The green sourcing wave has begun to roll with an increasing number of electronics companies beginning to catch on and ride the wave in an effort to proactively manage a new era of customer needs, environmental regulations and competitive realities that will ultimately impact their business.
Far from a fad or feel-good initiative, green sourcing is fast emerging as a strategic business imperative. As recent headlines involving quality issues make clear, an electronics manufacturer's relationship with its supply base is a top of mind issue for executives, customers and shareholders. And they're relying on procurement to proactively manage it.
Companies that want to get ahead of the curve and stay there need to begin thinking green now and develop an approach to sourcing and supply chain management that factors this new reality into their plans. It sounds like a daunting task. But with the following 10 simple steps, procurement organizations can jumpstart their efforts and get on the path to success.
1. Know where you stand: Understanding your organization's spend, supply chain and consumption patterns is naturally the first step because you can't affect what you can't see. Whether this is a detailed carbon footprint study or an assessment of your organization's "green" status, you need to know how your supply chain is positioned for the changes on the horizon.
2. Have a plan: Once you understand where you stand, create a set of goals and, even more importantly, metrics that can be used to track progress. For example, many electronics companies have made it their mission to improve end-of-life management by extending lifetime of hardware through increasingly modular and available components, expandable memory and easily navigable upgrade paths. This is a case in which several initiatives result from the identification of a broader goal.
3. Have a single point of accountability: Many organizations have appointed chief sustainability officers to oversee their green efforts. The applicability of this specific position will depend on your organization and industry, but the key is to have a single point of accountability that is empowered to effect change.
4. Market your progress internally and externally: Half the battle is getting the word out and getting people on-board. Be sure to communicate to all levels why green efforts are being undertaken (Goals); what will be measured (Metrics), and how the company is going to get there (Plan).
5. Incorporate "green" into your existing sourcing and procurement processes: Sourcing and procurement have always been about more than just price. Factoring green priorities into your existing processes is a natural extension of the non-price process, and an effective way to drive green goals. 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.
Organizations need to be as detailed as possible, which means they should explicitly disallow harmful chemicals such as CFCs or HCFCs, chlorinated solvents, cadmium, mercury, chlorinated or brominated flame retardants. Conversely, language needs to specify approved and preferred materials such as long-lasting low-mercury lamps or rechargeable and recyclable batteries.
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.
For example, since disposing old electronics is a potentially costly endeavor legally, financially and environmentally, make it clear to suppliers your company expects them to conserve materials; use chemicals and components that are less toxic and create products that can be easily disassembled for waste reduction, reuse and recycling purposes.
7. Stay up-to-date with global regulations: Sustainability regulations such as RoHS in the European Union (EU) will increasingly impact how your supply chain functions regardless of your location. And similar legislation is developing elsewhere, too. California's Electronic Waste Recycling Act (EWRA) prohibited the sale of electronic devices banned by the EU's RoHS including CRTs, LCDs and other products that contain the four heavy metals restricted by RoHS.
In addition, many states have already enacted mercury and PBDE bans, and several are considering bills similar to EWRA. For example, the City of Seattle has many regulations related to cutting down paper-based manuals and recycling mandates. Moreover, China has passed its own RoHS legislation.
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 industry groups, do whatever it takes to maintain your competitive advantage and not be left behind.
Thus, it pays for electronics companies to look at the emerging packaging paradigms such as the "multi-pak" made of recycled materials that contains several units which is being used to replace systems in which the majority of units are shipped individually.
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 kick-start your green initiative. Negotiate leasing or buy back options into your electronics contracts to make sure that hardware goes back to the manufacturer for recycling instead of heading for landfills. Or, simply label material types of all components, so consumers know how to group materials when it comes time for disposal.
10. Get everyone involved: As with any broad initiative, trying to make an impact on the entire organization from the efforts of just one functional area is nearly impossible. To be effective, you need engineering, design, sales, finance and everyone else involved.
By acting on these ten steps now, you can ensure that your organization will be well-positioned to limit risks and profit from the opportunities that green initiatives hold.
About the authors: Kris Colby is a senior manager and David Fertal is an engineering project manager in the Spend Management Services group at Ariba, Inc.