Supply Chain Management Blog : Green

How did HP become a "Green" Company?

christianverstraete — Fri, 25 Sep 2009 07:37:00 GMT

On Monday, Newsweek released their inaugural Green Rankings , and interestingly, HP finished at the top. In an article, titled " The Greenest Big Companies in America " they explain they decided to publicize this list to recognize the efforts...(read more)

Green for Dummies ... a couple thoughts

christianverstraete — Tue, 31 Mar 2009 08:09:00 GMT

There is a lot of discussion about Green IT, and there is a reason for it. According to the " Smart 2020: Enabling the low carbon economy in the information age " report from GSI and The Climate Group, "In 2007, the total footprint of the...(read more)

Carbon Neutral, reality or marketing?

christianverstraete — Tue, 10 Feb 2009 15:36:00 GMT

A couple days ago I received a quick note from one of my colleagues concerning an activity initiated by the UK government, the " Greening Government ICT: Efficient, Sustainable, Responsible ". In this initiative, they aim at making energy consumption...(read more)

Let's predict 2009 - 10 proposals for Manufacturing

christianverstraete — Sat, 20 Dec 2008 10:53:00 GMT

As 2008 winds down, many people are attempting to predict what will happen in 2009. One common element is that the year will be difficult from an economical perspective. Whether the crisis will last 6, 9 or 12 months is open for debate, but there is a...(read more)

Generate Value while going Green

christianverstraete — Mon, 01 Dec 2008 16:59:00 GMT

Up till a couple months ago, green was on the agenda of most enterprises. Since the financial meltdown has come with its economical difficulties and recession fears. It looks like green is disappearing from the agenda quickly, despite the fact going green can reduce costs, as illustrated by Reuters.. If this is the case, I believe it is a tremendous mistake. Working on their environmental impact helps companies reduce costs and mitigate risks. I also believe it may allow them to increase revenues by taking market share away from their competition. Let me try to illustrate my point here.

One of the key environmental measurements today is CO2 emissions. This is NOT the only element, but it is an important one as glasshouse gasses seem to impact our planet rather drastically. CO2 emissions have a lot to do with the burning of fossil energy. Again, there is more to it than that, but it is an important contributor. Reducing energy consumption is a way to reduce CO2 emissions, which in turn reduces the importance of a element of large variance in the supply chain. Even if the price of the barrel of oil is back around 50 $, the fact it went all the way to 147$ has been a wakeup call for many companies. If the economy picks up again, it could be back at such levels by the summer. So, the energy cost factor is a volatile one. Reducing its important in the product cost is more than welcome. So, by reducing cost and variance in the cost we have addressed an environmental concern. Green and costs are not mutually exclusive, as many people believe.

The other element to take into account is that, independently of reducing costs, it remains important to avoid being on the first page of the newspapers due to an environmental issue. This is probably more the case for companies owning a brand, as the brand is typically what suffers of such issues. And this is where risk mitigation comes in. Risk mitigation may cost money, indeed, and in difficult economical times, companies may be tempted not to focus on it. That is like not paying your insurance premiums when things get somewhat tougher. You might be able to get away with it, but there is the remote possibility of an issue that actually may leave you in a desperate financial situation. Aren't insurances there to avoid that?

The last element I want to bring up is the fact that focusing on the environment may increase your business, and I would like to illustrate this approach using a simple case study. Wal-Mart, the US retailer, initiated an "Eco-Challenge" some months ago, pushing their suppliers to submit ideas for the development of products with low amounts of packaging material. Our packaging engineers got working on this and one of them, based in Grenoble - France, came up with a brilliant and simple idea for our notebooks. Often when you buy a notebook, you also buy a carrying case, isn't it? You want to be able to safely transport your notebook. Well, what if HP provides you a notebook with it carrying case. Oh and by the way, let's manufacture that case from 100% recycled material. Rather than putting the notebook in specific packaging for its transport from Asia, we can now use the carrying case to do this. If it protects your notebook when you take it around, it can also do the same when HP's logistics partners transport it, isn't it? The advantage is 97% packaging material reduction. The only packaging left is the cardboard box in which a five notebooks are grouped to facilitate the stacking on the pallet. The consumer goes home with his/her new product in a nice bag and does not need to get rid of packaging material either. Everybody wins in the game. Not only did we win our category during the challenge, we are now also selling the product in the Wal-Mart stores. If you are interested in more details, you may want to look here.

