Latest Best Practice in
Environmental Purchasing & Supply
Barbara Morton
Manchester School of Management , UMIST
Hong Kong CIPS Event 12 May 2000
Latest Best Practice in
Environmental Purchasing & Supply
1. Business Case
2. Examples of “best” practice
3. Issues & suggested approaches
• Sharing knowledge & expertise
• Environmental Supply Chain Forum model
Part 1 - Business Case for Environmental Sourcing

Procurement - good practice
Securing supply of goods & services
Cost reduction
Rationalising the supplier base
Sourcing to reduce business risk
Identifying sources of knowledge
Adding value
Part 1 - Business Case for Environmental Sourcing
Environmental Regulation *
Insurers
Investors
Environmental Pressure Groups
Key Drivers
for the
Organisation
Customers *
Suppliers
BiE Index of Corporate Environmental Engagement
Barbara Morton, MSM
Part 1 - Business Case for Environmental Sourcing
Environmental Regulation - European Perspective


European Directives
Producer Responsibility





supply chain perspective
Packaging and Packaging Waste
Waste Electrical & Electronic Equipment
End-of-life Vehicles
UK Landfill Tax
Barbara Morton, MSM
Part 1 - Business Case
1. Securing supply of goods and services
PRESSURE
Customer
Pressure
Environmental
Regulation and
Legislation
FOCUS OF IMPACT
PRODUCT
regulated out of use - CFCs
phase-out hazardous materials
less resource-intensive
products
SUPPLIER
regulated out of business
markets threatened
alternative sources more
competitive
OUTCOME
No product /
market
Alternative
products
No supplier
Alternative
suppliers
Barbara Morton, MSM
Part 1 - Business Case for Environmental Sourcing
2. Cost reduction (1)
Challenging assumptions



Baxter Healthcare - healthcare products company
1998 - environmental initiatives saved the company
US$10 million.
From 1991 total costs incurred would have been US$107
million than they actually were in 1998 .
Barbara Morton, MSM
Part 1 - Business Case for Environmental Sourcing
2. Cost reduction (2)
Challenging assumptions - Baxter Healthcare

Raw materials
Energy
Production
Disposal costs
Packaging

http://www.baxter.com/




Barbara Morton, MSM
Part 1 - Business Case for Environmental Sourcing
2. Cost reduction (3)

Regulation driving out costs
•
•
•
•
Waste Electrical & Electronic Equipment Directive
Product take-back
1998 - AT&T & Lucent
Lucent picked up 526 shipments of vintage
telecommunications equipment
• AT&T received US$2.2 million in residual value
• http://www.att.com/ehs
Barbara Morton, MSM
Part 1 - Business Case for Environmental Sourcing
2. Cost reduction (4)

Concerned with‘whole life’ costs
– running costs e.g. energy
– US EPA computers = 10% of commercial electricity
consumption by 2000
– In the UK 20% of office energy use is in equipment
– reduce costs through management
– indirect costs e.g. air conditioning, admin.costs
– waste usually = 4% of turnover
– www.etbpp.gov.uk
Barbara Morton, MSM
Part 2 - Examples of “best” practice
Environmental Management Systems

ISO 14001 / Eco-Management and Auditing Scheme (EMAS)

Automotive Sector
Ford’s requirements of suppliers
 General Motors
 certification required - customer driving
 nature of supply chain relationships
Appropriate for all sectors?
UK Project Acorn - phased approach



Barbara Morton, MSM
Part 2 - Examples of “best” practice
Role of purchasing & supply in environmental management
Design and
Specification
Supplier pre-selection &
qualification
Purchasing &
supplier management
Accounting
Product use
Product
Transportation
Reuse, recycling
& disposal
Barbara Morton MSM 2000
Part 2 - Examples of “best” practice
Re- thinking design & specification (1)



Mechanisms for specifiers & purchasers
Banned substances
 Volvo - Black and Grey Lists
 Canon, Sony
Approved products
 Canon, Sony, NEC, Tokyo Gas
 Perrigo
 www.epa.gov/oppintr/epp/privsect.pdf
Barbara Morton, MSM
Part 2 - Examples of “best” practice
Re- thinking specification & purchasing - Perrigo

