. Companies that implement sustainability initiatives develop and publish a 'Sustainable Development Procurement Guidelines and Procedures' to their supply-chain.

Other sustainability concerns that affect supply-chains relate to health and safety of workers and customers, labor rights, business conduct and ethics, citizenship, and environmental impact. For example, fair trade certified businesses have a system designed to allow people to identify products that meet agreed environmental, labor standards and ethical principals.

However, there are varying shades of 'Going Green' and some of the questions for the supply chain may be:
• Recycled content
• Bio-based content
• Assessing toxic content (like Mercury in fluorescent lights) and disposal of hazardous waste
• Resource consumption (water, energy, carbon)
• Products take-back and actual recycling

HP approaches the supply-chain with a shared responsibility, and views sustainability as a journey, not a defined event with a finite target. HP has created environmental specifications in the 1980’s due to customer demands and regulation and has enhanced them since. In 2000, HP added the corporate social responsibility standards, which covered labor issues, workers rights, health and safety, ethics, global citizenship, as well as minimizing the environmental impact of producing and distributing the corporation’s products.

HP has the largest information technology (IT) industry's supply chain. Their Social and Environmental Responsibility (SER) program deals with product materials, components, manufacturing suppliers, and distribution services suppliers. Furthermore, HP shares accountability of its suppliers’ social and environmental performance, fosters commitment to corporate social responsibility among its supplier base, and collaborates to improve the supply chain SER performance.

In 2009, HP expanded its SER Program to include the indirect supply chain globally, i.e. including those suppliers providing products and services that are not used directly to produce HP’s electronic products.
Click on this link to read more about HP’s Supply Chain Social and Environmental Responsibility (SER) programs.

Similarly, Cisco has a strong corporate social responsibility (CSR) program with their value chain. Cisco shares with its suppliers the challenges of designing, fabricating, delivering, and managing the end of life of hundreds of product families.

Cisco’s approach to the supply chain social responsibility include Labor (protecting worker rights), ethics and Intellectual Property protection, Health and Safety, and environmental impact (efficient use and preservation of natural resources).

Cisco has developed and implemented the Supplier Code of Conduct, which conforms to the electronic industry code of conduct. Cisco oversaw a detailed evaluation of several high-risk suppliers and has worked with them to address instances of noncompliance. Collaborating with the supply chain, as well as creating corrective action plans, are all important goals for Cisco.

By working proactively with suppliers to reduce carbon emissions, waste production, and natural resource demands, in fiscal year 2009 (FY09) Cisco saved more than $12 million in annual cost. In addition, Cisco has implemented several projects focused on product packaging, resulting in a significant reduction in materials usage.
Click here to read more about Cisco’s value chain profile and programs and Cisco’s CSR report 2009.

Sustainable procurement experts agree that there are abundant opportunities in the field of sustainable supply chains. Best practices suggest to work together with the organization’s value chain in creating awareness, providing training to meet expectations, sharing of knowledge, and establishing corrective procedures. Experts also recommend that companies collaborate through industry specific consortiums, have a sounding board, and come up with practical recommendations and guidelines.

Crossroad image from green.sympatico.msn.ca

JOB LEADS

Check the following start-up job sites for career opportunities in sustainability, clean tech and several green sectors:

1. Startuply website - Helps job seekers to learn as much as possible about growing startups for the best fit possible. The site shows the startup company profile, number of people, funding status (and how much), they have (and from whom), what their revenue picture, and more.

2. Start up zone search engine

Use keywords green, supply chain, etc.

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