The energy costs associated with running some of our products (eg. PC's) over their lifecycle are two to three times the price of the product itself. How many of us are looking at the actual consumption of a product prior to making a decision. In looking at total cost of ownership, buying the cheapest product may not always be the best solution. Making a product using less energy also benefits the customer. And we hope it increasingly becomes a sale criterion as consumers and businesses alike become more environmental conscious.

During the design of a product many decisions are taken that will affect both the cost and the eco-friendliness of the final product and its supply chain. Having development engineers that understand how to make products "greener", is a tremendous asset to reduce both the cost and environmental impact of the product throughout its whole lifecycle. We call this "Design for the Environment".

We need the End-to-End view

christianverstraete — Fri, 18 Jul 2008 13:09:00 GMT

I ran into a blog entry on Cnet the other day. It was entitled "LCD making worse for the environment than Coal?". This got me thinking. LCD televisions and screens are often seen as "green", eco-friendly, because they consume less energy than conventional CRT tubes. However, according to the blog, during manufacturing nitrogen trifluoride, whose globe-warming effect, according to scientists, is 17.000 times stronger than that from CO2, is used in chemical vapor disposition. I have heard a lot of requests to move to flat panel displays for lower energy consumption, but this was the first I heard about the harm during manufacturing.

It illustrates very well the importance of looking at the impact of a product throughout its whole lifecycle, from manufacturing all the way through recycling. Most companies today unfortunately do not provide that information, nor do they focus on that. We find many, laudable, efforts to reduce this or that substance from a product, but it is not put into context. If we take a substance out, by what do we replace it? Is the new substance, including its manufacturing, usage and recycling, less harmful than the previous one? These are the real questions that we need to ask ourselves.

HP and a number of other companies are using "Design for the Environment" to take the product lifecycle into account right from the product design stage. In doing so, they not only look at the manufacturing of the product, but also at its usage and recycling. Such approach requires an in depth understanding not only of the components going into the product (which can be obtained from the suppliers), but also from the product usage (work with consumers), and recycling operations. But to achieve this, the company needs data, provided by suppliers, the distribution channel, the consumers, and the reverse logistics partners. This is becoming the next battlefield. The companies that will be first at being able to convince their partners to share more information and use it to their advantage to make "greener" products will be the ultimate beneficiaries. Legislation helps, but has a tendency to lag behind the innovators.

With the same logic in mind, I was surfing another blog entry, called "BPA-free and proud of it", pointing out that Sigg, a Swiss company, has developed reusable drinking bottles in stainless steel to reduce the usage of disposable bottles and cups. It's an interesting concept. However, let's think about the lifecycle impact. What has been the effect of manufacturing the stainless steel and paint on the environment? How much water is used to rinse the bottle? If the bottle needs to be collected for refill, what is the effect of the collection process? And I could continue that way. Frankly, I don't know the answers to those questions, and the bottle may be a great addition to our increasing list of "greener" products. Unfortunately, I don't know whether anybody ever did the exercise.

You disagree with me, obviously feel free to react.

I am going on holiday for a couple weeks, so will be quiet, but my partners are keeping the blog going during my absense.

BOS & BOC, new acronyms to get used to?

christianverstraete — Sun, 13 Jul 2008 09:48:00 GMT

Green, sustainability and SER, are terms that appear increasingly in our publications and conversations. They draw our attention on the fact our products interact with their environment and potentially harm it. That impact needs to be evaluated from the development of the product onwards, and obviously, diminished as much as possible. This is what is being called DfE, design for the environment.

