Green supply chain
How does a business evaluate the links in its supply chain to ensure suppliers behave ethically and operate in manner that doesn’t harm the environment?
Mon, Mar 26, 2012 at 02:31 PM
GETTING GREEN: Workers work on the production line at a Foxconn plant in China. Foxconn uses a remediation service to address issues in its factories, including sustainability. (Photo: ZUMA Press)
Consumers who consider themselves green want to associate with ethical, eco-friendly businesses. Likewise, a business that wants to consider itself green needs to associate with suppliers who are ethical and eco-friendly.
So, how does a business create a green supply chain to ensure suppliers behave ethically and operate in manner that doesn’t harm the environment?
Start with fuel and water
Richard Wilding, professor of supply chain strategy at the Cranfield School of Management at Cransfield University in the United Kingdom, says that the sustainability of all businesses starts with the materials that all companies use, whether directly or indirectly, and that’s fuel and water.
“We are all aware of the oil crisis, but there is also a water crisis going on worldwide,” says Wilding. “Sustainability for a business is going to depend on their ability to reduce their use of these materials in a variety of ways.”
Wilding recommends a video by the World Wildlife Foundation called “Change the Way You Think About Everything,” which discusses how much water we use and waste.
“The video shows how much water it takes to make a cup of coffee [a latte],” Wilding explains. “It explains that it takes over 50 gallons of water to make your morning latte, and what businesses and individuals can do to produce all the materials needed with less waste.”
Jim May, a senior executive in the national supply chain practice of the Chicago-based business and technology consulting firm West Monroe Partners, explains that green and sustainable supply chains have at heart an adherence to four high-level principles.
“These principles surround human rights, labor, environment, and corruption,” says May. “Sustainable businesses ensure that human rights are supported and respected at all times, and they are not involved in any human rights abuses. Labor is about the elimination of forced and child labor. The principle of environment means that green companies ensure that no harm comes to the environment through their practices, and they proactively support the adoption and use of eco-friendly technologies.”
It is not just important that the primary company follows these principles; all of their subcontractors and business partners must follow them as well in order for the main company to fulfill its goal of becoming a successful green business.
Apple and Foxconn workers
A recent example would be Apple and its relationship with Foxconn Technology. Foxconn, which manufactures products for Apple, has been strongly criticized recently by labor rights groups who say the company subjects its workers to unsafe working conditions and forced overtime.
“The important thing to know about the Foxconn concerns is that Apple self-reported,” says Wilding. “They had a system in place so that they broke the story, and were already working to fix the issues.” Having a remediation process in place is one of the trends in sustainable supply chains.
The exciting thing about green supply chains is what is on the horizon.
“In terms of trends, companies are not only considering sustainability journeys, but implementing them,” says Jim May. “More and more companies are creating score cards for their suppliers, and putting in place a vetting process.”
In Europe, Wilding says he notices the beginning of systems that could make logistics and shipping much more efficient by introducing the business equivalent of carpooling.
“Currently in the UK, competing companies are working together to share resources that don’t violate the competitive aspects of their businesses,” he says. “Right now, this is being demonstrated mostly in shipping.”
Wilding explains that there was so much waste in transportation, with half-filled trucks and ships traveling around the country and the world, it made sense the share that resource.
That sort of thinking makes it easy to see the economic benefits of instituting a more green supply chain.