Green demands trickle down the supply chain

If you want to sell to the big-name IT vendors, you must inject green into your products -- and your practices Government regulations, both national and international, impose a fairly high green bar for hardware vendors, limiting the toxic substances their wares can contain and the energy they can consume. But more IT vendors, such as IBM, HP, Dell, and Xerox, have been raising that bar even higher, scrutinizing

If you want to sell to the big-name IT vendors, you must inject green into your products -- and your practices

Government regulations, both national and international, impose a fairly high green bar for hardware vendors, limiting the toxic substances their wares can contain and the energy they can consume. But more IT vendors, such as IBM, HP, Dell, and Xerox, have been raising that bar even higher, scrutinizing not only suppliers' materials and manufacturing processes, but their overall environmental practices.

For companies aspiring to land a potentially lucrative deal with some of the more environmentally conscious, big-name tech vendors, that means you can't simply ensure those components you're hawking comply with the fine print of ROHS; you must have strategies in place to reduce energy consumption, conserve water, and e-waste, as well as to meet social-responsibility criteria such as those spelled out in the Electronic Industry Code of Conduct (EICC) and ISO 14001.

At a minimum, insisting that suppliers comply with various e-waste and energy regulations makes abundant business sense. After all, the last thing a company wants to endure is being forced to shelve millions of units of some product because one of its cables contains traces of cadmium. Not only does that sort of snafu cost a lot of money; it doesn't make for great PR: The public won't remember the supplier that delivered the toxic component so much as the high-profile vendor that got stuck with it.

But as long as a supplier is producing pieces and parts that conform to the strictest of environmental regulations, why should companies such as HP or Dell or IBM care that said supplier, for example, keeps the lights lit and faucets flowing all night? For starters, it's a matter of being consistent in your adherence to your business principles. "It reflects our own standards," says Judy Glazer, director of HP's global social and environmental responsibility operations. "We've minimized our own environmental footprint. We expect suppliers who are working on our behalf to do the same."

Indeed, a green-haloed company talking up its energy-efficiency while ignoring its supplier's wasteful ways would be like PETA having its annual dinner catered by Outback Steakhouse. (That's neither a knock at PETA nor at Outback, by the way.)

Of course, values are just part of the picture. Reducing waste throughout the supply chain means lower costs all around. "By working with suppliers on programs and initiatives to reduce environmental impact, we not only contribute to conservation and sustainable development, we can often see substantial cost reductions," writes John Gabriel, manager of supply chain social responsibility at IBM.

The processes vendors undertake to assess and help develop suppliers' environmental and social responsibility are quite extensive. The good news for suppliers: Vendors aren't going to make you figure it all out for yourself, nor will they simply tell you what to do. Rather, HP's Glazer describes it as a collaborative effort. "We start by introducing the code to our suppliers. We have an on-site auditing process to help them understand what the code really means in practice. Where there are gaps, if any, we ask them to develop corrective actions," she says.

It doesn't end there: Like IBM and other EICC members, HP offers training for managers at its suppliers, such as "interactive workshops on particular elements of the code of conduct," Glazer says.

The process is an ongoing one, too, which means suppliers don't get to reset on their laurels once they've reached a certain benchmark: "We're looking at suppliers to be continuously addressing areas of greatest opportunity," says Glazer.

Vendors are continuing to develop new ways to encourage suppliers to become more environmentally and socially responsible. "Our suppliers are reviewed quarterly in a business review that looks at a number of performance criteria including quality," writes Dell spokesman Bryant Hilton. "We have begun to include additional 'points' the suppliers can earn through environmental programs. The number of points affects the volume of business [we give them], so there is great benefit to the supplier to gain points.

"One new thing we are asking for is that suppliers report their emissions data annually," Bryant adds. "This will help Dell reduce our indirect climate impacts, and help our suppliers when we can work with them on reduction strategies."

Ultimately, of course, these efforts to green the supply chain aren't just to satisfy the demands of IT vendors. "IBM's clients -- including both companies and governments -- are increasingly seeking to procure from environmentally responsible companies and [are] including requirements for the environmental attributes of the products they procure in their bid specifications or preferences," writes IBM's Gabriel.

Or to put a figure to that interest, HP reports that "we had six billion dollars' worth of RFPs in 2005 that included socially or environmentally responsible criteria. It has only grown since then."

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