Price, quality, delivery...and ethics

Doug Smock, chief editor -- Purchasing, 5/20/2004

“Fifty-one of the largest economies in the world are now corporations; only 49 are nation states,” says Dick Conrad, senior vice president of Hewlett Packard’s supply chain, which spends $40 billion a year --an amount that is much higher than the gross domestic product of many of the countries in which it operates. Conrad told Purchasing in a recent interview that Hewlett-Packard has believed for more than 60 years that such economic power also entails social responsibilities. “Many assume wrongly that a company exists simply to make money…the real reason HP exists is to make a contribution,” said cofounder David Packard.

HP requires suppliers to sign a Social and Environmental Responsibility Agreement and to follow its product content environmental specifications. Hp wants to ensure that products are recyclable when feasible, are free of toxic materials and conserve energy. HP wants halogen-free plastics for computer monitors and printers. Conrad said HP is even supporting early work on biodegradable polymers. Conrad wants to know if HP suppliers have minimum occupational health and safety stan-dards that apply to the facility’s operations regardless of where it is located and the prevailing laws in that location. Conrad wants to know if his suppliers require their suppliers to be in conformance.

Such issues are really at the heart of the matter since so much manufacturing, particularly in the high-tech sector has been outsourced to countries that are said to have minimal legal standards. And manufacturers will hide behind the cloak of their supply chains, claiming ignorance of actions at a tier three or four supplier. It’s great copy, but what does it really add up to? Conrad told Purchasing the focus is on the top 50 HP suppliers who provide 80% of the company’s requirements.

“We try to collaborate with our suppliers rather than bang them over the head,” says Conrad. Five of the 50 refused to sign up for the program and are currently under review. For a look at HP’s buying power, go to this story.

Click here for more information on HP’s program.

The membership of the Institute for Supply Management earlier this year created a document called Principles of Social Responsibility, which is designed to increased awareness of social issues among purchasing professionals. For more information on the ISM policy, and other developments at the annual conference, go here.