Government program provides Lean and Green supplier assessments
Buyers cheer the introduction of the Green Suppliers Network (GSN)
By William Atkinson -- Purchasing, 12/11/2008 2:00:00 AM
For years, manufacturers have been trying to get their suppliers to operate more Lean, in order to achieve cost savings and efficiency improvements from which all parties could benefit. More recently, the effort has been to encourage suppliers to operate more Green. In some cases, though, Lean and Green end up being in conflict, because going Green sometimes adds cost and cuts efficiency.
Buyers weighing these considerations have cheered the introduction of the Green Suppliers Network (GSN), a program co-managed by the U.S. Department of Commerce and the U.S. Environmental Protection Agency, now being offered to U.S. industry. GSN is designed to help small and medium-sized businesses, which often lack the expertise and resources to engage in Lean and sustainability initiatives, to do just that. Suppliers interested in receiving GSN assessments can contact the GSN organization. In addition, manufacturers can nominate their suppliers for the assessments.
The assessments are conducted by representatives from the National Institute of Standards and Technology's (NIST) Manufacturing Extension Partnership (MEP), which is part of the U.S. Department of Commerce. The inspectors are hired from local manufacturing extension partnership locations. When they go out to conduct assessments, they make recommendations, and then the suppliers have the option of implement ing the recommendations. Theoretically, the recommendations would lead to both cost reductions and sustainability improvements.
Office furniture maker Steelcase in Grand Rapids, Mich. has been nominating its suppliers for GSN assessments since 2004. "What interested us most about the Green Suppliers Network were the practical aspects, which involved combining Lean with Green," says Mary Ellen Mika, supply chain manager at Steelcase. "This was really appealing to the supply chain management side of our business, because we have always been looking for ways to reduce cost, while incorporating sustainability at the same time." According to Mika, you can't just get involved in Green and ignore cost issues.
With four years of experience in GSN assessments, Steelcase has compiled a number of recommendations for success. First, Mika points out that senior management needs to believe strongly in the GSN, to the point that they would be willing to pay for the supplier assessments. (Payment options for assessments vary, and are often a combination of EPA grants, supplier payments and customer payments.)
Secondly, it is important to have the proper expertise. "In some organizations, sustainability expertise resides outside of the supply chain group," notes Mika. "This can make it difficult to get suppliers involved, because the organization first has to help the supply chain group understand it, and then go out to the suppliers." At Steelcase, though, sustainability expertise already existed in the supply chain group, so it was easy for them to encourage suppliers to get involved.
The next tip is to identify enthusiastic and creative suppliers that might benefit from a Lean and sustainability assessment to get involved early. Once success is achieved there, they will be willing to spread the word to other suppliers, Mika says.
Another key to GSN success is introducing the concept in detail to the supplier. Steelcase sends an invitation that explains the GSN, what it involves, what the potential benefits are, and examples of how it has worked with other suppliers.
Mika also recommends spending time in advance of deciding what kinds of expectations, if any, you will have from suppliers following GSN assessments. "At first, we did have some expectations of suppliers in terms of sharing some information and some of the cost savings," she says. However, the emphasis was more on the information than the cost savings, so that the company would have some ideas on how to improve its own operations.
Such expectations, however, caused some suppliers to balk at having Steelcase fund the assessments, because they weren't comfortable accepting Steelcase's money without knowing what we would be expecting from them in return, such as how much detail would be required about the recommendations, or how much of the cost savings they gained from implementing the recommendations, explains Mika.
Eventually, though, once suppliers started achieving some successes and talking among themselves, they began to feel much more comfortable and began to trust sharing information with Steelcase. They realized that Steelcase wasn't trying to wring everything out of them that they had just gained from the assessments.
"We eventually eliminated our expectations for information and cost sharing, because we became confident that we didn't need them," continues Mika. "We found that suppliers actually became enthusiastic about sharing information on their own." In addition, the company found, at the next bid opportunity, the suppliers were able to bid lower, because they had found more ways to reduce costs in their operations and they were better able to respond to additional sustainability initiatives that Steelcase had in place.
Mika says in some cases, assessors find a lot of Lean opportunities when visiting suppliers while in other cases they find that most of the opportunities lie on the sustainability side. One of Steelcase's suppliers, a metal fabrication and tooling shop, gained benefits on both sides. Between 2002 and 2005, the supplier's cost of natural gas increased from $3,500 to $12,000 a month. Two of the recommendations that the GSN team made were to install additional insulation and industrial-grade fans to re-direct excess heat. These initiatives increased the efficiency of the supplier's oven heating units and provided enough heat to eliminate the need for furnace heating during the winter. The team also recommended some Lean initiatives that the supplier implemented. As a result, the supplier was able to reduce its annual natural gas costs by $73,000, increase its delivery speed from nine days to two days, and cut its set-up time from one hour to 20 minutes.
Besides Lean and Green improvements for Steelcase and its suppliers, the company has also seen an increased overall awareness of the importance of sustainability among suppliers. "The program has helped us get some of our suppliers involved with some of our other sustainability initiatives that are unrelated to the Green Suppliers Network, such as Green product certifications," she reports. The concepts of Lean and Green became so important to Steelcase and its suppliers that some suppliers wanted to do some of the same things with Steelcase's facilities and use their expertise to help Steelcase improve its own Lean and sustainability activities, according to Mika.
While the program is well in place in the U.S., Steelcase sees opportunities internationally. Obviously, since GSN is a U.S. government program, it won't be able to use the exact same program. "We have a couple of suppliers in Canada that have gone through a similar program," she says. "We are also beginning a program in France, and then hope to expand to more of Europe." Steelcase has also talked with the World Environment Council about possibly getting some of its suppliers in Mexico and Southeast Asia involved in a similar program.
Mika's final recommendation? "It is not at all difficult to get started. As a supply chain group, we don't have to do the work. We don't have to conduct the assessments or create the reports. All we do is play a matchmaking role."
For more information on the GSN, go to: www.greensuppliers.gov.
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