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Most companies direct their greenhouse reduction efforts at the emissions produced by their operations, as well as tier one and two suppliers. With studies showing that supply chains make up the bulk of a company’s carbon footprint, business leaders are scrambling to implement efficiency partnership with their vendors.
"The average industry has only 14 percent of its total greenhouse gas emissions in tier one and 12 percent in tier two," says Chris Hendrickson, co-director of the Green Design Institute at Carnegie Melon University in Pittsburgh, Pa.
He defines tiers three and four as the extended supply chain, including products' delivery, use and disposal. "The contribution of those tiers to the total carbon footprint of the business can be much more significant," he says.
While many leaders are slowly becoming aware of the sprawling environmental impact of their businesses, it appears few have a handle on what to do about it.
A recent McKinsey survey of more than 2,000 global executives, for example, shows that while nearly half of respondents say climate change is an important issue to consider in purchasing and supply chain management, fewer than one-quarter say their companies regularly take climate change into account in these areas.
Among high-tech and other manufacturing executives who participated in the survey, 54 percent and 56 percent of respondents respectively, say climate change is important in purchasing, yet these executives were no more likely than average to say it was considered in practice.
Part of the problem, says Hendrickson, is the lack of control over suppliers' operations. "Companies don't have enough data about their supply chains and they may have different perspectives about sustainability than their suppliers," he says. "It leaves business owners worrying about things that are out of their control."
But that control can be secured. Like quality and cost expectations, greener business practices can be factored into the supplier relationship, and many businesses are already making it a central part of supplier contracts and partnerships with vendors to promote environmentally friendly initiatives across the supply chain.
| Key Tips for a Greener Supply Chain |
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Prioritize environmental stewardship in your supply chain reward system Help suppliers identify areas for improvement in their operations, and partner with them to achieve these goals. Show suppliers how energy reduction programs lead to cost savings to get them on board Related News & Blogs Begin with simple solutions that deliver fast results, such as waste reduction, before moving on to more innovative solutions. |
GreenBiz.com
Supply Chain Emissions May Represent 'Greatest Impact'
Global computer giant, Dell, is striving to meet its goal of becoming the "greenest technology company on the planet." That includes becoming carbon neutral and meeting a goal of avoiding 99 percent waste from its operations by 2012.
Dell leadership understands the only way to achieve this goal is to first clearly define the company's overall environmental impact. Then it introduces greener policies across the supply chain from raw materials to products' end-of-life, says Tod Arbogast, Dell's director of sustainability.
"Companies that don't focus on the environmental impact of their supply chain and product, along with their own operations, are likely missing their greatest impact," he says.
Dell, based in Round Rock, Texas, is currently conducting a life-cycle analysis of the greenhouse gas emissions generated by the entire business, from end to end.
"We don't have all the numbers yet," Arbogast reports, "but I can tell you our tier one and tier two operations make up the smallest part, by a significant measure, compared to our external supply chain and product impact."
