Carbon Disclosure, Meet Plastics Disclosure

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Environmental Leader and the New York Times are reporting that hundreds of companies and institutions should expect to receive a questionnaire in early October about their use of plastic.  The Plastic Disclosure Project, right ahead.

Why?

Industry estimates state that 300 million tons of virgin plastic are made every year. If just one percent can be saved through efficiencies, better design, or increased recycling, then 3 million tons could be saved, which is roughly what some conservative estimates say are floating in the middle of the Pacific Ocean. -Plastics Disclosure Project (PDP)

Some companies have already made progress in better managing plastics.  Electrolux, the Swedish appliance maker, for example, introduced a range of vacuum cleaners in February that are made from recycled plastic. Coca-Cola has devised a plastic bottle that contains some plant-based materials, a small step for which the soda company seems to be wringing significant PR traction.

Plastics disclosure: right ahead!

Most interestingly perhaps, as the New York Times points out, Procter & Gamble has the long-term aim of using 100% recycled or renewable material in its products and packaging.

Better managed plastics appeals to some of us as a resource-saver if nothing else -- for too long we've treated plastic as an almost-infinite supply of cheap material, both raw and article.

Remember the Carbon Disclosure Project -- which is not gone but currently forgotten?  Well, this plastics program seeks to inspire organizations to approach plastic consumption in much the same way as we've begun to approach carbon consumption:  more awareness, some conservation.  Fair enough.

Targeted big users of plastic include:

• companies
• universities
• hospitals
• sports groups

This October, the plastics questionnaire will ask organizations to report how much plastic they use and how they recycle.  Further, organizations will be asked what policies they have to:

• reduce consumption
• increase recycling
• increase the use of biodegradable plastic

Plastic Disclosure blog is here, if interested.

HP Says Quality Management is Both Green and Gold

In an interesting document from 2010, Hewlett Packard (HP) touches on quality management in a larger discussion about chemical monitoring in a supply chain -- towards compliance with custom Restricted Substances Lists (meaning, specific to a single company) and broader lists such as those restricted under REACH, RoHS and WEEE. Quality management for this discussion is an initiative for manufacturing product management with four primary elements: quality planning, quality control, quality assurance and quality improvement.

HP addresses the quality piece by saying that quality management solutions are essential to compliance. "A manufacturer must ensure its suppliers have control processes in place that DO NOT allow non-compliant material to enter the manufacturing process," says the company.

Here's the company's restricted substance historical timeline:

Image courtesy of DTSC.gov

Designing for the environment is apparently a greener approach for the company in more ways than one.  While everyone secretly hopes that someday environmentally-nurturing business will be the most economically sensible, HP seems to think they've got it.

"Environmental responsibility is good business," said former HP CEO Mark Hurd. "We've reached the tipping point where the price and performance of IT are no longer compromised by being green, but are now enhanced by it."

Interbrand is a leading global brand consultancy recently introduced a listing of the 50 Best Global Green Brands, and HP placed fifth overall after Toyota, 3M, Siemens and Johnson&Johnson. Businesses were ranked based on consumer perceptions of environmentally sustainable activities in the ten largest global markets and actual environment performance secured through publicly available information and data, says the press release.

(An aside to our gentle readers: Interbrand is essentially a marketing agency; we haven't researched the relationship between Interbrand and HP; nor do we know how the marketing company conducted their research.  Although it would not be a huge surprise to see HP in the top 50, say, of a "listing of best global green brands," it's important to mention that many consultancies will do anything to get the attention of the large brands with deep pockets.  Top n lists are one of the easiest ways to get attention, right out of Marketing 101.  Nothing wrong with it, in fact we've done a few Top 10 lists ourselves -- for example here and here and here -- however, in the case of buddying up with a Fortune 500 company, a Top 50 list should be seen for what it is: a marketing document, and not the strain of scientific research you'd want to launch a rocket on.)

(Frankly, when I think of HP I don't think of a green brand at all, as I might with Timberland and Whole Foods.  With HP I think of a powerful laptop that I own, which is riddled with bells and whistles designed to upsell at every possible opportunity.  In short, I think of good technology, excellent value, and annoying partnerships.)

