How does a supply chain company reduce cost, reduce risk and increase revenue? One emerging and beneficial way is by practicing sustainable procurement.
As supply chains become more complex, numerous elements may stop a supply chain from achieving business objectives. In addition to operational, logistics and customer service risks, reputational risks need to be taken seriously.
For Jabil, when opportunity knocked in the form of a customer complaint, the responsible team turned to innovation and sustainability, which yielded positive, measurable results.
When a Jabil team was informed that plastic airbags used to ship products were arriving deflated they quickly determined that the problem was with the packaging. With the problem identified, the team began brainstorming solutions. Their analysis took the following into consideration:
According to Carlos Rivera, Jabil’s global packaging engineer, “Coming up with the right solution required teamwork from people in many areas: Engineering, quality, production, procurement, management, business, customer and suppliers. We had to act quickly but find a solid solution that met the different requirements internally and externally.”
Out of several solution possibilities the Jabil team, in conjunction with their customer, agreed that a molded pulp and paper solution met their criteria. The new paper solution not only protected the customers’ product during shipping better than the plastic solution, but also was the most ecologically friendly and cost effective.
The team’s solution was also implemented and validated by a third party as well as being adopted by other Jabil manufacturing facilities.
The Jabil team did some analysis to determine the impact to the environment by using the new paper-based solution.
The previous plastic bag solution was made of low density polyethylene that would take 150 years to biodegrade. The amount of plastic bags used equated to 1243.4 pounds of plastic contamination.
The new paper-based solution made of newspaper and wasted cardboard takes 45 days to biodegrade and is environmentally friendly in that it does not contaminate and is recyclable.
By taking an ecologically sustainable perspective in identifying a solution to their customers’ problem, the Jabil team realized the following benefits:
In terms of the value of sustainable procurement, in most cases, cost reduction outweighs implementation.
According to John Caltabiano, Jabil’s vice president of gobal sourcing, “We have discovered that sustainable procurement practices not only provide a competitive advantage in providing our customers with cost effective sourcing solutions, they position our company as a responsible member of the local communities in which we do business.”
Has your company implemented sustainable procurement practices? Share your experience?