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Dustin Mattison

Green Purchasing

Posted by Dustin Mattison in The Future of Supply Chains on Jan 31, 2012 2:10:50 PM

I interviewed John Wilkerson who shared his views and experiences with Green Purchasing. John Wilkerson is a 25 year supply chain, global sourcing and sustainability executive with a broad background spanning procurement, global supply chain management, and sustainability. His functional expertise ranges from sales and operations planning to retail manufacturing, global logistics, and lean/six sigma. He has a very broad geographic background which ranges from Asia, Europe, Latin America and North America.

 

John is glad to be fortunate enough to have an opportunity to be able to present some thought leadership work with Fox Business, MSNBC, APICS, ISM, Kyoto Publishing, Environmental Leader and a few other publications.

 

 

Definition of Green Purchasing

 

Simply stated, green purchasing is the buying or purchasing of goods or the acquisition of goods and services for the enterprise. It is not a lot different than traditional purchasing. However, John and his team applies 7 principles to help shape the thought process for green purchasing strategy.

 

  1. The most important principle is looking at the total cost of ownership throughout the acquisition. The things we pay attention to from a principle perspective are price, geographic source, service level and also the specific solution.

  2. Supply Partners – John looks for his partners to participate in some type of carbon footprint reduction strategy, or water optimization strategy. He and his team look for those folks to be part of that thought process.

  3. Supply chain partners should develop a strategy for renewable energy long term. In the short term it is not realistic in most cases. They look for the supply base to participate long term in the renewable energy market.

  4. The basic principle that suppliers or supply chain partners need to comply with the appropriate rules and laws, whether local, national or international standards.

  5. Look for supply chain partners that are socially responsible throughout the supply chain network.

  6. Suppliers evaluate risk throughout the supply chain.

  7. Suppliers clearly have strategies to prevent risk.

 

These 7 principles, combined with the acquisition of goods would be the John's definition of Green Purchasing.

 

Who Should Be Involved With Green Purchasing?

 

The traditional concept was for procurement/strategic sourcing programs to have the Chief Purchasing Officer be exclusively involved in purchases.

 

In Green Purchasing the environmental health safety team is the most critical group John and his team needs to bring in to collaborate to make a big difference in the future. When you think about different organizations, the most progressive out there have key initiatives that they pursue in the Green Purchasing space. There are two things they look for:

 

  1. Reducing Environmental Risks

  2. Being More Socially Responsible

 

The traditional CPL team can't do that without the environmental health and safety team. This is the time to be able to work together.

 

How Should Companies Get Started?

 

John uses the Institute of Supply Management (ISM) as part of his direction on this topic. Companies such as AT&T, Herman Miller, General Mills, ADM and Rockwell are sustainability leaders which are the strongest in the retail manufacturing space. From a public sector side Alcoa, SCIC, and IBM are the leaders who have actually set the path.

 

John sees a 3 step methodology for most organizations to participate in this space. The 3 step methodology for transforming or transitioning to a green purchasing transformation project would be to:

 

  1. Establish a business case

  2. Develop a trial program

  3. Expanding the trial program and going to a more broader based perspective in green purchasing deployment.

 

Looking at the Business Case

 

John sees 4 points which are very important:

 

  1. The voice of the end retail customer: This involves understanding the influence of millennials, the Generation Y, the people on the West and East coasts, etc. Organizations and enterprises do pay attention and this is one reason Green Purchasing is important. This group of people      are being monitored by experts, demand planners and marketing planners. It is very important for for organizations to pay attention. As marketing drives organizations it trickles down to purchasing.

  2. The voice of the shareholders and investors: WallStreet, NASDAQ, Hong Kong and all the indexes are looking at the environmental sustainability programs. Green Purchasing is another one of those items that is out there. You have to listen to it and it is another reason why you generate the potential business case.

  3. The voice of the business: Organizations do not like to have negative press and boycotts of their brand. Green Purchasing is another extension of the marketing in this space.

  4. The voice of the workforce: It is very important to recognize that those same Generation Y millennials are in some cases driving things and making things happen.

 

Developing and Trial Program and Looking at the Total Cost of Ownership

 

You want to make sure that Total Cost of Ownership is the first case. From there you want to be able to clearly understand the voice of shareholders and most importantly the voice of the customer. After you complete your trial program you will take the program to full blown deployment. If this makes sense the CPO organization will get involved. It is just a matter of taking the lessons learned from a trial program and extending it further.

 

About John Wilkerson

john_wilkerson copy.jpg

John Wilkerson, CPSM, SSMBB

Supply Chain, Procurement, Sustainability Executive

LinkedIn Profile

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