Green is Lean: An Inside Look at Sustainable Purchasing at DHL Americas

Wayne Evans, Sr. Vice President for Procurement, the Americas, DHL

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?

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Whole Foods/Cork ReHarvest Partnership: A Best Practice in Product Lifecycle Management

Image courtesy of Whole Story - the official Whole Foods Market blog.

Earlier this spring, Whole Foods Market and Cork ReHarvest announced a partnership to allow Whole Foods customers to leave wine corks in drop boxes in all Whole Foods stores in the United States, Canada and the United Kingdomto be recycled.  This is an interesting program with a great focus on the lifecycle of products.

Although many people recycle cans, bottles and newspapers, too many other products slip through the cracks and end up in landfills.  I have written in the past that all products that cannot be recycled in towns and municipalities at curbside should come with instructions on how to responsibly be disposed of when finished.  Whether this includes empty toothpaste tubes or laptops, it is important for companies to not only focus on the green marketing message at time of sale, but also the environmental considerations at the end of the product’s lifecycle.

Whole Foods has been an industry pacesetter for some time, having announced a partnership with Preserve in early 2009 to allow customers to bring in hard-to-recycle #5 plastic to stores to be recycled.  This includes Brita filters, which too often find the trash after two months use.  Here is some additional coverage on the Whole Foods blog from April 2010.

My firm, Grossman Marketing Group, also tries to do its part by not only using environmentally-friendly products but also allowing our employees to bring in used lightbulbs (CFL), batteries and paint from home to be recycled.

Consumer goods and electronics companies have a long way to go to ensure that their customers know the facts about what to do with their products when they are finished using them.  However, these partnerships that companies like Whole Foods have created are an encouraging step – and probably a very good way to continue to build their brand and encourage store foot traffic at the same time!

Highlights of Ceres Roadmap to Sustainability

By Marisa Greenwald (Green Marketing & Sustainability Practice, Grossman Marketing Group)

Ceres’ report, titled “21st Century Corporation: The Ceres Roadmap to Sustainability” which it released earlier this spring, contains noteworthy proposals for corporate governance and green marketing.  As a network of investors, environmental organizations and public interest groups, Ceres incorporates the private sector perspective into the sustainability movement.  The report encourages organizations to create serious internal metrics for sustainability rather than limiting their focus to their sales and PR efforts.  Out of the 20 expectations presented for new business standards, I wanted to highlight three in particular, which, if implemented, would help align business objectives with sustainability goals in a meaningful way.

The first expectation of note is “requiring clear public policy position statements” from companies.  Ceres believes that companies should disclose their public policy positions, as well as membership in and contributions to trade associations. When appropriate, companies should also develop public policy positions that support best practices in sustainability.  An example of this was in Fall 2009, when several companies, including Apple, left the U.S.  Chamber of Commerce because of the organization’s criticism of pending climate change legislation.  This expectation would go a long way in removing the current disconnect between lobbying and marketing by requiring companies to integrate sustainability messages into consumer communication, and actually prove that they’re truly committed to environmentally-sound practices.

Another standard worth mentioning is for companies to require “suppliers to meet the same sustainable standards as the company.”  As part of a marketing communications company with some of the strongest environmental standards in the industry, I understand the environmental impact that sustainable practices, and, alternatively, their absence can have across the entire supply chain.  This recommendation would reward suppliers with positive environmental practices, incentivize companies to work with environmentally-minded suppliers, and hold companies accountable not just for their own practices but for their vendors’ practices.

A final impressive expectation laid out in the report is “designing and delivering products [and services] aligned with sustainability goals.”  This expectation goes to the heart of a company’s work and places a high consideration on sustainability in product formulation and promotion.  By factoring environmental considerations into the creation of products, companies will be playing a positive role in shaping consumer behavior by moving consumption patterns toward sustainable ends.  As someone passionate about green pursuits, I see this expectation as the one with the most potential beneficial impact in the sustainability cause.

Ceres mentions one interesting way to implement this final idea: it recommends that companies “re-conceive the idea of a ‘product’ such as transitioning from offering products to offering utilities or services. “  In fact, Ceres mentions one of Grossman Marketing Group’s most sustainable-minded clients, Zipcar, which has reshaped the way consumers use automobiles.  As mentioned, Zipcar offers customers the use of a car in hourly units, which removes the need to own a car for urban use and moves toward offering the car as a service.  Zipcar also offers lower pricing for hybrid vehicles, encouraging customers to use this cleaner mode of transport.