Steps to green:  Restricted Substance recovery program  The short version of HP's notable supply chain steps & progress program are seven key points.  The steps involve:

1. Risk-based country, site & partnership assessment
2. Partnership-oriented engagement & auditing
3. Hundreds of audits surface root causes
4. Supplier, worker & gov’t capability building
5. Coalitions & multi-stakeholder initiatives
6. Local solutions with NGOs
7. Transparency

Here's how the company articulates keys to minimizing environmental impact through materials innovation:

1. Reducing materials use (dematerialization)
2. Materials substitution
3. Eliminating materials of concern
4. Innovative and recycled materials

The quality management package for restricted substance management and green product development is what HP calls the "Hewlett-Packard Approach."  It can be distilled to four keys:

1. Cross-functional team with senior sponsorship
2. Worldwide product transition
3. Engage with suppliers early
4. Drive industry standardization

As for success factors going forward, HP suggests that government should balance public policy goals with harmonization and clarity -- which would likely allow for effective global compliance programs. Following that, pragmatic and effective enforcement can likely follow, and is recommended.

TSCA right ahead?  The benefits of certainty, consistency, quality and testing  For manufacturers and their suppliers, HP suggests creating certainty around a long-term roadmap, consistent requirements, interpretations and testing -- and pushing compliance management upstream.  The creating certainty around a long-term roadmap point is particularly interesting.  Image how much more likely all companies would be -- including suppliers -- if we had some idea what would be expected of us 5 years from now?

For all its foibles, REACH regulation at least does that: provide a road map and some certainty around expectations.  RoHS and WEEE also.  We'll see about TSCA, so far the state-level Propositions, bills, laws, initiatives, proposals, standards and restrictions have not been altogether inspiring, clear, or effective.  HP's vision, however, is getting closer to those things year by year.  Kudos.

More, here and in color, from the California Department of Toxic Substances Control.

Marketing & Supply Chain: Chocolate and Peanut Butter?

Supply Chains: looking for good taste

Profits in today's market are notgetting easier. There's a famine on and the herds are thin, so there needs to be a more unified approach to hunting down opportunity and spearing it. Whilethere used to be a luxurious chasm between Marketing and Supply Chain administrators,the two camps now need to build themselves a longhouse where they can eat,breath and cook up a manufacturing company's future -- together.

Mike Burkett at Gartner points out that today's supplychain must become market-driven to increase value. "Fueling growthstarts with driving demand, which is becoming more of a team effort," saysBurkett.  The idea being that a supply chain is the protein (peanut butter) fueling growth while a marketing team attracts prospects (chocolate) and drives demand.

May seem and unlikely mix, but what about getting some of that chocolate in the peanut butter?

In terms of consumer products, recentGartner surveys have shown that innovative products are a top influencer ofdemand.  Consumer electronics are an obvious example: everyone has to havean Android or an iPhone; my own Android, new, retailed for over $600 (somewhatironic, considering I chose Android over iPhone because of the free apps). 

Marketing and Supply Chainexecs: you got chocolate in my peanut butter

Many organizations' business unitshave addressed and streamlined inventory complexity and reduced costs throughMarketing's "value engineering" and Supply Chain's "enhancedsupplier management" tricks and efficiencies, such as supply chaincollaboration around formula and B.O.M. management. Fair enough. 

Having done so these organizationsare now trying to better understand the markets served, and ensure that valueis delivered to both the customer and the business.  In plain terms: it'sone thing to get people to buy the innovation, a smartphone, say -- now make it sing.(Yes, there's an app for that....)

Often times, says Burkett,delivering real value to the customer is more about organizational change thanbusiness process.  Here are two methods Gartner says can be used toovercome organizational barriers:

1. Metrics and governance — Measuring performance against strategic business goals and enforcing accountability is often a prerequisite to breaking down organizational barriers. P&G holds the executives responsible for business results accountable for ensuring that value is derived from new product innovation
2. Talent management — New skills are required as supply chain seeks early involvement with customer-facing and product development partners. A formal program to regularly assess talent gaps in the march toward more advanced supply chain capabilities

Could chocolate and peanut butter work?

Supply chain organizations do seemto be collaborating more with the marketing team than withtheir procurement colleagues.  Time will tell but it's a trend to watchand consider.  

Marketing and Supply Chain intelligence really could be two great tastesthat taste great together.

