Sourcing : 2011 : July : 11

With companies eager to adapt to a new era of customer needs, regulations and competitive realities, green sourcing has become tantamount to ensuring that goods and services maintain high environmental standards while maximizing revenue potential. But going green isn’t easy.

The green sourcing wave has begun to roll, and is far from a feel-good fad. Green sourcing is fast emerging as a key business imperative that can deliver bottom-line results. Closely aligned with the foundations and best practices of strategic sourcing, green sourcing is all about understanding your spend, proactively managing your suppliers, and making sure that your organization's priorities are accurately reflected in every dollar your company spends.

What Could Green Sourcing Mean?1
Waste Reduction Initiatives that result from green policies can save you hundreds of millions of dollars. Green Buildings will save you significant energy costs, improve the environment, and even improve your health. (Fresh air with increased oxygen content is the best cure for the new wave of environmental illness that results when some people are locked in closed steel and concrete buildings with stale air for long periods of time. Green Buyers can avoid environmental taxes and resultant cost increases. Green Products improve market share.

What Could Green Sourcing Mean?1

Waste Reduction Initiatives that result from green policies can save you hundreds of millions of dollars.
Green Buildings will save you significant energy costs, improve the environment, and even improve your health. (Fresh air with increased oxygen content is the best cure for the new wave of environmental illness that results when some people are locked in closed steel and concrete buildings with stale air for long periods of time.
Green Buyers can avoid environmental taxes and resultant cost increases.
Green Products improve market share.

Tips for a Green Office
To conserve energy and reduce internal heat gain, turn off computers, monitors, printers and copiers during non-business hours. Do not leave equipment in sleep mode overnight because it will continue to draw a small amount of power. To save energy during periods of inactivity, ensure that the built-in power management system for your office equipment is active. Ensure your screen saver is compatible with the computer's power management features, and that the setup allows the system to go into power saver mode. Laptop computers use 90% less energy than a desktop system When purchasing new office equipment, look for ENERGY STAR. The ENERGY STAR office equipment program promotes energy-efficient computers, monitors, printers, fax machines, scanners, copiers and multi-function devices that automatically power down during extended inactivity. Energy saving of 50% or more is possible. Install plug load controllers in cubicles to control multiple loads like monitors, task lights and fans. These devises use a motion sensor that is incorporated with a plug load surge suppressor. Inactive equipment can be shut down when the cubicle is unoccupied. Use e-mail instead of sending memos and faxing documents If you need to print, consider double-sided printing and reusing paper. Educate and encourage employees to be energy-conscious and to offer ideas about how energy can be saved. Employee buy-in and involvement can make or break your company's efforts to conserve energy Designate a "responsible party" to be responsible for and to promote good energy practices for the organization and/or facility. This individual should work with management to facilitate energy savings ideas and strategies - optimizing energy use and costs minimizes overhead and operation costs.

Tips for a Green Office

To conserve energy and reduce internal heat gain, turn off computers, monitors, printers and copiers during non-business hours. Do not leave equipment in sleep mode overnight because it will continue to draw a small amount of power.
To save energy during periods of inactivity, ensure that the built-in power management system for your office equipment is active.
Ensure your screen saver is compatible with the computer's power management features, and that the setup allows the system to go into power saver mode.
Laptop computers use 90% less energy than a desktop system
When purchasing new office equipment, look for ENERGY STAR. The ENERGY STAR office equipment program promotes energy-efficient computers, monitors, printers, fax machines, scanners, copiers and multi-function devices that automatically power down during extended inactivity. Energy saving of 50% or more is possible.
Install plug load controllers in cubicles to control multiple loads like monitors, task lights and fans. These devises use a motion sensor that is incorporated with a plug load surge suppressor. Inactive equipment can be shut down when the cubicle is unoccupied.
Use e-mail instead of sending memos and faxing documents
If you need to print, consider double-sided printing and reusing paper.
Educate and encourage employees to be energy-conscious and to offer ideas about how energy can be saved. Employee buy-in and involvement can make or break your company's efforts to conserve energy
Designate a "responsible party" to be responsible for and to promote good energy practices for the organization and/or facility. This individual should work with management to facilitate energy savings ideas and strategies - optimizing energy use and costs minimizes overhead and operation costs.

Ten Tips for Greening Supply Chains

1. Know Where You Stand

Understanding your organization's spend, supply chain and consumption patterns is the first step because you can't affect what you can't see. A simple assessment of your organization’s “green” status of a more detailed carbon footprint study will provide you with the information you need to determine how well your supply chain is positioned for the changes on the horizon.