But this is easier said than done. Indeed, in today's environment, suppliers do not have the information at hand for each of their components, ingredients or substances. Actually, as mentioned in my previous post, the way to calculate the impact is not standardized, so even if the values exist, what do they mean?

During the development of a product, a Bill of Materials (BOM) and Bill of Process (BOP) are created. These will be used at a later stage in the operational systems. I would like to argue that we need to add two new bills to the series. These are first, the Bill of Substances (BOS), which would contain all the substances contained in the product and their quantities, and second, the Bill of Carbon (BOC), containing the amount of carbon emissions for the product at all stages in the manufacturing. There should be a close link between the BOM and the BOS, and between the BOP and the BOC. Operational systems should include modules to report on those two bills.

But now, how do we get the data to populate them. Obviously, the base information related to the components, ingredients and substances needs to come from the suppliers and be augmented with the data associated with the company's operations. The easiest way to do this would be for each company to report both the BOC and BOS for their own products. For the BOS, the information should be the sum of the information of each of the components, ingredients and substances included in the product, potentially reduced by the substances subtracted during the process. For the BOC, we should start from the sum of the information coming from the suppliers and add the quantities generated during manufacturing and transportation.

For the Bill of Carbon, we should agree on a standard way of calculation to ensure the numbers are meaningful and reflect reality. Obviously averages may have to be used, as not all manufacturing facilities generate the same amount of CO2 to make the same product, and that transportation can depend on the warehouse/distribution center used, on the distance to the customer etc. Let's stay pragmatic. Gaining visibility of the amount of CO2 generated, even if it is an average, would already go a long way to focus the attention on reducing it.

So, are we ready to increase our usage of three letter acronyms?

Carbon Footprint, you know yours?

christianverstraete — Wed, 09 Jul 2008 03:21:00 GMT

Two weeks ago at the green Supply Chain conference in London, Carbon Footprint was at the center of the discussions. And one of the topics referred to extensively was how to calculate carbon footprint. It’s actually a very good question and numerous efforts are being undertaken to find a standard way of doing so. Unfortunately, standards will take time and if some scientists, who predict the absence of ice on the North Pole in September, are correct, we may not have such time available. So, what do we do about it?

One of the speakers was very pragmatic. Regardless of the method used, he said, keep doing the same things; all what counts is that you improve. It really made me think. Are we not too often trying to find the ultimate, scientifically correct, method, rather than getting things going? Occasionally we need a pragmatist to tell us what really matters, isn’t it?

The second topic was how high to go in the Supply Chain. Should we go all the way to the raw material extraction company? And in that case, how do we get people cooperating all along. The above comment about the pragmatist made me think. What if each company calculates its own carbon emissions and how they relate to their products. If we all to that, the carbon footprint from my product is the sum of the carbon footprint from each of the components comprising the product, complemented with the emissions generated to transport and manufacture the product itself. By developing an IT infrastructure that allows the propagation of this information, an easy and pragmatic way of estimating carbon emissions could be found.

On the carbon topic, carbon labeling was discussed. As you may know Tesco in the UK is putting emphasis on adding carbon emissions on the packaging. In the example described, the Carbon Trust was used to calculate the actual emission, but what was interesting, beyond the number, was that printing the number on the package got as side effect that the manufacturer immediately started to look at how they could reduce that number. And the good news is that they already know how to do so.

The WWF just issued a report on how information technology can help reduce carbon emissions. The report titled “The potential global CO2 reductions from ICT use” not only addresses the energy reductions that can be achieved in the use of IT equipment, but also how IT equipment can help reduce energy consumptions from buildings, vehicles and manufacturing facilities through optimizing operations. The goal, reducing emissions by 1 billion tonnes. Let’s hope our industry can help achieve this ambitious objective.

How do you feel about your carbon footprint?