A greener world
Lucy Glynn looks at an initiative to improve suppliers' environmental performance
Boots was one of seven host companies to take part in a pilot Envirowise project, launched in January 2002, to help retailers green the supply chains. With their suppliers, over 120 companies were involved and potential savings of more than £1.9m were identified. Phase two
The Supply Chain Partnership was such a success that Envirowise has now launched phase two - Retail Therapy - in partnership with the British Retail Consortium (BRC).
WHSmith, Safeway, Halfords and Manchester United have all signed up to the new initiative, with Boots and Center Parcs involved for the second year running. Nigel Smith, corporate social responsibility (CSR) director for the British Retail Consortium, says it became a partner because of excellent feedback from Boots. "It seemed to make sense," he says.
Richard Swannell, deputy project director for Envirowise, lists a number of pluses: "Working with suppliers to reduce costs, increase competitiveness, decrease waste and reduce environmental risk. It also helps companies build closer relationships with their suppliers," he says.
"People were a bit unsure what it all meant at first. But it's very positive. We provide them with training and help them prepare an action plan. At the end of five months, we get together and everyone shares their experiences. They identified the savings and did all the hard work, we simply helped. But by the end of it we couldn't shut them up."Overcoming supplier nerves
Holiday company Center Parcs took part in the pilot with 19 of its key suppliers. After an Envirowise workshop, laundry group Paragon, which washes sheets and towels for Center Parcs, installed a water recovery system which cut water costs by 12% and saved £36,000/year.
Simon Drury, UK environmental manager for Center Parcs, was already working closely with suppliers, but they were still unsure about the initiative. "They were nervous - worried about how much it would cost. But about halfway through our presentation they all started to get excited and said: 'Why are you doing this for me? This is fantastic'."
Most of the companies involved in the Supply Chain Partnership Forum found suppliers sceptical at first.
Carl Kockelbergh, practice development officer for the Chartered Institute of Purchasing and Supply, says this is normal. "People are traditional - happy to stick with what they know. The initiative is a change, so it has to be done in a structured way. You can't just say to people, 'you have to do this now'. It's an education and time issue."
But once this has been overcome, the benefits are multifaceted, Drury says. "Our suppliers saved over £500,000. Our supply relationships are much stronger and it spreads the environmental word. If you force your suppliers to get ISO 14001 they'll get it, but they don't want it and they don't like it. Your relationship with your supplier declines. Instead we say 'we want you to come down this route with us. We are not going to make you, but there are real benefits for you if you get involved in this'.
"It makes good economic sense too," he continues. "No matter how efficient you are as a business, there is always more you can do. And it doesn't have to cost you money. It doesn't cost you anything to get your staff thinking 'I must turn that light off'."Building momentum
Savings of £250,000 were identified by Boots' suppliers, and Robert Brown, the company's environmental and CSR consultant, says another benefit of the scheme is that the training lasts for five months. "It's enough time to encourage action and build enough momentum to ensure interest. It also leads to cheaper production in the long-term. If companies are more competitive, they stay in business. We don't get a cheque written out to Boots, but we get something in the long -term. It saves money and reduces waste, so you can't lose."
Although the Supply Chain Partnership Forum was launched to support the retail sector, local authorities and service and manufacturing companies wanted to get involved. Envirowise has now set up an engineering programme, which began last autumn. The companies involved have just completed the workshop programme and are about to set their targets. A furniture sector scheme started in April.
For other sectors, getting a trade association on board could help kick-start the process. Smith says having BRC endorsement helped to raise Retail Therapy's profile among its members. Also, Smith already has environmental contacts in companies, so the process of recruiting companies and their suppliers is that much easier.
High Peak Borough Council, in Derbyshire, joined the initiative as a host for 12 of its 50 suppliers and contractors. As a result, Glossop Leisure Centre installed waterless urinals, saving £333/year and new showerheads which reduced water use by 70% and water costs by £1,500/year. The leisure centre also replaced 80W fluorescent tubes with 70W natural daylight tubes, which reduced energy use while increasing light levels.
Council supplier, Natural Stone Sales saved £100,000/year in reduced haulage, rework, rejects and labour costs through more efficient quarrying.
For local authorities, the benefits of a supply chain partnership includes greater knowledge about companies tendering for contracts as well as greater competitiveness in the tendering process. Also, by helping companies comply with environmental laws, they can start greening their work practices rather than face the stress and cost of playing catch-up when legislation comes into force.
Companies involved in supply chain partnerships will be more competitive, less likely to be prosecuted and more likely to stay in business, which helps secures local jobs.
Gordon Murray, principal procurement consultant for the Improvement and Development Agency for local government, says that when local authorities award contracts they should factor in environmental costs and include criteria such as carrying out an environmental impact assessment and an action plan to minimise environmental impact over the length of the contract.Where to begin
Envirowise has published a step-by-step guide outlining how to develop supply chain partnerships. Also, to help in getting suppliers signed up, it has produced a presentation which highlights the benefits of the scheme and should quash any fears suppliers might have. Once suppliers are on board, it's important to get support from senior management as it's very difficult to make the initiative a success otherwise. It's also vital to get the purchasing department on board as it is usually a suppliers' main contact with a company. Purchasers must realise that a supply chain partnership involves a shift in emphasis from short-term opportunism to long-term profitability.
A change in your mindset also helps. Murray says: "You don't need a light bulb - you need light. Learn to ask how goals can be achieved in a way that is more cost effective and with less environmental impact."
Then realistic targets must be set. Cherry-pick quick savings by focusing on the highest costs, as this helps build confidence and motivation.
Waste reduction is a good place to start. The true cost of waste is typically 4% of turnover, but with simple measures this can be reduced to 1%. Waste minimisation enables companies to cut costs with much less effort than is needed to generate the same increase in profits from increased sales.
And after you've looked at waste, try reducing water use, look at energy management, transport logistics, cleaner design and packaging optimisation. "We are hoping this will become normal business practice," says Swannell.