While this report contains some impressive ideas for corporate reform, it is unclear whether and to what extent such expectations will be implemented in the coming years.  Regardless, the report serves as a positive sign that some agreement has been reached between private sector influencers and public sector opinion leaders on the need to move forward in implementing sustainability standards.  It also lays out for companies a sustainability roadmap, should they choose to use it.

Click here to access the full Ceres report.

Follow up to key idea from the Environmental Defense Unconference: Corporate Collaboration on Sustainability

collaborationOn this blog, my summer colleague, Lenora Deslandes, discussed her observations on the Environmental Defense Unconference in Boston.  One of the main ideas she highlighted was the need for companies to share best practices in sustainability in order to advance our common good.

Therefore, I was excited to read in the New York Times this month about some recent collaborative efforts among large companies to share environmentally friendly innovations.  The article, titled “Everybody In the Pool Of Green Innovation,” spotlighted two major initiatives:

  1. Eco-Patent Commons: According to the article’s author, Mary Tripsas, the Eco-Patent Commons was founded in 2008 and is a place where “Companies pledge environmental patents to the commons, and anyone can use them – free.”
  2. GreenXchange: A joint initiative between the Creative Commons, Best Buy and Nike to be launched next year that will allow companies to contribute patents and be able to charge licensing fees for interested parties.

It remains to be seen how successful either of these initiatives will be (there are only 100 patents currently shared on the Eco-Patent Commons, and the GreenXchange has yet to go live), but these developments are encouraging.  As I have seen in my business and those of our clients, learning about the tactics and strategies other organizations are employing to operate in a sustainable way has the potential to add tremendous value and contribute to the level of dialogue and ideas exchanged both in individual firms as well as in our society as a whole.

Direct Mail Insight: Green Envelopes and the Big Picture

bigstockphoto_Mail_Box_With_Letters_2482928Last month, Target Marketing Magazine published an article on trends surrounding environmentally-friendly envelopes – I was on vacation at the time so I didn’t get a chance to pass it along then.  Here’s a link to the article.

As I’ve written on a number of occasions, “green” envelopes are an important part of an organization’s marketing and communications efforts (we have already sold more than a quarter billion envelopes made with 100% certified wind power over the past couple years).  In fact, they are often the first component of a direct mail piece that a recipient sees, and it is important to take that opportunity to send a values-laden message through the materials/inks/energy that are used to produce the piece.

Obviously, using green practices for direct mail should be just one of the many sustainable business practices that organizations employ – otherwise they could be accused of greenwashing.  However, given recent developments in technology, mailers can make their pieces more environmentally-friendly without adding much, if any, cost, which removes the most critical barrier to adoption.  Research has demonstrated that consumers want to buy products from companies that do business in an environmentally-responsible manner.  Marketing collateral is one way for organizations to demonstrate this commitment.

Here’s a link to the full article.

Tips for selecting the right eco-friendly papers

green_papers****Guest post from David Grossman (SVP, Grossman Marketing Group)****

When getting ready to print a piece of marketing collateral, there are many ways in which you can make it more environmentally friendly.  None is more important than your paper selection.

There are a number of criteria by which you can evaluate your paper options:

  1. What percentage of post-consumer recycled content is contained in the paper?
  2. Is the paper made with 100% certified wind power?
  3. Is the paper FSC-certified (The FSC logo stands for Forest Stewardship Council, a group that works to ensure that the materials used are sourced responsibly.  Each step in the chain (i.e. from forest to printer) must be traceable.  The intent of the FSC system is to eliminate habitat destruction, water pollution, displacement of indigenous peoples and violence against people and wildlife that often accompanies logging)
  4. Is the paper process and elemental chlorine free?

While all of these factors combine to determine the eco-friendliness of a paper, the single most important factor is the percentage of post-consumer content.  This indicates how much of the paper pulp comes from material that has been used by consumers, then reclaimed and reused, thereby eliminating the need for that portion of the paper to be made from virgin fiber.

Obviously the goal is 100% post-consumer waste (PCW).  This means that no trees were used to make this paper.  There are varying percentages of PCW contained in readily available commercial printing papers made by the major paper mills.  Some of my favorites, which incorporate all of the aforementioned criteria are (in order of preference):

UNCOATED PAPER (all of these papers are 100% PCW):

Monadnock Astrolite PC 100

  • This is arguably the most premium of all readily-available eco-friendly papers.  The downside is that it is generally the most expensive
  • It has gorgeous finish/printability
  • Despite being 100% PCW, it is a bright white stock

Mohawk Options PC 100

  • Very smooth finish
  • Bright white shade
  • Excellent Printability
  • The one complaint I have heard is the occasional appearance of black specks throughout the sheet.  This is a byproduct of the 100% PCW

