Green Procurement: Eco-Friendly Way to Business Growth

Environmental protection is one of the major responsibilities of industry and organizations as part of their triple bottom-line - People, Profits and Planet. Sustainable procurement is a way that organizations can practice to benefit both, environment and economy. It emphasizes on the selection and purchase of eco-friendly materials, parts and supplies like recycled-content office paper, energy from renewable sources, VOC-free paints, natural ingredient cleaners, etc., which will have no or less impact on the environment. 

Green procurement offers the potential to reduce environmental impacts and risks, while delivering economical benefits to the organizations. INSEAD Business School has proven through its research that, Sustainable Procurement can yield positive economical benefits for companies in terms of "Risk Management", "Cost Reduction" and "Revenue Growth." By sourcing environment-friendly material or parts, organizations preempt consumer and environmental risks during usage and disposal stages and ensures quality living. As consumers are becoming sensitive to environment, companies can benefit from increased sales and revenue by offering products that are made with eco-friendly materials or parts. On the other hand, by controlling the use of hazardous waste and through recycling, costs of material, logistics, and disposal can be saved significantly. For example, Anheuser-Busch saved more than 250 million pounds of aluminum and 800 million pounds of glass and recycled more than 1,000 tons of plastic strapping by working with suppliers.  Whirlpool, through its strict manufacturing process, ensures that 85 to 90 percent of the materials (steel and other metals, some plastics) used in Whirlpool products can be recycled.
 
Purchase organizations, as part of their procurement & quality policy should include green standards/criteria that guide buyers to source materials from suppliers whose processes are driven by environmental standards. In 1997 recognizing the negative impacts of parts sourced on environment, Canon has issued "Global Canon Green Procurement Standards" and "Global Canon Green Procurement Guide." As part of its purchase policy & standards, Canon's primary focus is to assess and ensure their supply sources for environmental sustainability. It conducts Supplier Environmental Evaluation every time contracts are renewed or contracts awarded. Their latest version is 8.1 which was issued in March 2012. Canon's purchase policy lists out chemical substances contained in parts and materials delivered to Canon into three categories: 1) prohibited substances - substances which should not be used in materials or parts; 2) Use-restricted substances - substances that are allowed to be used in parts and materials for a specified periods; 3) Controlled Substances - that require tracking of the absence/presence of each substance in parts and materials. 

Toyota Motor Corporation, through the company-wide implementation of its Earth Charter strives to work more closely with its suppliers and promotes green procurement in order reduce environmental impact of vehicle parts as well as raw and supplementary materials at a global scale. Since April 2003, Sony sources its parts and materials for its products solely from suppliers that have been certified as Green Partners. This green procurement policy has also been extended in the purchase of its office products & supplies and ensures that only "eco" mark products are bought.

Go Green with Efficient Freight Logistics

Freight logistics across the world account for at least 1/3rd of fuel consumption and carbon dioxide emissions. Employing efficient transportation mode(s) will reduce carbon emissions and energy costs. For instance according to one of the IEA publications, shifting to more efficient freight transportation modes is expected to reduce CO2 emissions by at least forty per cent. Road transport consumes significantly more energy per tonne-km than rail or ship freight transport. Using more marine and train solutions to supplement truck transportation will reduce the emissions. But because freight can't be shipped to every place using train or marine, freight transporters prefer road transportation. Multi-modal transportation integrating road, rail and marine offers the best solution in such cases. Banking more on LTL (Less-than-truck-load) for goods shipment will not only reduce transportation costs for firms but also reduces congestion and impact on environment. However, when orders need to be expedited transporters bank on trucks for direct shipment. In such situation, logisticians should employ better practices that will improve logistics efficiency and cut carbon emissions.   More efficient logistics reduced the Volvo Group’s carbon footprint by 22 percent.

Use of advanced methods & tools for Vehicle Routing & Scheduling and load planning can optimize both loads and traveling distance. With the help of longer vehicles, firms can transport more goods during each run. For instance, use of truck rigs that are 25, 32, 40 meters long will make road transportation more efficient. Rigs will be able to ship two to three 40-ft containers, thus reducing CO2 emissions per ton per kilometer drastically. Besides, theoretical and practical training for truck drivers in fuel-efficient driving, will improve the fuel efficiency. Further, trucks should be equipped with more modern engines, which consume less fuel and emit less carbon dioxide. During 2006 - 2010, such green logistics practices helped Volvo Group’s transportation of goods in Europe reduce their carbon footprint by 22 percent improving their logistics efficiency.