General Motors extends early lead in developing a Green supply chain
By William Atkinson -- Purchasing, 2/14/2008 7:00:00 AM
While many supply chain organizations are now just jumping on the "Green bandwagon" one company's supply chain organization has almost a decade of experience under its belt. In the late 1990s, Detroit-based automotive giant General Motors created a supplier environmental advisory board, which included a select group of Tier 1 suppliers. "We met quarterly, and we had a good exchange of ideas," says Pat Beattie, director, chemical risk management in GM's Environmental Services department. "However, we wanted to get more of the suppliers involved."
To test the waters, GM's Saturn division launched a Green supply chain project, starting with a pilot that involved Saturn tapping four of their suppliers to develop a process to integrate environmental aspects into some of the manufacturing activities.
Because of the success of this effort, GM realized the benefits of expanding the program to all of its suppliers corporate-wide. "However, we didn't have the resources to visit all of our suppliers to conduct all of the necessary workshops," states Beattie. "This is when we thought about working more closely with the Environmental Protection Agency and some of our Tier 1 suppliers, to create a formal organization that anyone in the automotive supply chain could join."
In 2003, GM partnered with the EPA to create the Suppliers Partnership for the Environment (www.supplierspartnership.org), a nonprofit organization designed to let automakers engage all levels of suppliers in the development of common-sense approaches to reducing environmental impacts. The Partnership has two goals. One is to benefit the environment. The other is to save money for both GM and its suppliers. And, according to GM, both goals can be achieved simultaneously. That is, when a company reduces the amount of material it purchases for production and/or reduces the waste that it sends to incineration, landfill, or treatment plants, it is helping the environment and reducing cost.
"During the first year, the Partnership involved GM, the EPA, and a number of our suppliers, including some Tier 2 and Tier 3 suppliers," says Beattie. About a year later, Chrysler joined. Now Ford has joined, adding a lot of momentum to the project.
The smaller suppliers benefit through direct access to the OEMs, as well as exposure to the leadership in the EPA. They are learning a lot about best practices that are helping them save money and make environmental improvements.
"The OEMs are becoming aware of some suppliers and other organizations that we didn't know about before," Beattie says.
Beattie notes that some of the most successful initiatives relate to sharing of energy reduction best practices both between large OEMs and among the suppliers. In terms of byproduct strategies, the Partnership is looking at waste streams that come from one company that may be able to be used as a resource by another company.
"One thing that is really exciting is that Goodwill is a member of our Partnership, and one of their areas of focus is to create jobs for people with disabilities," she notes. Goodwill has been able to create jobs for these people to handle these byproducts and recycle some things that would otherwise be waste coming out of the plants. So, in addition to the cost benefit and the environmental benefit, there is also a social benefit.
More recently, the Partnership launched a chemical issues work group and several Tier 1 suppliers that haven't been very involved in the Partnership so far are showing some interest in this work group, especially because of so much recent concern over chemicals in finished goods.
In terms of results and benefits, Beattie admits that it is difficult to calculate the actual dollars and cents benefits, because a lot of the suppliers that are achieving some savings prefer not to share these results with their Tier 1 suppliers or the auto manufacturers. "However, some of the case studies we do show that suppliers have reported potential savings in the several millions of dollars," she adds.
One of GM's smaller chemical suppliers went through one of the Partnership's "lean and green" workshops. As a result, they were able to reduce the use of about 10,000 pounds of hazardous material a year. They were also able to reduce their solid waste by about 15,000 pounds a year. "They also reduced their energy and water usage, which led to additional savings," states Beattie.
Overall, GM is very happy with the way things are going, and it hopes more companies will become members and participate in the effort. "It is a great opportunity to leverage ideas and work together," she emphasizes. "A number of auto manufacturers have a lot of common suppliers, and there is no reason we can't work together on a lot of these areas."
And probably the most significant sign of success: Because of the success of the Partnership, the EPA recently created the Green Suppliers Network (www.epa.gov/greensuppliers), modeled after the Suppliers Partnership for the Environment. "This is designed to expand the concept to other industries beyond just the auto industry," she concludes.
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