Image: Evan Amos

China Is More E Than E-Waste These Days

Divya Sharma reported yesterday via Reuters from Asia that manufacturers of electrical products forecast strong 2011 revenue growth.  This comes on the heels of strong fourth quarter results in the sector.

Ametek, a global manufacturer of electronic instruments and electromechanical devices ($2.5 billion in annual sales) cited growth in demand from industrial, oil & gas, power and aerospace customers.  At this posting, the Ametek stock is priced at $40.80.

Reuters also reported that Teledyne, the electronic component maker, posted a higher quarterly profit, boosted by higher sales at its electronics and communication unit. For Q4 2010, the company earned $36.6 million, or 99 cents a share, compared with $32.2 million, or 88 cents a share, a year prior.

Bull in the China shop

Teledyne also said it would "focus on its core electronics, instrumentation and engineering businesses after selling its aviation products business to an unnamed international buyer."  Interesting on a few levels, not the least of which is that the company sold its aviation products business.  This was announced on December 14 last year:  Teledyne would sell its general aviation piston engine business to Technify Motor (USA) LTD., a subsidiary of AVIC International, for $186 million in cash. 

Headquartered in Beijing, In 2009, AVIC International has consolidated annual sales of approximately US$ 6 billion. AVIC was formerly known as CATIC International Holdings Limited.  It's an investment holding company.  AVIC International aviation customers include Boeing, Airbus, Snecma and Honeywell, says its press, but then, everyone's customer base includes Boeing, Airbus, Snecma and Honeywell to some degree so that doesn't really tell us much. (I don't mean to be cynical, just realistic: those are the most comprehensive supply chains out there.)

AVIC being a China-based holdings company is also interesting.  We should get used to seeing that. China is more economy than e-waste these days.  The electronics aspect of this is the tip of the iceberg.

In a video recently circulated by a manufacturing magazine Economist Martin Jacques discussed China's likelihood of taking over as the world's dominant economy by 2050.

 (source: http://www.mbtmag.com/Content.aspx?id=1899)

Jacques showed that Goldman-Sachs said that by 2027 China's economy would be twice that of the United States.  But then he said that this projection has been adjusted, due to the recent global economic tumble. 

Now, says Jacques, updated forecasts indicate that China's economy will be larger than that of the United States by 2020.  That's less than ten years from now.  That kind of thing can improve your posture quickly.

China from the inside out

The video is worth watching.  Jacques goes on to identify three "building blocks" to understanding Chinese culture and how it is different from our own culture.  He also says that contrary to popular belief, Chinese culture will not become more like Western culture as it becomes more modernized and successful.  In fact, we need to become educated quickly on how their culture ticks so we can more accurately predict and understand market behavior.

According to Martin Jacques, Chinese thought is critically different from Western thought in the Chinese firm notions of:

1. culture: one unified civilization with many different systems within it
2. race: where nationality and race are almost synonymous
3. state: where state is not a meddler, it's a family member, a patriarch

Jacques' point is that we'd better start understanding Chinese culture now because they're going to be boss soon.  He wrote a book about it called "When China Rules the World: The End of the Western World and the Birth of a New Global Order."  A good read if this sort of thing interests readers as much as it does this blogger.  (Do we have a choice but to be interested..?)

A very informed review of the book in the New York Times provides this perspective: 

As China finds its own path economically, it is unlikely to look west for political advice, Jacques suggests. Its ruling Communist Party, having largely set aside its socialist ideology, has become a modern version of an imperial dynasty. China’s Communist leaders have flirted with reviving Confucianist thought, positioning themselves as protectors of Chinese unity, the state’s traditional role. Many Chinese see that mission as sacred. Jacques argues, credibly, that most Chinese will back their leaders, with or without democratic reforms, as long as the country keeps getting stronger.

So how might the world work under Pax Sinica?  Jacques ventures some fascinating guesses: The United States often promotes democracy within nations. China insists on democracy among nations. If the power of countries in the international arena were determined by how many people they represent, China would have more clout than all the Western democracies combined.

- by Joseph Kahn, former Beijing bureau chief and deputy foreign editor of The New York Times.

So when Reuters reports on the elevating electronics market - and immediately we're talking about Chinese holding companies - it really should come as no surprise at all.

As the next few years tick by, we'll want to understand what's happening in China more from the inside out. Which is why voices like Jacques, Kahn and others are so very important to the manufacturing industry and supply chain management, starting right now.