Still Customer Driven

The importance of Sustainability — of “thriving in perpetuity”[1] — is clear enough. However, Stephen Covey’s Seven Habits[2] reminded millions of us that “important” is often trumped by “urgent”. This post from last summer discusses one channel that elevates Sustainability to Covey’s Quadrant #1: Urgent and Important! — C.H.

Customer – Driven Sustainability?

Originally Posted 6 July 2011

When managers of smaller manufacturing firms first encounter Sustainability, they begin to grasp just how broad Sustainability can be. That leads to concerns about the work involved, and the resources necessary to accomplish that work.  So, with everything that needs to be done in the business already, why get involved with Sustainability?

Often, the “pull” comes from customers. Often, even quite small manufacturers have much larger customers somewhere along the downstream value chain. Large public companies, generally speaking, are already quite concerned with Sustainability. And that concern extends to their suppliers. Many large firms have established and published Sustainability objectives that can only be accomplished in coordination with suppliers. So, the definition of a “supplier” is coming to include “actively contributes to the achievement of (customers’) Sustainability objectives”.

Here are some examples:

The U.S. Government has established “Green” purchasing preferences and policies. In response to a presidential order, GSA, the agency that acts as the Government’s purchasing agent, is leveraging the Government’s purchasing power to increase purchases of sustainable products and purchases. GSA’s actions include establishment of Federal Supply Chain Emissions Program, which will encourage suppliers to reduce greenhouse gas emissions through the entire supply train.

If you sell to the Government, or your customers sell to the Government, or if somebody you want to add as a customer sells to the Government, then “supply chain” may well include you. You can learn more about the “greening” the federal supply chain at: http://www.gsa.gov/portal/category/26433. Also, GSA’s Green Purchasing Plan is available for download at: http://www.gsa.gov/graphics/fas/GSA_Green_Purchasing_Plan.pdf

“Green” construction practices are the hottest portion of today’s moribund building construction industry. The square footage of building space that was LEED certified in 2010 exceeded 20% of all new construction, and that percentage continues to increase. LEED (Leadership in Environmental and Energy Design) certification is the operational definition of Green building design. LEED certification is based on a points system which favors certain building materials and discourages others. The favored materials are Green products that conserve energy and natural resources, or reduce health hazards. In effect, the entire building construction industry is requiring its suppliers to become increasingly Sustainable. You can see the numbers in a comprehensive Green Building Market and Impact Report at: www.Greenbiz.com/business/research/report/2010/11/17/green-building-market-and-impact-report

Wal-Mart has launched a Supplier Sustainability Assessment “to help suppliers evaluate their Sustainability”. The assessment starts with a supplier questionnaire that consists of questions regarding energy and climate change, materials efficiency, natural resources and people and community. In other words, suppliers are being asked what they are doing about Sustainability. Wal-Mart is a large public company that has published an ambitious set of Sustainability goals – and Wal-Mart recognizes that 80% of Wal-Mart’s environmental impact lies in its supply chain.

There is little doubt that manufacturers that supply Wal-Mart, directly or indirectly, are going to embrace Sustainability. Further, Wal-Mart’s size makes it a market leader. Many other organizations, especially in packaged consumer goods industries, are following Wal-Mart’s lead by inquiring about their suppliers’ Sustainability efforts. To help spread the word, Wal-Mart offers an on-line Supplier Sustainability Assessment Webinar at: http://walmartstores.com/Sustainability/9691.aspx?p=232

http://www.dreamstime.com/-image21295105Bottom line: When it comes to Sustainability, there is a new definition of “customer driven”. Customers, really big customers, are driving manufacturers to embrace Sustainability, much like cowboys here in Arizona drive cattle.


Thoughtful comments and experience reports are always appreciated.

… Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

Photo: Dreamstime, www.dreamstime.com


 

[1] Werbach, Adam, Strategy for Sustainability, Harvard Business Press, Boston (2009), page 9

[2] Covey, Stephen, The Seven Habits of Highly Effective People, Free Press, New York (1986, 2004)