In our effort to explore green business issues and the impact sustainability has on organizations’ purchasing patterns, we are proud to interview Wayne Evans, Senior Vice President for Procurement, the Americas, DHL. During the interview, Wayne reflected on his team’s commitment to sustainability, and how he and his colleagues have found that green business practices can help save money. If you have any questions that you would like to submit to Wayne, please let us know.
1. Could you tell our readers a little bit about DHL and the kind of work you do there?
DHL is part of Deutsche Post DHL. The Group generated revenue of more than 46 billion euros in 2009. DHL commits its expertise in international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers. A global network composed of more than 220 countries and territories and 300,000 employees worldwide offers customers’ superior service quality and local knowledge to satisfy their supply chain requirements. DHL accepts its social responsibility by supporting climate protection, disaster management and education.
In my role as Head of Procurement for DPDHL Americas I am responsible for purchasing more than $1b of goods and services across 22 countries. I manage a team of 70 individuals that have buying and sourcing experience in categories such as transportation, fuel, packaging, travel, production equipment, etc. My day-to-day activities are focused on leading the team, meeting with business partners to understand their needs, and meeting with suppliers to better understand new products in the market.
2. When did DHL first start talking seriously about green strategies?
DHL has been working on green strategies for many years. In 2008 the company completed a major initiative designed to baseline the carbon footprint of the Company. This was a critical step as it established criteria by which we can measure progress against an established goal.
3. Would DHL pay more for a green-sourced product?
There are many considerations involved in a sourcing decision but in fact it is possible to pay more for a green product. This can happen as the Total Cost of Ownership (TCO) is factored because initially it might appear that the cost is higher but when you factor the operational costs the product might in fact be lower in cost. As an example, if we look at the TCO for a truck we may find Vehicle A has a slightly higher cost than vehicle B. However, the higher-priced vehicle has greater fuel efficiency which is greener and over a period of time the total cost of ownership (TCO) is lower. In another situation we did make a conscientious decision to buy recycled paper at a slightly higher cost because it is better for the environment.
4. In which areas does DHL most frequently make green-minded business decisions?
Transportation has the largest impact on our carbon footprint and therefore it is the critical area to focus on. This is a large part of our business and there are many levers that we can use to reduce the carbon impact. We are heavily engaged in hybrid vehicles including trucks and we also look for ways to use electric vehicles and even bicycles where possible.
5. What have been the major trends in green procurement over the last few years?
One of the core goals of procurement is to identify different ways to drive down costs. There are different ways that procurement organizations can combine cost savings with green initiatives. One example is recycling items such as stretch wrap. Many companies use a significant amount of this product to package and ship. In the past during the unpacking process the materials were removed and thrown in dumpsters for disposal. One of the more recent trends was to add a bailer which is a container used to gather the plastic waste materials and they are picked up by recycling companies who process this material into something like a pallet. Companies can actually receive money for the used packaging materials and they use less space in dumpsters which lowers the cost of trash pick up.
Procurement professionals are also starting to look at ways to evaluate suppliers with regards to their “greenness”. Based on this evaluation, suppliers will be given credit for being a green company and in close bid situations it could be a deciding factor.
Another trend is demand management, where procurement professionals are getting engaged in minimizing the amount of product needed. By using only what companies need there will be less waste and less cost.
6. Can you tell our readers a bit about the GoGreen strategy at DHL?
Our goal is to improve our CO2 efficiency by 30% by 2020, compared to a baseline of our 2007 performance. To help us monitor our progress towards our 2020 goal, we have set ourselves an interim target to improve the CO2 efficiency of our own operations by 10% by 2010. The ability to calculate our own carbon footprint is a key prerequisite of our GoGreen Program. We need to identify opportunities for reducing our footprint and to track how much we have changed our ways. We also need the data to offset our GoGreen products and services, and in due course to calculate our customers’ individual footprints.
7. Do you think the organization thinks about green issues differently since it is based in Germany?
It’s not so much that we think differently but more that we act differently. Because we are a global company we act in a global way. When we identify a key strategic initiative such as this it is rolled out across the world and implemented accordingly. The green movement is a bit more obvious in many parts of Europe as they have been following some of the best practices in conservation for quite some time
8. What kind of impact has the recession had in shaping or modifying the green strategy at DHL?
The recession has not had much of an impact because as previously mentioned “green is typically lean.” Some of the projects with longer term ROI and high capital investments could have been impacted as companies were trying to conserve cash flow during the recession.
9. What kind of difficulties have you faced implementing GoGreen with workforce and management?
Since the green initiative is a CEO-sponsored and lead initiative it has not been difficult getting support. The only challenges come when there are large capital outlays required without a sufficient business case.
10. What has been your greatest triumph in implementing the Go Green campaign?
We support four (4) businesses in the US and each is very independent. We have been successful in pulling them all together and aligning strategies. We have many projects that were initiated such as recycled paper, hybrid vehicles, alternative lighting, etc.
11. What has been the biggest struggle or challenge in implementation?
In some cases it is not always easy to make clear sourcing decisions based on the supplier’s “greenness” as there are no real standards for accurately rating a supplier.
12. Could you highlight a few examples of unique contributions DHL has made in the area of sustainability?
- Our “go green product” allows customers to pay a small additional fee to offset the carbon impact of the shipment. This money is used to plant trees and funds other programs that offset the impacts of the shipments.
- Use of renewable energy in Mainland Europe – over 25% of energy now comes from renewable sources
- Lighting programs in the USA – more than 50 sites now use energy efficient lighting, with initial results showing consumption down by 18% to 30%
- Transport efficiency programs across the UK have lead to a 4% year-on-year fuel efficiency improvement