Eco-friendly supply chain
Companies have found that having an eco-friendly supply chain can save money.
Mon, Nov 08, 2010 at 10:53 AM
Being green is the hottest trend to hit the corporate world since outsourcing. Companies have spent a fortune re-branding themselves as green, and have paid special attention to recycling, protecting endangered forests, sourcing local products and managing water consumption during the manufacturing process.
But companies themselves are consumers. Just as shoppers buy their products, companies buy goods that are components of their products or aid in the manufacturing of their products. And they’ve found it’s not enough for them to be green. The companies that supply them with goods and services must also use green sourcing and manufacturing methods.
That’s what’s called an eco-friendly supply chain. And according to a study by management consulting firm Accenture, companies have found that having an eco-friendly supply chain can save money.
What is the eco-friendly supply chain?
All companies have a supply chain. It traces the process by which companies develop and produce their goods, and then sell those goods to consumers. For some companies, the supply chain is fairly straightforward. But for large companies in the retail, hospitality and manufacturing sectors, for example, the supply chain can consist of hundreds, if not thousands, of individual firms that provide component goods and services.
In order to have an eco-friendly supply chain, these large companies must be sure that their suppliers, for example, harvest wood in a sustainable way. Or that they don’t deplete the water supply in areas where they work.
Key aspects of the eco-friendly supply chain
The specific aspects of the eco-friendly supply chain vary from industry to industry.
For grocers, for example, buying more fruits and vegetables from local sources is key, according to The Packer, which covers the fresh produce industry. That’s because it reduces the distance the produce must travel from the field to the consumer’s table.
For companies in the electronics industry, the process of obtaining minerals such as tin, tantalum and cobalt is a key part of the eco-friendly supply chain, according to the Electronic Industry Citizenship Coalition. That’s because mining for such materials typically takes place in the developing world where there can be sensitive geopolitical and environmental ramifications. (For more information, visit: http://www.eicc.info/)
There are, however, some basic aspects of the eco-friendly supply chain that affect all companies. For example, most companies are looking to reduce emissions, energy use and waste.
Companies that have excelled at greening the supply chain
It’s no surprise that the world’s largest retailer, Wal-Mart Stores, is leading the pack when it comes to having an eco-friendly supply chain.
According to Wal-Mart, its customers “want to know the product’s entire lifecycle.” The retailer’s customers want to know that its products are produced in a responsible way.
To achieve that end, Wal-Mart has created a sustainability index for its suppliers. The first step of the index is the supplier sustainability assessment, which includes a 15-question survey. The questions are aimed at determining if the suppliers have embraced three broad goals:
- Reducing waste to zero
- Using 100 percent renewable energy
- Selling sustainable products
For example, suppliers need to say whether they have measured and taken steps to reduce their annual corporate greenhouse emissions.
For more information, visit Wal-Mart's sustainability section.
A company such as Apple, which makes computers and consumer electronics, faces an additional set of priorities as it creates an eco-friendly supply chain. The company has outlined its environmental expectations along with human rights stipulations in its supplier code of conduct.
Since many of its products are made at factories in the developing world, Apple pays special attention to the safety of these facilities, and to the rights of the workers. That means outlawing child labor, and insisting that workers not be disciplined for alerting managers to safety issues.
Apple also stipulates that its suppliers limit the normal work week to 60 hours. Workers at supplier factories are given one vacation day per seven days worked.
In addition, Apple asks suppliers to pay strict attention to the emission of volatile chemicals, aerosols and combustion byproducts that are produced during manufacturing. Suppliers are expected to reduce or eliminate solid waste.
For more information, visit Apple's Supplier Code of Conduct.
According to Marriott International, the hotel chain spends $10 billion each year buying products and services for its 3,000 hospitality properties. And it has taken steps to make sure those purchases are green.
Marriott purchases 47 million pens each year to stock hotel and meeting rooms, and each pen is composed of 75 percent recycled material. And the 24 million key cards it buys each year are made of 50 percent recycled material. The hotel chain says that saves 66 tons of plastic that would otherwise end up in a landfill. The company has pledged to replace 100,000 synthetic pillows with ones filled with material from recycled bottles.
For more information, visit Marriott's Green Supply Chain page.
For more information on how large companies are reaping savings from an eco-friendly supply chain, read the Accenture report.
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