To actually make your supply-chain more green, the first step is to understand what the main environmental impacts are and where they occur in the supply chain or product lifecycle.
I intend to write about what purchasing professionals can actually do to ‘green’ supply-chains and lower their organization’s carbon footprint. My goal is to stimulate ideas and debate; so please feel free to comment or add your ideas.
Increased public awareness, scrutiny from environmental groups, regulatory pressure and concerns about climate change has led companies in a race to establish their eco-credentials; through removing harmful but regulated substances like phthalates (often found in PVC) from products, changing palm oil suppliers to save rainforests, and setting huge targets to remove carbon emissions from supply chains. For many companies, their products’ biggest impacts, and therefore risks and opportunities, are from the supply chain in the production, extraction, cultivation, and transport of raw materials.
But at the moment, while there are big claims about the scale of emission reductions and environmental improvements that will be made through green or sustainable procurement, there are fewer details about how this will be done. However, there is a growing expectation that suppliers will be working to reduce their carbon footprints in all areas of business.
To actually make your supply-chain more green, the first step is to understand what the main environmental impacts are and where they occur in the supply chain or product lifecycle. From there it is possible to start managing the risks and realizing opportunities that alternative products or different production processes may offer. If product A accounts for 90% of your supply chain carbon footprint and product B only 10%, then a 10% improvement in A will be more significant than 50% from B, although both are desirable. In hard economic times it is even more important to prioritize resources, but getting to understand the impact of a supply chain could deliver healthy returns.
If it has not already happened, your customers may soon be reviewing their suppliers on environmental grounds, seeking compliance with a carbon accounting system or requesting targets to reduce emissions. Or, indeed you may be considering this for your own suppliers. This is a hugely challenging agenda, but by investing in data collection you will be in a position to collaborate with both customers and suppliers, approach negotiations on your own informed terms and to deliver measureable environmental improvements.
Managing the supply chain can be complex, but is definitely possible. Establishing a chain of custody for a product from cradle to grave, potentially across continents and different regulatory regimes can be challenging. The trick is to prioritize: to know where the biggest impacts along the supply chain are; identify suppliers making genuine environmental claims; and foster a collaborative approach to making environmental improvements with chosen suppliers.