Green Options

If you are thinking about ways to green your supply chain, you’re not alone. A Supply Chain Consortium survey showed that organizations of all sizes are implementing sustainability initiatives throughout the supply chain not only to achieve regulatory compliance, but also to improve brand image and customer satisfaction.

What does that mean? The most effective greening of purchasing involves thinking about your entire inbound supply chain with an overriding purpose in mind: to select and purchase goods and services that are affordable, and have the least possible environmental impact throughout the course of every phase of their lifecycle including manufacturing, shipping/transportation, use, and recycling or disposal. And, contrary to popular belief, green purchasing does not always have to mean higher costs—although sometimes it will. In fact, by greening your supply chain you can often streamline your purchasing process, reduce overall costs, and improve your environmental footprint.

There are five good supply chain strategies that can be used to reduce waste. You can start by considering strategies that reduce the physical distance between where materials are sourced and where they are used. These strategies not only help reduce travel-related emissions, but also often result in shorter times to market and lower inventory holding costs:

Buying local is an excellent greening strategy. There significant social, environmental, and economic benefits to creating local economies. At this writing, some thirty-six cities and towns—from Albuquerque to Tampa—have adopted programs to label and promote locally owned businesses. It is always worthwhile to check with your vendors about the availability of local products and materials. Buying local also provides business owners with more control over their materials and end products. As an example, one wholesale distributor of locally grown food products in Michigan tells the story of being able to deliver poultry products that are cut to customer specifications quickly and on a regular basis, something that would be impossible if he were using larger, more distant vendors. The Business Alliance for Local Living Economies (BALLE) is a good resource for finding a local business network in your area.

If Wal-Mart is ever going to achieve the status of a company truly committed to sustainable business practices, there’s one 800-pound gorilla that it must address: China. The company’s sustainability summit on October 21 and 22 in Beijing was an attempt to do that, both from a PR perspective, but also in terms of “laying down the law” with its suppliers in China.

Green to Gold author Andrew Winston attended the summit, and listed the following commitments and statements that came out of it in a blog post at Harvard Business’ “Leading Green” blog:

• Supplier commitments: All suppliers will sign new agreements indicating compliance with environmental laws, starting with Chinese suppliers to the U.S., UK, and Canada in just 3 months. Over the next 3 years, all suppliers globally will sign.
• Audits: Wal-Mart will “strengthen” its surprise and third-party audit program
• Supplier goals: The top 200 suppliers will achieve 20% energy efficiency improvement, and most importantly, “By 2012, all suppliers that we buy from directly should source 95% of product from companies that have the highest ratings in audits.”
• Product goals and quality: Zero defective merchandise returns by 2012. Lee Scott connected quality to sustainability in very funny, specific terms: “Customers want a sock that will not fall down even if washed.”
• Transparency: Suppliers must reveal the name and location of every factory they use to make a product, as early as November for apparel, then home goods, toys, and others by the end of 2009. As [Wal-Mart's Vice Chairman Mike] Duke said, “If you sell us tennis shoes, we expect you to know and tell us where it was made and which sub-contractors were involved…If you don’t pose these questions, our customers will…in this age of YouTube there is no trust without transparency.” (Wal-Mart will have more insight into what’s going on at factories than ever before thanks to the work of Ma Jun who runs an NGO that has compiled compliance data on every factory. See his group’s stunning water pollution map here.)
• Dropping suppliers: Wal-Mart will work with suppliers that fail to comply, but “if after a period of time, the supplier does not improve, we will move our business.”

In what is being called the “the most ambitious private sector drive yet” to go green, Wal-Mart told hundreds of the chain’s top Chinese suppliers this week that the store intends to raise standards and “green” its supply chain.

You read correctly.  At this week’s “sustainability summit,” in Beijing,  Lee Scott, Wal-Mart’s CEO,  told top Chinese suppliers that the chain “intends to use its market power to get more than just low prices.” At the gathering: Procter & Gamble, FedEx, Kimberly-Clark, Coca-Cola and Rubbermaid.

The Financial Times called the summit “the most ambitious private sector drive yet to reduce waste and pollution in China’s export-focused manufacturing industries.”

“Our environmental footprint is primarily through our supply chain as a company,” says Matt Kistler, head of Wal-Mart’s global sustainability efforts. “So we have the ability to really build a world-class, better quality, better value supply chain.”

Energy independence seems to be each country’s topmost agenda in today’s challenging economic climate. While many companies are looking to take advantage of the new tax credits extended to renewable energy industries, others are looking to solve the problem finding ways to convert emissions into high value, sustainable technology. Carbon Sciences is developing a breakthrough technology to transform carbon dioxide (CO2) emissions into useful carbonate products that can be used by the paper, pharmaceuticals and FMCG industries.

Helveta, specializes in supply chain tracking systems that give companies the ability to track any and every item in their supply chain. In forestry, this means that it can link barcodes and radio identifiers to individual trees and map them using GPS and Helveta’s proprietary software.

