LONDON, 21 - July - 2008 - The "greening" of companies needs to be taken out of the hands of marketers and given to supply chain managers that can influence the procurement processes, according to Aon Global Risk Consulting. In a recent Aon report, 76% of respondents said they only had limited visibility of their suppliers supply chain leaving them open to reputational risks should their supplier be found to be less than green.

Organisations need to take a more holistic view of the company to create a more green friendly supply chain if they want to make their green brand into a sustainable and meaningful reality. Although many organisations have jumped on the bandwagon, there is little evidence to suggest environmentally friendly thinking has permeated throughout all aspects of business, beyond snappy marketing initiatives.

Alex Hindson, head of enterprise risk management, said:  "Businesses we speak to know they want to improve their green credentials; they know they want to be a positive force in the move for a green change, but many simply do not know how to integrate their green philosophies into one of the most environmentally impactful parts of their business, the supply chain.

"Greening the supply chain is heavily industry and sector specific, but there are some 'top tips' those with influence over supply chain decision making should keep in mind when planning and implementing change."

1. Embed environmental thinking in procurement processes and function
Take greening initiatives out of the realm of pure marketing and PR, and integrate a 'green' way of thinking throughout the business. Donating a percentage of sales to a green charity, for example, is both noble and effective, however your green credentials will take a battering if you end up sourcing products from China that could be sourced closer to home and thereby cutting down on the environmental cost of transporting goods.

2. Measure what you are doing:
If the supply chain is going to be truly green it is essential to understand the environmental impact and carbon footprint of what you buy. Create a set of metrics around the environmental cost of purchasing goods and also look at the environmental cost of manufacturing those goods. Delve in to your suppliers' suppliers.

3. Set objectives
Decide from the outset what is important and set some change management objectives for improvement. Be realistic with the goals you set. There is no point saying you want your company to be completely carbon neutral in the first year of the project if you know this is unachievable. Sustainability is key.

4. Measure and track the 'total cost' not just financial cost
Examine where waste is occurring in the supply chain and where this can be cut down. A major cost to companies is the waste of raw materials. Reducing this wastage will not only be good for the environment but also save money.

5. Engage suppliers
Educate suppliers in objectives around sustainable development then evaluate their performance and embed this in selection and performance management processes for suppliers.

Alex Hindson added: "There are major challenges facing businesses in greening their supply chain, the number one of which is justifying cost and ensuring a sound return on investment. However, the long-term cost of not undertaking green reform is enormous both from an environmental standpoint, but also from the reputational standing of the organisation."
 
For more information contact:
David Skapinker
020 7505 7478
David.skapinker@aon.co.uk
http://aon.mediaroom.com

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