GM Holden has begun to put the idea of ‘greening’ its supply chain into action, partnering with the World Environment Centre (WEC) to examine the sustainability practices of its parts and components suppliers. Derek Parker reports.
THE World Environment Centre has been developing its ‘Greening the Supply Chain’ initiative since 2003, conducting projects in Brazil, China, El Salvador, Mexico and Romania.
In Australia, the WEC has engaged environmental consulting firm Coffey Environments to work with GM Holden’s suppliers to improve both the sustainability of operations within suppliers and at the points of interaction along the supply chain.
“This initiative particularly draws on the experience of GM in China, where GM and the WEC were very successful in fostering better practices at many points along the chain,” said Samantha Read, GM Holden’s associate director for government relations and public policy.
“In Australia, the program is still in the pilot stage, but to date we are satisfied with the processes and we have received good feedback from the 13 suppliers that have signed up to it.”
The program involves Coffey Environments undertaking an audit and assessment of a supplier firm, looking especially at energy efficiency and water use. Coffey Environments then provides advice, and training if appropriate. There is no cost to the supplier firm, although they might choose to undertake new investments in the light of the advice.
“The ultimate aim is to achieve specific, measurable results that improve competitiveness across the supply chain by applying sustainable development practices,” Read said.
“By including our suppliers, we hope to be able to draw a comprehensive environmental footprint of GM Holden’s operations, and find ways to systematically reduce that footprint.
“We make the point to our suppliers that, in our experience, sustainable practices improve the long-term financial bottom line,” she said, noting that in many cases the ‘greening’ of a supply chain has a positive interaction with a move towards Lean manufacturing processes.
This is an important point, as both Lean manufacturing and sustainable processes are about the elimination of waste, including material inputs and energy. Both often employ a similar methodology of external auditing and ongoing review.
A decade ago, many manufacturing companies were concerned about the cost of implementing sustainable practices, but the past few years have seen a marked development in the relevant technologies, such as improved energy efficiency and recycling of otherwise waste material. On the financial side, there is the added impetus of spiralling energy costs and increasing imposts for the disposal of waste in landfills.
For companies that act as suppliers, there is also the issue that at the international level some large firms have begun to mandate sustainable practices from their suppliers. Earlier this year, in the US, a number of multinational firms, including Procter & Gamble, Unilever, and Cadbury Schweppes, formed the Supply Chain Leadership Coalition with the aim of pressuring suppliers to lift their environmental standards, including the release of data about carbon emissions and strategies to mitigate climate change.
Large Australian firms are likely to follow this pattern. In this context, the development of sustainable practices can become a competitive advantage when bidding for contracts to supply a large firm.
For her part, Samantha Read emphasises that participation in the GM supply chain project is voluntary. She also sees the supply chain project as tying into GM Holden’s own efforts to improve its practices, pointing to the installation of a sophisticated computerised energy monitoring system at GM Holden’s plant at Fisherman’s Bend to optimise the energy efficiency of the furnaces and compressed air distribution plants.
There has also been a series of water saving initiatives introduced by the company, aimed primarily at reducing water consumption in the engine production area. As a result, the total water consumed per engine produced has dropped from 930 litres per engine in 2002 to 576 litres per engine in 2007.
“We want to be able to say that we are leading by example, when talking to our suppliers about sustainability,” she said. “GM Holden works on the principle that emissions and waste can be prevented or minimised by the use of innovative technologies and environmentally compatible materials.
“We hope that other large companies will see this program as a model they can draw on. When you look at the public debate, as well as documents like the Government’s Green Paper on its Carbon Pollution Reduction Scheme, the direction of change is clear. We see the greening of our supply chain as a way of getting ahead of the curve.”