Neenah Environment PC 100

  • It can be slightly less readily available than Astrolite or Options
  • Nice finish
  • Nice shade of white

Rolland Enviro 100

  • This paper is very affordable and performs admirably for a value sheet of paper
  • Less smooth and less bright than the previously mentioned sheets
  • Prevalent black specks
  • Good for clients who want a paper with a more obvious recycled look/feel

COATED PAPER

Sappi LOE (Lustro Offset Environmental)

  • Contains 30% PCW, which is the highest percentage available in readily-available commercial printing paper
  • Beautiful finish
  • Excellent printability

Chorus Art

  • This imported sheet of paper has 50% recycled content with 25% PCW
  • It is extremely cost-effective and performs at a level far beyond its price point
  • Good finish
  • Good printability

For comparison’s sake, a typical sheet of paper contains approximately 10% recycled content, which may or not be PCW.  Please note that I didn’t mention any papers made by New Leaf Paper, despite their high degree of PCW.  This is due to their unreliable availability, especially on the East Coast.

In this day and age, where environmental awareness has been significantly elevated, it is key to make decisions with sustainability in mind.  There is no choice that has more of an environmental impact on your printing than paper selection.

An inside look at the greening of Harvard Business School

HBS Green TeamI’m pleased to include a guest post from Katharine Randel, who is a staff member of the Marketing Unit at Harvard Business School, as well as a member of the school’s Green Team.  I met Kathy earlier this year when I gave a presentation on green marketing and green business issues to the HBS Green Team (HBS is a client of our firm), and I was struck by her passion for and knowledge about sustainability issues.

I invited her to write an article on the work that the HBS Green Team is doing to help reduce the carbon footprint of the school, and I’m excited to feature her report below.

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By Katharine Randel

When I began working at Harvard Business School several years ago, there was no paper recycling program.  Dismayed at how much paper I was putting in the trash every day, I enthusiastically joined a group of MBA students spearheading an effort to bring paper recycling to campus as soon as I learned of their work.  A few months later, recycling bins began appearing around campus, and today all offices have them.  In the years following, several sustainability practices were added to the HBS campus (for example, solar panels were added to the roof of the gym); but as an administrative employee supporting faculty, I was not involved…until recently.

A few years ago, Meghan Duggan was hired as assistant director of mechanical, electrical, plumbing and sustainability projects.  One of Meghan’s initiatives was to start an HBS Green Team of employees across all departments whose mission it is to establish a sense of environmental awareness throughout the HBS community.  The goal of the Green Team is to effect a change in behavior among faculty and staff that leads to a reduction in water and energy consumption and waste generation.  In January, I became the Green Team representative for a building of 250 faculty and staff.

This winter the Green Team held an energy competition in which ten office buildings on campus competed to reduce their energy consumption from the same time period the year prior.  This year the overall campus reduction was 24,880 kWh for one month.  The estimated monthly campus savings was $3,732 with an approximate reduction of 10.45 metric tons of carbon dioxide emissions.   Ten-and-a-half metric tons is the equivalent of CO2 emissions from 1,186 gallons of gasoline consumed.   If HBS faculty and staff maintained their energy-saving behavior for the rest of the year, we could save $44,784 and reduce CO2 emissions by 125.40 metric tons.

But the numerical results are only part of the story.  Another goal of the competition was to raise awareness and educate faculty and staff about sustainable behaviors.  In my building the competition has been surprisingly successful.  Since the competition, more than 20 faculty and staff have offered suggestions for ways HBS could reduce its energy consumption.  I circulate suggested behavioral changes back to the building inhabitants and contact various departments to follow up on suggestions.  When people see me in the hall they now tell me the latest steps they’ve taken, confess their inaction, or tease me (one of my coworkers turned out the lights in the copy room — knowing I was in the room — to “conserve energy”).  I am thrilled; every conversation and email tells me faculty and staff are more aware and the efforts of the Green Team are making a difference.

To learn more about Harvard Business School and Harvard University’s efforts towards environmental sustainability please see the following websites:  HBS Business & Environment and Harvard Operations Services Sustainability.

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Katharine Randel is the Unit Coordinator for the Marketing Unit at Harvard Business School. In that role she collaborates with faculty to create strategies and programs that foster the unit’s cohesion and purpose.  She has been passionate about improving the health of our natural environment since reading Rachel Carson’s Silent Spring in seventh grade. In addition to her HBS Green Team activities she has studied environmental management at Harvard Extension School and has been composting and growing organic fruit and vegetables for 19 years.