Supply chain strategies: Forrester, GM offer best practices for going green

A lot of companies are interested in building green supply chains, but scattershot information makes it difficult to get started. A new report from Cambridge, Mass.-based Forrester Research—and the example set by General Motors—now offers some help.

04/21/2008


A lot of companies are interested in building green supply chains, but scattershot information makes it difficult to get started. A report from Cambridge, Mass.-based Forrester Research , Supply Chain Leaders: Your CEO Wants to Know Your‘Green’ Strategy. Do You Have One? , now offers some help.
Patrick Connaughton, senior analyst of supply chain for Forrester and lead author of the report, offers six recommendations for launching a green supply chain. All of them have implications for the manufacturing/operations arena.

•, who suggests companies ask themselves two questions: 1) What is the absolute minimum CO2 we could emit while still satisfying demand? and 2) How much would each possible alternative cost us?

•o product development.

While these five areas have manufacturing implications, the sixth one—“Manufacture with holistic measures in mind”—has the greatest opportunity for manufacturing, says Connaughton.
“One goal of green manufacturing is to achieve better asset utilization, and one way to do this is with predictive maintenance,” he says. Leading companies use condition-monitoring technologies to track key asset health indicators such as temperature, pressure, and vibration levels. An emerging trend in condition monitoring is the use of embedded sensors that wirelessly transmit condition and diagnostic data to the main enterprise asset management (EAM) system for real-time analysis.



Supply chain managers looking to launch and foster green supply chains must increase service levels, reduce costs, optimize asset utilization, and determine the environmental impact of each decision across all phases of the product life cycle.

“Manufacturers should look to EAM software vendors to help them track asset utilization information,” says Connaughton. “This is a journey, and one key to success is identifying some early wins—not biting off more than you can chew. If you do, the efforts can fizzle out as people start to see the complexities involved.”
While the green supply chain has only recently begun to gain traction in U.S. industry, one company—Detroit-based General Motors —has almost a decade of experience under its belt. In the late 1990s, GM created a supplier environmental advisory board that included a select group of Tier 1 suppliers.
At the time, reports Pat Beattie, Ph.D., a director in GM’s environmental services department, GM didn’t have the resources to visit all of its suppliers to conduct on-site workshops. Instead, it began working with the Environmental Protection Agency (EPA) to form the Suppliers Partnership for the Environment, a nonprofit organization that helps automotive equipment manufacturers engage all levels of their supply chains in the development of common-sense approaches to reducing environmental impact.
GM works with its suppliers to communicate its expectations for the Suppliers Partnership for the Environment. It also identifies activities that can assist suppliers in their environmental efforts. The smaller suppliers in particular appreciate the fact that the program gives them direct access to the OEMs, as well as EPA leadership. They are learning a lot about best practices that save money and enable environmental improvements.
Some of the most successful initiatives relate to energy reduction.


“We’ve been able to share some best practices with other members, and vice versa,” says Beattie, citing a recent partnership with a chemical issues work group. According to Beattie, several Tier 1 suppliers are showing interest in this work group in light of recent concern over chemicals in finished goods.
“In terms of results and benefits, some of the case studies we know about have reported potential savings in the several millions of dollars,” states Beattie. One of GM’s smaller chemical suppliers went through one of the partnership’s “lean and green” workshops, which resulted in a reduction of about 10,000 pounds of hazardous material a year. The supplier also reduced solid waste by about 15,000 pounds a year.
Those numbers aside, Beattie says the most significant sign of success is a recently created Green Suppliers Network, which is modeled after the Suppliers Partnership for the Environment. “This will expand the concept to other industries beyond automotive,”
she concludes.





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