© General | May 28, 2014

Greening the Electronic Supply Chain: Corporate Sustainability Management gaining ground

The goal of greening supply chains has traditionally focused on improving manufacturing processes or cleaning up a "dirty" industry issue.
Today, as sustainability management continues to expand, companies all along the global semiconductor and electronics supply chain are increasingly interested and dedicated to extending sustainability across processes and facilities. Not only do the outcomes of Corporate Sustainability Management (CSM) lessen our impact on the environment, there are real business and cost-saving opportunities that can be realized.

Green benefits are business benefits

In Smith & Associates' annual survey of the global supply chain, respondents clearly voiced their concerns around the potential impact on their business from climate-induced disruptions. Delving further into the issue of environmental impact on the supply chain, respondents also provided feedback on a set of corporate sustainability activities.

The semiconductor and electronics industry has long recognized that these types of unforeseen weather events can cause significant disruptions – often leading to solution services from Independent Distributors (IDs) to mitigate the impact of the disruption. Having only recently emerged from the last of the long-running after-effects of the 2011 Thailand devastating flooding, the impact of climate-induced disruptions cannot be prevented, but with attention to environmental sustainability, we may be able to alleviate some of the severity over time.

Among the survey respondents, Contract Manufacturers (CM) stand out as the leading company category to evaluate climate induced natural disruptions as an extremely likely scenario (37.50%), with an overall likelihood rating of 62.5%. CMs are followed by Electronic Manufacturing Service (EMS) providers who rate the overall likelihood (as opposed to extremely likely) of such a disruption affecting their business at a 65% likelihood rate followed by Original Equipment Manufacturers (OEM) at a 62.5% likelihood.

Taking these points in conjunction with increasing awareness of sustainability and environmental issues, there is clear support that a next phase of CSM strategies are being implemented along the global supply chain.

The importance of CSM
  • Leading CSM activities range from direct environmental practices to internal company work environments:
  • Green asset disposition (recycling, zero-landfill, etc.)
  • Industry certifications & accreditations (e.g., ISO 14000, e-Stewards, etc.)
  • Green corporate practices and green buildings (Sustainability Management)
  • Environmentally-friendly manufacturing practices
  • Greener work environments for employees

Survey respondents evaluated these activities as "Important" and highlighted two activities in particular, ("green") industry certification and accreditations and environmentally-friendly manufacturing practices, as being "very important."
When we consider who is evaluating these CSM practices the highest, and we recall the evaluation of the likelihood of climate-induced disruptions to occur, it is not so surprising that OEMs reveal the overall highest ratings (80.7%) for the sustainability activities as "Important" to "Very Important."

EMS providers pattern closely along the lines of OEMs and also consistently rate the sustainability activities as "Important" to "Very Important," averaging a 73% rating. Thinking about who and how disruptions affect the supply chain, the data ring true to logic and history as well.

Implementing sustainability strategies

Putting CSM activities into a coherent and implementable strategy that itself can be sustainable in the corporation is another hurdle altogether. Having a broad framework to pull a company's larger sustainability management goals and smaller, individual activities or steps into a tangibleCSM strategy is essential so that progress is not stalled after the plan is formed.

The real challenge to successful CSM comes after the initial set of implementations. The challenge is not starting but keeping the momentum going once the initial hard work of identifying the sustainability goals and drilling down into action points is complete. The real challenge to CSM though is to successfully maintain momentum. The opportunities for measurable and decisive key performance indicators (KPIs) must be identified and shared. These KPIs should span business cost-savings, environmental impact, community support, and employee and customer satisfaction to meet the goals of all stake-holders in the CSM.

As the MIT-BCG December 2013 report points out, this is the point of moving beyond the initial sustainability steps into the realm of the more-significant ones where "[…] the disconnect between thought and action" separates organizations along doing, trying, and simply talking about CSM (p.10).

One point where failure in CSM typically occurs is in not appreciating the need for (and patience with) agility. For Smith, one key to success is accepting that the goals for CSM are broad, but the steps to achieving those goals are discrete and so they can be done at different paces and through different venues as the appropriate timing and opportunities arise. As Smith's co-founder and Director, Robert Ackerley, expressed in a National Geographic article:

In 2009, the interest in our environmental impact issues grew beyond our employees, as our major customers began to express a greater concern as to how we operated our business. […] I don't think this experience is that unusual. It underscores that sustainability, rather than being either a grassroots or top-down initiative, is a truly collective phenomenon, one that is strengthened and furthered when we work together, step-by-step.

Along the CSM road, there are, necessarily the bigger goals which typically involve greater resource allocation and the smaller, day-to-day activities that improve work and behavioral practices that add up to bigger change. Smith has prepared a case study detailing such stepwise CSM implementations.

Author: Mark Bollinger, VP of Marketing, Smith & Associates
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