In the past month, a number of large-scale products manufacturers (IBM, Ford, Intel, Proctor & Gamble, Puma) and service providers (Kaiser Permanente) have issued sustainability focused supply chain related announcements. As noted by Green Advantages’ Andrew Winston, a common theme of each of these mandates focuses on “transparency” (http://bit.ly/a8Tjfq). Also, new reports are emerging that companies are taking climate change programs to their respective supply bases (http://bit.ly/bbNCya) as means to support corporate responsibility reporting.
But, while a “Green Supply Chain” starts with a promise and a goal or two, what I have heard from many logistics and sustainability professionals that the hard work centers on actually requiring and monitoring supply chain compliance. Most practitioners believe, as I do that sustainable sourcing and green supply chain effectiveness must include supplier monitoring and “verification” to truly be effective and sustainable. This need was also underscored recently by reports out of China that many IT suppliers to major global electronics manufacturers were in “gross” violation of many of China’s environmental regulations (see China’s IT Poisons in the Huffington Post http://huff.to/a3mlcx).
That is why the mandates from IBM, Proctor & Gamble and Kaiser Permanente stand above the rest and offer great promise. Each of these programs includes a verification element to supplier conformance. In addition the IBM and Proctor & Gamble initiatives contain a component that rates individual vendors on the basis of maintaining a proactive environmental management system and other key environmental performance metrics important to each company. This data in turn is rolled up to support company-specific corporate sustainability performance criteria. Monitoring and verification through demonstrated performance metrics is strongly encouraged through implementation of proactive management systems (such as ISO 14001-2004 or other continual improvement based certifications). This step assures that the information provided by suppliers is accurate (so as to not compromise what is reported and to avoid reputational risk in corporate social responsibility reporting).
There is no doubt in my mind that green supply chain management 1) improves logistics agility by helping company’s mitigate or leverage risks and speed innovations; 2) increases adaptability by fostering innovative processes and continuous improvements, and (most importantly) 3) promotes alignment, by creating a platform to negotiate policies between suppliers and customers, thus resulting in better alignment of business processes and principles.
Last month I spoke at the Aberdeen Research Group Supply Chain Summit in San Francisco (http://bit.ly/d7e856 )on strategic and tactical steps that companies can take to green their supply chain. A key takeaway from many of the presentations at the conference was the critical importance and value of “collaboration” and optimized value chain management to leverage supply chain positioning. These two elements are critical elements to successful supply chain “greening” as I recently noted (http://bit.ly/93C2Xp). Three tactical tools that I discussed at the Aberdeen Summit include:
1) Prequalification of suppliers
- Require/encourage environmental criteria for approved suppliers
- Require/encourage suppliers to undertake independent environmental certification (ISO 14001)
2) Environmental requirements at the purchasing phase
- Build environmental criteria into supplier contract specs
- Incorporate 3BL staff on sourcing teams
3) Multi-tiered supply base environmental performance management
- Supplier environmental questionnaires
- On site supplier environmental audits and assessments
Finally in order to be successful in implementation of sustainable supply chain practices, it’s vital that suppliers are engaged early in the supply chain development process by : 1) working with industry peers to standardize requirements; 2) informing suppliers of corporate environmental concerns by issuing statements related to triple bottom line priorities to suppliers or distributing a comprehensive green supply chain management policy ; and 3) promotion of exchange of information and ideas through sponsored supplier events and mentoring programs.
I summed up my presentation (can be viewed here http://slidesha.re/9fY6mz) with a few key points, which I offer for your consideration:
- Look for the win-win and make the business case, both internally and externally
- Consider the holistic supply chain – engage your key suppliers that are most vital to your most important product
- Consider all aspects of your business & innovate
- Consider the Extended Enterprise both up and downstream of your organization (several tiers deep)
Perhaps most importantly, get started today and engage your supply chain to implement green practices. Improving sustainability in the supply chain and implementing verification practices may be the key to pulling away from your competitors and establishing your company as sustainability-focused, “best-in-class” leader.