Can Being Green Put You in the Black?

Spend Matters is pleased to present a guest post from Verian Technologies.

Although Kermit the Frog doesn't dress like your average CPO, when he laments "It's not easy being green," he certainly sounds like one.

Kermit's famous ode may have been about fitting in, but when today's CPOs hear the word "green," they worry about controlling costs. We live in an enviro-centric world that expects companies, especially big ones, to support sustainability. That means paper instead of plastic, recycled raw materials, and keeping an eye on your carbon footprint.

For decades, U.S. companies shied away from green initiatives because they think being green is synonymous with 10 to 15% cost premium. But many corporations are surprised to find that environmentally conscious pop singer Jack Johnson's catchy "3 R's" (reduce, reuse, recycle) song actually provides them with a roadmap for reducing costs.

One of our clients, a global shipping corporation, recently developed a Three R strategy that put 60,000 employees in control of conservation and sustainability efforts. It used advanced e-procurement technology as the key tool for providing information that enabled its front-line employees to choose green goods at the time of requisition and save $61.5 million in the process.

Here's what they did with the Three R's:

Reuse - Create a marketplace of idle goods Why buy new when you've already bought it? Every office has unused items gathering dust in a closet or warehouse, but how do you share idle inventory with the enterprise? The shipper enabled users to upload excess inventory and idle assets in any of its 35,000 locations to their shared catalogs. The catalogs present "reuse" opportunities ahead of new merchandise. The shipper quickly discovered that when given the opportunity, most requistioners choose to reuse instead of buying new.

Recycle - Make it easy to identify and buy green products Employees will gladly buy green products if they know how to find them. The shipper's employees can search through the online marketplace for environmentally preferred products (EPP). For example, a user who enters 'printer paper' and 'EPP' in the catalog search engine would see all the available paper with one or more EPP indicators. There are a total of ten attributes EPP products can carry, including Energy Star, Bio Preferred, Recycled, Watersense and Chem-Free. As a result, suppliers with cost-competitive EPP products in the shipper's catalogs saw a 17% spike in demand and the company reduced its impact on the environment.

Reduce - Monitor sustainability efforts Green efforts are only as good as the results they provide – organizations need a way to track their progress. At the shipping company, off-catalog requests are reviewed by an internal demand management team. Warnings and denials are accompanied with education on how to source in a more cost-effective and sustainable. The shipper also bumps up their utility invoices against local weather reports to identify anomalies in consumption that may be due to equipment that may need repair.

This story proves that employees will go green if you give them the right tools. More importantly, it shows that the Three R's are just as good for the bottom line as they are for the environment.

If Jack Johnson and Kermit the Frog were to sing a duet today, they might change the lyrics to "It's profitable being green."

-- Mark Schaffner, VP of Marketing, Verian Technologies

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