'Green' is good business

Paul Teague, Editor-in-Chief -- Purchasing, 11/17/2005

To landfill owners, the parts in the picture below look like money. They could charge a pretty penny to dispose of these parts.

To IBM, the parts look like money too—money saved.

Enveloped in those bins are products that were once leased by customers. When the leases were up, IBM asked them to send the equipment back so the company could recycle the parts into new equipment. That saves IBM from having to pay landfill owners to dump the equipment. And, it enables IBM to offer customers the option of buying or leasing equipment with recycled parts that have already been proven in the field.

IBM offers such product reuse and recycling options in 35 countries. In 2002, the company saved $2.9 million through such recycling activities.

Message: Being environmentally friendly is good business as well as a measure of corporate social responsibility.

That's why "green" purchasing and supply chain activities are spreading, and not just at electronics companies that must comply with the European Union's Restriction on the Use of Hazardous Substances (RoHS) Act. (See our coverage beginning on page 30.) Richard Jacobs, vice president of supply-chain management at Eaton Corp., says his company is pursuing several "green" initiatives to reduce waste, including eliminating additives in its automotive facilities that are harmful to the environment. His initial costs are higher, but he reduces consumption and engines stay clean longer. In another industry, Thoro Packaging sells paper roll cores to recyclers rather than sending them to landfills, and recycles all its aluminum plates.

A recent survey of readers shows that nearly 66% of them evaluate the environmental impact of materials and services they buy. Sixty percent say procurement should take a leading role in encouraging recycling and other environmentally friendly activities. But only 35% rank environmental issues as high on their list of priorities. Maybe more should. After all, as IBM and others have shown, this isn't simply an issue for "tree huggers." There is a business case for "green" activities. What do you think?