2. Have a Plan

Once you know where you stand, create a set of goals and, even more important, metrics that can be used to track progress against these goals.

3. Have a Single Point of Accountability

Many organizations have appointed "chief sustainability officers" to oversee their green efforts. The appropriateness of this specific position will depend on your organization and industry, but the key is to have a single point of accountability empowered to effect change

4. Market Your Progress Internally and Externally

Half the battle is getting the word out and bringing people on board. Be sure to communicate to all levels why green efforts are being undertaken, what will be measured and how the company is going to get there.

5. Incorporate "Green" Into Your Existing Sourcing and Procurement Processes

Sourcing and procurement have always been about more than just price. Be sure to include green criteria in your requests for proposals (RFPs) and create clear metrics for measuring them as part of supplier performance management.

6. Communicate Your Goals and Standards to Your Supplier Community

By setting clear expectations of your supply base during the sourcing process and proactively monitoring compliance/progress, you can quickly improve your sustainability performance. Outline what suppliers will be expected to provide and how they will be measured to ensure that they are delivering and putting in place the processes and procedures to drive compliance.

7. Stay Up-to-Date With Global Regulations

Environmental regulations such as the Restriction of Hazardous Substances (RoHS) directive in the European Union will increasingly affect how your supply chain functions regardless of your location. You need a method for keeping up with changes in this rapidly evolving area to avoid costly mistakes in your supply chain.

8. Keep Up With New Materials, Technologies and Processes

Significant work is being done to develop new approaches that can cost-effectively address the challenges and opportunities that green initiatives present. Stay up-to-date in your industry, participate in trade groups and do whatever it takes to maintain your competitive advantage and not be left behind.

9. Do the "Easy Stuff" First

You don't need to overhaul your supply chain to see gains from sustainability efforts. Instead, identify "quick wins" such as simple improvements in energy efficiency that can both deliver bottom-line results and kickstart your green initiative.

10. Get Everyone Involved

As with any broad initiative, it is nearly impossible for just one functional area to have an impact on the entire organization through its efforts alone. To be effective, get Engineering, Design, Sales, Finance, Operations and everyone else involved.

Green Sourcing — Focus on Asking the Right Questions First

If your company hasn’t already joined embraced green sourcing, it’s possible that you are…quite frankly…a little scared. Scared that making a switch to a greener product line could backfire, either financially by driving up costs or from a PR/brand perspective if your new “green” decisions don’t deliver as expected. You can have great intentions to shift to a greener supply chain, but wind up publicly embarrassed when your suppliers either:

misrepresent themselves or
their green standards don’t live up to consumers’ expectations.

The way to avoid succumbing to ‘greenwashing’ is to stop it at the source. If your RFx focuses on uncovering the right information, you’ll greatly decrease the chances of a surprise in the future. Each product or service you source is different, so you’ll need to adjust your RFx accordingly.

Green Sourcing RFx Questions for your potential suppliers:

Do you have energy efficient production technology?
Do you have manufacturing facilities running on renewable energy?
What are your waste management strategies (i.e. recycling or landfill or composting)?
Do you have an Social and Environmental Corporate Responsibility Program?
Do you have an environmental management system (EMS)?
Do you consider environmental issues in the design process?
Do you provide any data on your company’s environmental impacts?
Are any toxic materials in your manufacturing process? If so, please identify.
Do you incorporate any recycled material, particularly from post-consumer sources, in your production?
Are you Forest Stewardship Council (FSC) certified?
Are you Sustainable Forestry Initiative (SFI) certified?
Are you ISO 14001 certified?

Luckily, there are several guidelines and certification organizations who help you and your supply base achieve their sustainability goes. For example, the ISO 14001 certification helps organizations minimize how their operations negatively effect the environment, comply with applicable laws and regulations. And their stamp of approval ensures that these issues have been vetted:

Design and functionality of the product
Extraction and processing of materials
Manufacturing processes
Packaging and distribution
How the product is used
Recycling, reuse and disposal

*Adapted from Supply Excellence article by Kimberly Davis-Gerst, Ariba

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Beverly Dunn is a Customer Success Manager with Ariba. All customers are invited to join the private Customer Success group on Ariba Exchange, where you can access the Customer Success Spotlights, Lunch 'n Learn Webinar calendar and replays, and the Ariba Knowledge Nuggets.

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