Using these tags, it allows timber producers to demonstrate that their wood and lumber comes from a legal source. According to Patrick Newton, President of Helveta, this gives an additional level of auditability and supply chain assurance to buyers and watchdog groups:

If it doesn’t have the tag or the audit trail attached to it, they will know it is probably illegal

And, according to an article in the Economist, that’s exactly what is happening in Liberia.

An interesting article in The Wall Street Journal, Six Products, Six Carbon Footprints, highlights the next trend in green marketing, calculating and promoting the supply chain carbon footprint.

Never mind that the average consumer isn’t actually aware or at least has a pretty fuzzy grasp of what exactly a carbon footprint is, manufacturers are busily calculating away. And, they are finding some fairly interesting facts.

Leather, milk and meat from cows pack a pretty big carbon footprint: The average dairy cow produces, every year, an amount of greenhouse gas equivalent to four tons of carbon dioxide, according to U.S. government figures. Most of that comes not from carbon dioxide, in fact, but from a more-potent greenhouse gas: methane.

The recipe for a low-carbon load of laundry: Use liquid detergent instead of powder.

… a six-pack’s carbon footprint was about seven pounds. The real surprise was where the bulk of that number came from: the refrigeration of the beer at stores.

I actually found some of these things pretty interesting too, but as a marketer, I have different questions. I’m wondering if this will be the next wave in green marketing. I’m wondering if we will really be able to educate consumers that much about the manufacturing process. I’m wondering if they will care.

At this point my gut feel is that this WILL become a trend. Consumers will react to carbon footprint information. Leather will be out. Mothers will switch to soy and rice milk (even more than they currently are). Powder detergent will become passé.

Helveta aims to change the way supply chains are managed. With their software platform CI World™, Helveta is providing a solution to extended supply chain industry sectors (their initial two targets are the food and timber sectors) to enable an auditable chain of custody.

What does this mean? Specifically, it allows lumber and wood companies, fair-trade producers, and others to validate claims that their supplies are sustainably harvested, that their supply chain is held to rigorous standards, as well as providing risk assurance on extended supply chain purchases, and even royalty collections.

Last week I shared the triple bottom line adapted from our ECOpreneuring book. The triple bottom line encompasses people, planet and (some) profits. Since people run a business, I started by examining how the DNA of a Green Business Starts with People, touching on customers and employees (apparently not highly valued at the now defunct Lehman Brothers and Bear Stearns).

The other two People bottom lines are vendors/suppliers and investors (if your business has any), addressed below:

(3) Vendors and Suppliers

How a sustainable business chooses and interacts with vendors and suppliers, so-called business-to-business transactions, that provide the supplies and services the business needs to run is one way ecopreneurs are helping grow and magnify our impacts. We seek out like-minded vendors with whom to do business. Co-op America’s Green Pages (greenpages.com) is often our first stop to look for products our business might need, since it lists thousands of socially and environmentally responsible businesses.

A growing number of small businesses are perhaps inspired by the Amish and their collaborative sense of community and shared economic prosperity. Rather than working alone, many Amish provide goods or services to each other, working together on projects that on the surface may benefit only one farmer, but on the whole end up benefiting the entire community. As author Bill McKibben writes about in Deep Economy, there’s greater comfort and security from community membership than individual ownership. This idea is reflected in the business-to-business commerce mushrooming on the Internet and in small businesses, especially the nanocorps, or new forms of interlinked commercial websites, like Sohodojo.com.

The U.S. retail sector represented 4.5 trillion dollars in 2007 and so when retailers talk about trends we should listen. A new study released by The Aberdeen Group shows where retailers are going when it comes to going green. The good news is that the opportunities for eco-entrepreneurs will continue to grow.

According to Environmental Leader, the new report titled “Getting From Green To Gold: Retail Success Factors and Outcomes” lists the six key focus areas for retailers:

• Adopt enterprise-wide policies for green sourcing/procurement (59%)
• Institute eco-friendly mandates for waste management (54%)
• Institute eco-friendly mandates around packaging (48%)
• Redesign the retail supply chain to align with green/responsible mandates (41%)
• Offer eco-friendly end-of-life product programs to customers (41%)
• Redesign store facilities and infrastructure around sustainability goals (35%)

Kudos to my colleagues who go the extra mile to design seminars I’d wake up at the ungodly hour of 5:37 AM to sit and listen to in half-wake awe, Americano in hand.

Seminars that go by blockbuster titles - as least for green entrepreneurs - such as “How to manage carbon risk” have authentic learning value.

In our over-wired world, live events are a luxury, an hour or three to feel how much we really love context and contact, not just stoic information glaring out at us from a screen when we’re learning complex stuff - like international carbon trading markets.

More to the point, events are becoming an even more attractive “pull” medium than ever. And, the savvy, green entrepreneur should know how to harness the reputation and client lead potentials of a well-orchestrated event - an eco-friendly supplied event, that is.

Wal-Mart’s environmental initiatives have been a major part of the company’s recent attempts to win public favor. The company has made a number of lofty promises aimed at improving its carbon footprint AND its public image. CEO Lee Scott has announced plans to reduce packaging, improve its truck fleet and “green up” the company’s stores. Up until now, the public has bought it.

But an article in today’s Northwest Arkansas Morning News shows that the company’s suppliers [...]