Following Products Through The Green Supply Chain

For most companies, the path to sustainability begins with the supply chain. After all, the supply chain is where companies move things, make things, store things, and throw things away. It is a crucial part of an organization's environmental footprint. Green supply chain management-the integration of both environmental and supply chain management-is a proven way to reduce a company's impact on the environment while improving business performance.

Greening the supply chain takes a long-term commitment. Even for companies that have an environmentally focused culture, green supply chain implementation is a multi-year program, requiring significant resource investment.i Successful green supply chain management companies include many profitable firms such as Herman Miller, Hewlett Packard, Timberland, Xerox. For these companies, going green
is not just a slogan, it is an integral part of their business strategy; they link sustainable programs to reducing costs, increasing revenue, and mitigating risks.

Setting the Vision

Successful green supply chain programs are integrated within the corporate green strategy and, ultimately, the overall business strategy. Without this alignment, a company risks wasting resources on efforts that don't deliver business value. As such, defining the green strategy shapes product and supply chain requirements.

Timberland and Herman Miller both have an environmentally focused corporate culture; differences in their business strategy result in different green supply chain visions. Herman Miller's customers are more motivated by price; as a result, Herman Miller's green supply chain strategy is geared toward programs that have minimal impact on product price.iii In contrast, Timberland sells products for outdoor enthusiasts, an environmentally conscious customer segment. As a result, the environmental impacts of its products play a large part in their product strategy. Timberland shoes have a "nutrition label" to define the amount of energy used to make the product. The company also developed the Earthwatch Boot, an environmentally friendly shoe assembled using green processes with water-based adhesives and no PVC.

The green vision starts with customer requirements and includes green programs the customer is willing to pay for. A company's internal business strategy is then used to identify the role of environmental stewardship. The overall strategy is brought together by requirements for green operation from stakeholders, which include regulators, investors, and community members.

With the vision set, senior management support, both in words and resources, can make the idea real. HP used a company-wide Supply-Chain Council to sponsor its green supply chain programs. This senior leadership in green programs was a key component of HP's success and ensured green initiatives were closely tied to the overall supply chain business strategy.v The senior leadership was accompanied by product stewards who worked with design teams to ensure green requirements were included in the product.vi Timberland, likewise, has an environmental stewardship group that acts as an internal consultant to support project ideas from the business, incubate the ideas, and then fully implement them.

The last step includes measuring the success of a company's green programs. Companies should select the metrics that would illustrate green progress and success, and then set aggressive targets. Timberland has led its industry in developing a Green Index for its products, which takes into account a product's climate impact, chemical content, and resource consumption. HP has set specific packaging reduction goals and product content targets, and it's working with the Carbon Disclosure Project to measure supply chain carbon footprints. Herman Miller, likewise, uses the McDonough Braungart's Design Chemistry (MBDC) product assessment approach to set goals for product content. These measures and targets allow companies to track progress of green programs, while clearly communicating priorities to employees and supply chain partners.

It's the Inside that Counts

Understanding the product's contents allows companies to identify the product's environmental impact as it passes through its life cycle. The MBDC framework categorizes material by the type of impact it creates-recyclability, human health risk, etc.-and by the magnitude of that impact.
Herman Miller fully embraced the MBDC approach to rate the sustainability of its products with a goal for achieving 50 percent product compliance with the MBDC criteria by 2010 and 100 percent compliance by 2020. This approach has allowed the company to identify products with the largest environmental impacts and isolate the most harmful components.xi HP's product stewards leverage industry standards for product content and environmental best practices to propel green designs.xii Similarly, Timberland works diligently to remove harmful materials such as PVC and solvents from its products.

Following the Product

While a product's materials have intrinsic environmental impacts, the supply chain that brings them together creates further complexities. Mapping the supply chain identifies the involved players and processes and their impact on the environment. Perhaps more importantly, it also identifies key partners for implementing green supply chain initiatives.

In this step, a framework such as the Supply-Chain Council's Supply Chain Operations Reference (SCOR) model helps structure a company's efforts and save considerable time and effort. In fact, the GreenSCOR version of SCOR was created specifically to facilitate mapping and evaluating the supply chain with an environmental focus.

