In the Trenches: Green Procurement and the Supply Chain
In this continuing series, Jennifer Ulrich shares her experiences in the trenches of executing strategic sourcing projects, to give you practical insights into best practices.
With Earth Day just around the corner I thought I would touch upon the familiar topic of green procurement and the movement towards more sustainable supply chains. Large corporations and small businesses alike are focusing their efforts on developing guidelines to help drive their operations in a greener direction, and green requirements are a trend that we are seeing more than ever within our customers. In this month’s column I will address some challenges that companies face when going green, as well as some myths about green procurement. I will also discuss some easy ways to get started for those who may not already have something in place but are looking for ways to do so.
“Green” procurement policies generally state that organizations will make an effort to purchase goods and services that minimize environmental impacts and ultimately allow the company to create a smaller footprint. While the supply base has grown tremendously in this industry over the past several years there are still quite a few hurdles to overcome when implementing these best practices in organizations. The following myths and challenges may sound familiar.
Myth #1: Green products are more expensive than non-green equivalents.
This is a common misconception, green products are not always more expensive in purchase cost. This will depend on the type of product and whether or not the manufacturing costs are built into the upfront purchase price of the item. Oftentimes environmentally considerate product lines are similar in cost to products that may not meet the same green requirements. This is also based on a time when there were few suppliers in the market focused on sustainable products. Nowadays the supply base is flooded with recycled material suppliers, and as such, increased competition has driven costs down for many environmentally conscious goods.
Challenge #1: Perform a thorough price comparison analysis on green versus non-green purchases.
While some green products are in fact more costly upfront, consider the impact that purchase will have in the long term. Some factors to consider include the transportation costs of toxic materials versus non-toxic, less liability when considering the product’s lifecycle, energy savings and reduced disposal costs. Softer costs include less training required for non-toxic substances and therefore reduced health and safety costs for the organization. In general, when performing a thorough green versus non-green analysis, it is important to consider the upfront cost, the usage costs throughout the product’s lifecycle and finally the disposal costs.
Myth #2: Green products are less effective than non-green products.
While this can be true in some cases, companies go to great lengths to ensure that the products they sell are sufficient for the purposes they intend them for. Green cleaning products for example, are tested thoroughly to ensure their efficacy in comparison to their non-green counterparts. The fact is, many green alternatives have the same quality and even meet the same technical and quality specifications as their non-green origins.
Challenge #2: Finding suitable green alternatives.
The green movement has been going on for many decades but only recently have we seen a real trend towards eco-friendly consumerism. As market demand increases, manufacturers will find ways to improve green products and find better alternatives. When implementing any new product companies generally require a trial and error period, green products would require the same type of testing and evaluation prior to putting them into a production environment. This might be a good opportunity to consider incorporating green alternatives into the testing process. Another imbedded challenge is the availability of eco-friendly products. Not all suppliers will carry the products and some many have limited supply. Therefore, when transitioning to green alternatives, locate adequate sources, or multiple sources to avoid running into shortages.
Myth #3: Green procurement means purchasing goods that have recycled content.
Eco-friendly procurement can mean many different things to an organization. Green procurement practices are not just about switching from OEM products to remanufactured components or buying recycled paper products. Building a sustainable supply chain might involve considering the social repercussions of the manufacturing practices associated to the products being purchased. This includes human rights violations, labor conditions, and reducing poverty. While these factors might be somewhat extreme to some, organizations can also consider moving to more green practices such as implementing policies for recycling or minimizing consumption through reduction practices. For instance, recycling used toner cartridges instead of disposing of them.
Challenge #3: Implementing and enforcing green procurement practices.
Organizations that have made the decision to move to more environmental friendly business practices will need to establish guidelines to direct staff. Depending on the current practices and the culture within the company this may present a challenge, veering away from what was always done can sometimes take time and effort. The first step to overcoming this challenge is through education. Presenting the staff with seminars or educational materials around the benefits of green practices and the basics on how to achieve them will help the transition. It is also important for management to express commitment to the change. Another initial step includes establishing a baseline for future comparison on what is being purchased today, and set short and long term goals. Management can encourage this by assigning rewards for departments that meet key goals, thus incorporating employees on an individual basis as well as company-wide.
So what are some ways that organizations can get started towards a more sustainable supply chain?
Buy “green”. Office supplies are an excellent area to get started with. Some examples include moving from OEM toner to remanufactured and purchasing goods that are high in recycled materials. Switch from bottled water to water coolers with recyclable and refillable containers. Another consideration is generally managing the office supplies more efficiently to avoid overuse and waste of supplies.
Think “green”. By changing some simple office behaviors you can encourage better practices, and it won’t cost much to implement. Think before you print. Do you really need to print that email or document? Do you need that in color? Optimize energy settings on work computers to save more energy during downtime. Encourage the use of natural light in the office as opposed to artificial light, if possible.
Involve others. Ask your suppliers for ways they can help improve green efficiencies in either their product supply or services. Include green clauses in contracts that encourage the use of more eco-friendly practices such as battery operated machinery as opposed to gas powered. This will also demonstrate the organization’s commitment to green procurement and the movement in general.
These are just a few small tips. There are endless possibilities to reduce carbon footprints depending on how aggressive of a program the organization wants to implement. Of course some are easier than others. In making the decision to become greener and developing a more sustainable supply chain the first step has already been accomplished.