Aims
• to improve indoor air
quality
• to reduce number of
cleaning products
• to minimize
environmental
impacts of cleaning
process

Results
• saved > $35,000 p.a.
• reduced number of
products to 2
• buy in bulk
• consolidated
purchases with a
single supplier
Barbara Morton, MSM
Part 2 - Examples of “best” practice
Re- thinking specification & purchasing (2)

Hierarchy
•
•
•
•
•

eliminate
minimise
reuse
recycle
dispose
Guidance for public
sector buyers
• UK DETR - Green Guide
for Buyers
• US EPA EPP - Santa
Monica case study
• Belfast City Council

Re-thinking utility
Barbara Morton, MSM
Part 2 - Examples of “best” practice
Supplier selection and assessment to reduce business risk

Issues
• Closer relationships with fewer suppliers & key
suppliers
• Increase in outsourcing
• Cannot outsource environmental responsibilities

Stages
• Pre-selection - ‘approved’ supplier status
• Awarding business
• Supplier management
Barbara Morton, MSM
Supplier selection and assessment to reduce business risk Mechanisms (1)

Supplier environmental
questionnaire

- mixed results

Questionnaire & grading
system
• The Body Shop
• B&Q - QUEST system
Appropriate to level of
business & environmental
risk
• strategic suppliers
• environmental impact

Appropriate to resources
available
Barbara Morton, MSM
Supplier selection and assessment to reduce business risk Mechanisms (2)

Ask about key issues for
your business
•
•
•
•
•

ISO 14001 only if relevant
compliance
hazardous materials
toxic content
packaging

Supplier workshops
• explain policies and
priorities
• Blue Circle

Offer guidance
• Belfast City Council
Tie to supplier auditing
• Boots & Halford’s
Barbara Morton, MSM
Part 3 - Issues and suggested approaches
Identifying sources of knowledge (1)
Customer Organisation
Environment
Procurement
Supplier A
product information
- including alternatives
process information
management system
environmental expertise
User / specifier
Supplier B
Regulator
External bodies
Supplier C
Barbara Morton, MSM
Part 3 - Issues and suggested approaches
Identifying sources of knowledge (2)

Information on
products & services

Eco-labels

Product declarations
• Hewlett Packard
• Volvo


Information
requirements not
being met
Databases of products
& services sought
• construction sector
Part 3 - Issues and suggested approaches
Environmental Supply Chain Forum





Established 1996
Meetings with specialist input
Determining good practice and sharing
experiences
Network and website
Supply Chain Environmental Management
Programme
Barbara Morton, MSM
Environmental Supply Chain Forum
Participants include:






AMEC Design &
Construction
Belfast City Council
BICC Cables
Body Shop
Centre for Sustainable
Construction - BRE
CIRIA








Co-operative Bank
Eutectic Co Ltd
Halford’s Limited
Nortel Networks
Tarmac Construction
Vertex Data Science
United Utilities*
Yorkshire Water
Barbara Morton, MSM
Part 3 - Issues and suggested approaches
Environmental Supply Chain Forum

Topics covered
• Supplier
environmental
assessment
• Integrating
environmental criteria
• Construction industry
• Transport
• Forest Products

Meetings planned
• Aerospace &
automotive
• Chemicals & related
industries

Links with
• Business in the
Environment
• CIPS
Latest Developments

CIPS Environmental & Green Issues Policy Group
• Examples of policies, case studies
• To inform development of policy
• To bmorton3402@hotmail.com

Project on plastic packaging
• Partners required
• Contact Dr Richard Fung
• richard.fung@cityu.edu.hk
Latest Best Practice in
Environmental Purchasing & Supply
Barbara Morton
Manchester School of Management , UMIST
Hong Kong CIPS Event 12 May 2000
Part 1 - Business Case
1. Securing supply of goods and services



Environmentally
preferable purchasing
US EPA EPP Program
Impacts include:
• energy-efficiency
• recycled content
• water efficiency
• resource conservation
• waste prevention
• renewal material %
• adverse effects to
workers, animals,
plants, air, water & soil
• toxic material content
• packaging
• transportation