A company starts mapping the supply chain by tracing the origin of each product component back to its original source, identifying the companies involved, and the processes used. It then maps the product's travels to the end-user. Ideally, the entire product life cycle would be identified, from raw material extraction and transportation to final customer use and disposal. This process can reveal gaps in knowledge about a company's supply chain, especially in stages beyond the company's direct reach. The created supply chain map can then identify energy consumed and waste and emissions generated at every step in the product's life cycle.

Timberland takes this lifecycle approach to assessing its supply chains. Its assessment of the leather supply chain even includes estimating the carbon emissions from the cows. The company then follows the leather through the supply chain all the way to the inclusion in a shoe and delivery to the customer.

Companies must not forget to assess the packaging materials used across the supply chain. Excess packaging reduces the quantity shipped per shipment, increases the fuel consumption per unit shipped, and requires proper disposal after use. HP looked at packaging for one of its camera products and was able to increase the number of units on a pallet from 300 to 720 while reducing packaging weight by 175 grams per unit.

Product Use and End of Life

Although removed from the producer, the environmental impacts from product use and disposal are very important. Green companies should keep in mind that their products may go through several customers after they sell it and should work that into their impact assessments of the product's total life cycle.

Mapping the final fate of a product helps identify which portions can be recycled, and through what processes. Here is where the environmental impacts of disposal are assessed for materials that cannot be recycled.

As an example, Xerox identified components in its copiers that could be reused in new machines. By designing products to take advantage of these components, Xerox avoided purchasing new components and saved several hundred million dollars a year. They also instituted a take-back program for old machines to guarantee a source of supply for used components. This had the added benefit of saving customers the burden of disposing of older machines, which earned Xerox higher customer loyalty.

Recyclability assessments also need to include the effort required to disassemble the product. This is critical for a number of reasons. First, many materials cannot be recycled if they are mixed with other materials, so components that are permanently attached may not be recyclable despite being made from acceptable material. Second, there is energy and effort involved in disassembling, separating, and recycling a product; if that effort is too high, consumers may decide to throw the product away rather than recycle it, eliminating any benefit from recyclable content.

Herman Miller assesses all of its furniture for recyclability and disassembly. The measurement uses a scale of orange, red, yellow, and green for materials and a target to completely disassemble the product in thirty minutes or less using one person and standard tools.

Rolling out a Greener Supply Chain

Let's assume a company now has a clear green supply chain vision and a complete picture of its products' environmental impacts; it should now take actions to achieve that vision. It is important to maintain a life cycle view of the product when undertaking this step-after all, the goal should be to green the entire supply chain, not just the impact of one step.

Many companies find using lean manufacturing techniques and ongoing statistical analysis helps identify innovative ways to reduce waste.xviii In addition, independent groups and trade associations have specific tools for improving environmental performance, such as the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) Green Building Rating System™.

Of course, taking actions across the product life cycle involves collaborating with suppliers and customers to change their processes or behavior. Oftentimes, companies find they need to forge new relationships with customers and suppliers. Here, metrics and targets become critical tools for communicating priorities and benefits, and improving partner acceptance.

When Drew Schramm of Herman Miller started working with suppliers, he received diverse reactions. Most suppliers worked with Herman Miller to design new materials. But he also ran into a few suppliers that refused to participate. Schramm relied on persistence and clear communication to convert the skeptics.

Judy Glazer of HP says her company combines clear communication of environmental requirements, such as restricted materials and green operations expectations, with close supplier collaboration at the executive level. Each supplier understands HP's code of conduct, which sets social and environmental expectations. HP routinely invites suppliers to be part of the product design process and also works with them in areas of mutual benefit.

As a company evaluates how to approach its suppliers, it should keep in mind they may supply other firms in the industry as well. Both HP and Timberland have led their industries in developing industry-wide standards that improve compliance while reducing the reporting burden on suppliers. Timberland worked with its competitors to develop a scorecard for leather production processes. As a result, suppliers report their performance using a single tool, even though the shoe manufacturers may set different standards. HP has implemented similar practices through the Electronics Industry Code of Conduct.

Once the supply chain has gotten the green light, a continuous evaluation progress can ensure it stays green. After all, going green is not a one-time initiative, but a continuous effort to identify ways to reduce a company's environmental impact and improve business performance.

*Footnotes