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|
|Tips for a Green Office|
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
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.