Green strategies: Ariba's got 10 tips for the supply chain
By Manufacturing Business Technology Staff -- Manufacturing Business Technology, 9/20/2007 1:46:00 PM
With increasing regulation, "green" sourcing is tantamount to ensuring goods and services maintain high environmental standards while maximizing revenue. But going green isn't easy. Ariba, a spend management solutions vendor, offers 10 tips To jump-start a green supply chain.
"The green sourcing wave has begun to roll," says Kris Colby, senior manager, Ariba. "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 you spend."
Ariba suggests these best practices for green souring and supply chain management with minimal investment:
1. Know where you stand: Understanding the 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 the organization's "green" status, including a carbon footprint study, will yield the information needed to determine how well the supply chain is positioned for changes on the horizon.
2. Make a plan: Once you know where you stand, create a set of goals and metrics that can be used to track progress against these goals.
3. Establish a single point of accountability: Many organizations appoint "chief sustainability officers" to oversee their green efforts. The appropriateness of this position depends on the organization and the industry, but the key is to have a single point of accountability empowered to effect change.
4. Market progress internally and externally: Half the battle is getting the word out and bringing people onboard. 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 existing sourcing and procurement processes: Sourcing and procurement are more than just price. Be sure to include green criteria in requests for proposals, 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 the supply base during the sourcing process and proactively monitoring compliance/progress will lead to fast improvements in sustainability performance. Outline what suppliers will be expected to provide and how they will be measured to ensure they are enabling the processes and procedures to drive compliance.
7. Stay current with global regulations: Environmental regulations such as the Restriction of Hazardous Substances (RoHS) directive affect how the supply chain functions regardless of location. Enact procedures for keeping up with changes in this rapidly evolving area to avoid costly supply chain mistakes.
8. Review 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, join trade groups, and do whatever it takes to maintain a competitive advantage.
9. Do the "easy stuff" first: It doesn't require a supply chain overhaul 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 a 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, and Operations involved.
"Driving corporate sustainability requires time and effort," concludes Colby. "But by taking these actions, procurement can get the process started and start realizing results."
