Deutsche Post / DHL's Great Green Advice (Part 2)

In my first post on DHL's green cost reduction and supply chain strategies from ISM, I provided some background about how DHL approaches sustainability strategies in general as well as some specific tips around supplier management. In this second post in the series, I'll expand the discussion to include ways that DHL is selling green to both internal and external stakeholders. First, when it comes to tackling sustainability, DHL, like most companies, has no choice but to target their suppliers (and their suppliers' suppliers). That's because at DHL, "sub-contractors account for approximately 75%" of their carbon footprint in recent years", according to the company.

To target this opportunity, DHL is looking at ways to measure both how energy/fuel efficient their subcontractors are as well as ways of improving their efficiency. Here, Jim Kelly (JVKellyGroup) and Wayne Evans (DHL) suggested standing by a few aphorisms that could apply to almost any operational improvement program, green or otherwise. First, "If you don't measure it, you can't control it". Second, "If you measure the wrong thing, you're wasting your time". And third: "If people can't see it or use it, it doesn't matter".

To accomplish these goals, DHL is attempting to change behavior internally. As part of these efforts they have set up a "Procurement Green Team" which is systematically tasked with managing "all green aspects of procurement and consultancy for internal business partners" with a "particular focus on green purchasing". DHL is also purchasing textiles according to Oeko-Tex Standard, recycled paper, products made from degradable plastic, reduced-color packaging, etc. And in the Asia Pacific region, they're moving to certified "green offices" and purchasing only "green office equipment and devices to lower energy consumption".

All of this is well and good, but cost savings remain key to driving internal compliance and excitement for the initiatives. To this end, "when resin prices were high, DHL implemented a plastics recycling initiative, taking waste from bins, recycling plastics and having plastic pallets made". When prices are above a certain threshold, DHL actually receives payments from the recycling companies for simply carting away the old plastic material.

Clearly, the procurement organization is playing a major role in driving all of these programs. But where, specifically, aside from basic cost reduction initiatives, should procurement play a role in green and sustainability? The first area involves the types of operational procedures and improvement programs we've already touched on. Next, DHL suggests that procurement should "identify and assist in securing grants for the updating of equipment and maintenance" while also providing "green energy planning and implementation support". In addition, procurement should drive "employee awareness, participation, and accountability" while also focusing on equipment "upgrades/retrofitting / asset management".

But perhaps the most important area for procurement to focus on is metrics. Wayne put it best when he noted that "metrics changed for us ... it used to be when we saved 10 cents on a $1 box we were satisfied. Now we get a credit if we don't buy the box at all. Buying less and consuming less is green." And it also saves money, proving that the best sustainability strategies are founded as much in the interest of earnings improvement and shareholders as in regulation and going green for green's sake.

Jason Busch

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