AMR’s Supply Chain Saves the World concept has re-energized my focus on environmental and socially responsible supply management practices. As a lowly researcher of commodity and electronic componentry markets in the early 1990’s, I kept my sanity (and sense of self-worth) by investigating environmental initiatives, like Energy Star and the first regulatory effort to remove hazardous materials from circuit boards and solder. While some good came from these efforts, for most comapnies these programs often seemed more like hobbies than strategic corporate initiatives.

Today, the conspiring forces of rising energy prices, inflation, increased regulation, and emerging market opportunities may finally provide the fuel necessary to make the latest push for sustainable supply strategies stick. This point was driven home at the recent AMR Supply Executive Conference when keynote speaker, former President Clinton said, “Japan produces two times the power from solar energy we do here in the United States. Why? Because they import all their energy.” Current oil prices and commodity scarcity could prompt similar moves in other first-world countries.

I have also been tracking the opportunities and impact of sustainable supply management strategies myself. During the Supply Management 2.0 Forum, I cited both Compliance and Marketing and Branding as two of the four areas where procurement is adding value to the enterprise — not just reducing costs.

Here are just some examples of supply management strategies that balance both profitiability and sustainability:

• May automotive sales figures showed that Toyota, Honda, and other Asian manufacturers claimed a record 40% of the U.S. market, thanks in large part to sales of more fuel efficient and hybrid vehicles.
• Starbucks has been proactively sourcing growers that commit to fair labor practices, fair pay, and environmentally responsible cultivation methods. The company proudly markets this supply management practice under the Fair Trade logo on all its coffee. At the AMR Conference President Clinton suggested that he was responsible for convincing Starbucks to developing suppliers in war-torn and poverty-sticken regions, such as Rawanda and parts of Indonesia.
• A Purchasing magazine article highlights an initiative by Interface Inc., the world’s largest carpet manufacturer, to move to a “zero environmental footprint.” Interface sourced and developed suppliers to provide usable industrial and consumer discards, redesigned or recycled plastic, and bio-based raw materials. In the first decade of the program, the company saved more than $260 million from waste reduction. Better yet, Interface Chairman Ray Anderson said customer preferences for greener products is increasing company revenues.
• Siemens, which presented at the AMR conference, has launched several sustainability programs under the “SiemensOne” umbrella, including creating waste water recycling systems in Toluca, Mexico for a DaimlerChrylser product facility. The system allowed the automaker to continue operating in the area without draining scarce water resources from the region.
• New batteries produced by Johnson Controls Inc. consist 80% recycled lead and plastic. This company run recycling initiative also helped JCI hold down costs in the face of metals and plastics price increases. In addition, JCI has devised ways to eliminate materials and waste in their production processes. Example: last year the company began producing door panels using a method that eliminates the need for adhesives and additional wrapping operations. In addition to the environmental benefits, the effort also sped production cycles and reduced supply costs and production waste.
• A great cNet article examines how Google and Microsoft are battling to be the greenest portal and search engine provider. Both companies have launched incentive programs to encourage employees to buy energy efficient vehicles (good news for Toyota and Honda), created green buildings, and are using solar power systems to power their office buildings. Microsoft Chairman Bill Gates has also invested in an ethanol fuel manufacturer.

I will be dedicating a series of posts to the concept of environmental and socially sustainable supply strategies. I encourage you to contribute examples of your own company’s sustainable supply methods. And check back here often for more tips.