Tuesday, February 19, 2008

You Are Only As Green As Your Supply Chain

HBR Green

Years ago Herman Miller decided to become an advocate for the environment, both because we believed it was the right thing to do and because we saw the potential for a clear business benefit. Ever since, we've been refining our processes to put our aspirations into practice.

Our Perfect Vision campaign, launched in 2003, includes green goals such as no landfill waste, no hazardous waste, no air or water emissions from manufacturing, and the use of 100% green energy, all by the year 2020. These are stringent targets our company cannot reach without engaging over 200 materials and components suppliers in the ongoing task of greening our global supply chain.

As we've examined every aspect of our worldwide supply chain, we've learned one key lesson: A business, and the products it sells, can only be environmentally sustainable through a holistic approach to design, raw materials, production methods, packaging, shipping, recycling, and even marketing--across the entire value chain. It's far too large and complex a undertaking for any organization to go it alone and be truly effective. You know the saying, "It takes a village to raise a child." Well, it takes an entire supply chain to green a company.

Here are three things we recommend to companies working with their suppliers on the long-term goal of going green.

1. Design your products with sustainability as a core principal. At Herman Miller, we have a problem-solving, design-driven culture, so we spend a lot of time thinking about how to create our products. HBRGreen_topic2_image2.jpgIn 2001, when we were creating our Mirra chair, we had been working with architect Bill McDonough and chemist Michael Braungart, both leading-edge environmentalist thinkers, toward their vision of a "cradle-to-cradle" design that embraces sustainable materials in a closed-loop life cycle. As a result, we eliminated the use of a chemical called polyvinyl chloride in that chair. Now, PVC has advantages, including the fact that it is inexpensive and durable. However, PVC releases toxins during manufacturing and when it is burned. We decided not to use it and implemented that decision with the help of our suppliers. We embedded those cradle-to-cradle principals in our product development process for all new designs, beginning with Mirra.

2. Refine your goals and put them to paper. We aim to be fully sustainable by 2020, but we're holding ourselves accountable to interim goals along the way. For example, by 2010, 50% of our sales will come from products that conform to our own rigorous Design for the Environment standards, and we aim to reduce our environmental footprint by 80%. Achieving these goals requires paying attention not only to materials, including their chemical ingredients, but also to our sources of energy, to our manufacturing processes, and to our packaging. We don't want to reduce our impact in one area while ignoring it in another. Nor do we want to move our environmental impact upstream into our supply chain.

3. Embrace transparency and meaningful metrics. Our company, our customers, and our industry in general are moving inexorably toward more transparent reporting when it comes to the environment. And, like any other management issue, what gets measured gets managed. When it comes to our supply chain, several measures apply. We award points through our Supplier Quantification Process for formal environmental programs and active waste-reduction programs. We rate our suppliers according to how effectively they are working to help us reach our goals--from researching alternative materials to incorporating our measurable targets into their flow charts. And this is the crux of the issue: We're not only looking at our suppliers, but at our suppliers' suppliers.

We have 12 years and a long way to go before reaching our self-imposed deadline for our Perfect Vision mission. By looking--and forcing change--outside our company as well as inside, we believe we can achieve this goal. By following the three steps above, we believe other companies can reach their green goals as well.

Source: Harvard Business Review

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