How to build the Green chemical supply chain
Chemical buyers begin to realize and measure the benefits of environmentally friendly sourcing.
By Richard Weissman -- Purchasing, 7/17/2008 2:00:00 AM
The chemical supply chain is turning Green. Not necessarily the dark lush green of summer, but more like the blush of green seen at the start of spring, hinting that the lusher green is on its way. While many chemical buyers and suppliers have formalized sustainability policies, few have fully embraced the concept of a Green supply chain. Yet, they recognize that it is an important part of their sustainability efforts.
“Being Green adds value to our business and fits directly into our sustainability efforts,” says Rose Perkins, manager of sustainable development for the Philadelphia-based electronic materials manufacturer Rohm and Haas. “Less toxic materials mean less need for protective clothing, less specialized handling, and less pollution abatement. This saves money for us and our customers.”
Perkins says that the electronics industry's code of conduct helps drive its sustainability efforts and, as a supplier to that industry, the choice for Rohm and Haas was clear. “Companies such as Intel, AMD, and Samsung have high expectations of suppliers like us and that pressure focuses our health and safety performance to go a bit above and beyond what is required. We chose to go Green as a competitive advantage.”
But the big challenge for chemical buyers is to get their suppliers to begin thinking and acting Green. “We are taking a leadership role with our suppliers by actively working with them on Green initiatives,” says Mary Mattock, a procurement manager at Rohm and Haas. “Our specifications have tightened considerably to support our Green efforts and most of our suppliers are striving to meet those specifications.” Mattock says there is increased emphasis on supplier qualification and making sure suppliers are aligned to the long term sustainability efforts of Rohm and Haas.
(See also: Dow Chemical to buy Rohm & Haas)
Weighing the cost
While environmental regulations and market demands may be a Green driver, cost concerns will always have a major place in sourcing decisions. “In general people start looking at Green chemicals because it is the right thing to do, but at the same time there is tremendous pressure on cost containment in most procurement organizations today,” says Dennis Gawlik, head of non-clinical sourcing at Seattle Children's Hospital and Regional Medical Center. “No matter the merits of going Green, we still need to justify costs and look at the associated ROI, just like with any other purchase.”
Gawlik says that cleaning chemicals are a significant purchase at the hospital and his team looks for environmentally safe products, but also evaluates them based on operational performance and cost. “The good news is that our suppliers are working with us to identify Green products and help us make the business case for environmentally safe and cost-effective supplies. We need to justify the sourcing decision.”
For Michael Bunge, manager of North American supply at Toledo, Ohio-based glass manufacturer Libbey, the Green supply chain is part of the company's deep seated sustainability values. “We've adopted the Institute for Supply Management's Principles of Social Responsibility and we incorporate those concepts into everything we do. In the glass industry, recycled content can reach 30-50%.”
Bunge measures the payback in adopting a Green supply chain on a case-by-case basis. “We work closely with our tier one suppliers on knowledge and technology transfer, and we see increased value when it comes to process improvement,” says Bunge. He adds that while Libbey may have some sophisticated international sourcing opportunities, many of its most important suppliers are local.
Turning the corner
Drew Schramm, senior vice president of supply management for Zeeland, Mich.-based furniture manufacturer Herman Miller, sees the Green supply chain quickly reaching the tipping point of providing value. “Our efforts were inconsistent early but we are gaining momentum in working with our supply base,” says Schramm. “Between government regulation and customer demands, we are betting that a stronger Green position with our suppliers will add long-term value.”
Herman Miller has emphasized environmental advocacy in a host of internal areas and this trend is moving strongly into its chemicals and plastics supply chain. “We are working closely with our plastics suppliers to provide a complete chemical breakdown of their products,” says Schramm. “Some find it a hassle but we need to manage the chemical composition of our products.”
Dow Chemical's Cindy Elliott has focused on Greening the logistics at her company. Elliott, the supply chain sourcing director, sees her organization creating value while maintaining Dow's sustainability goals. “We focus on energy savings with enhanced transportation utilization for internal transfer of chemicals between plants and to our customers,” says Elliott. “By maximizing payloads and shipment methods we can save considerable money and also improve the carbon footprint for us and our customers.”
Midland, Mich.-based Dow ships much of its chemicals supply by water. “We are the largest inland waterway shipper in the country,” says Elliott. “Believe it or not, barges are a very fuel-efficient, resulting in low environmental impact.”
Steve Roberge, the director of health and safety for Axcelis Technologies, a Beverly, Mass. electronics firm, is taking a watchful approach to Green. “We have done a lot of work internally to minimize our volatile organic compounds, especially isopropyl alcohol used in the manufacturing process,” says Roberge.
Roberge sees suppliers not only providing Green products but learning about overall sustainability efforts. “While our customers are driving our internal Green efforts, I now get calls from suppliers wanting to learn more about environmental management practices,” says Roberge. “That is a very positive sign.”
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