Vodafone Tackles Supplier Performance and Sustainability (Part 2)

In the first post in this series looking at how Vodafone manages supply chain sustainability initiatives as part of their broader supplier performance management program, I discussed some of the background elements of the program, its various components and how Vodafone actively engages, measures, and develops suppliers. In this post, I'd like to continue the analysis, double-clicking on some of the elements that matter most to Spend Matters' readers including measuring and driving sustainability savings as a result of supplier CSR engagement. But before digging into these areas, it's worth noting some of the macro-level goals of the program to understand its overall scale and breadth.

In 2008, Vodafone announced it would reduce their carbon footprint 50% by 2020. But this number is actually significantly higher if measured pragmatically because by then, Vodafone will have rolled-out the 4th generation of mobile networks (4G) and will have "far more devices in use, consuming far more bandwidth". In other words, Vodafone is looking for what I'm estimating is between a 65-80% reduction in its carbon footprint based upon what the additional new output/business activities will bring in the twelve year period between defining and implementing this 50% reduction goal.

But perhaps most relevant today given the overall economic -- not to mention environmental -- climate, is how Vodafone is also using this program to drive savings. And in many cases, these supplier development and monitoring programs are focused as much on engineering and R&D-led initiatives around new product innovation as on changing the way old business is done. Consider the case of Vodafone's cellular network base stations. To reduce power consumption on these units, Vodafone is working closely with their suppliers to reduce the size of the power supply needed by alleviating the need for cooling / air conditioning in some areas of these units. Moreover, by reducing the size of units, Vodafone reduces the amount of material used in the production process.

Vodafone is also working to engage suppliers to use new materials and designs to eliminate the need for excess material. For example, Vodafone no longer needs to put a water/wind proof box around one class of new base stations because new supplier designs are weatherproof. New designs are also reducing energy consumption. In the case of one new design for a "lean base station", Vodafone expects to cut daily energy consumption in half from 350W to 175W. Their suppliers are doing this by leveraging smaller footprints and overall new designs that use lighter weight infrastructure and lighter weight cables. Moreover, these designs include a combination of "solar, battery and wind" power for use in remote areas.

They're also shifting the location of various components on stations, such as the location of solar panels, to both reduce cooling requirements and also theft (i.e., if you place panels further off the ground, they're less likely to be seen and stolen by would-be thieves). But regardless of which benefit is the greatest in this case, one thing is clear -- it's a combination of "low-tech and high-tech" innovations and ideas contributing to the greening of Vodafone's supply chain and the bottom-line results its shareholders will also see from these initiatives.

Stay tuned for the final post in this series where we look at which technologies Vodafone is leveraging to automate its CSR and supplier performance management process as well as the key lessons we can all takeaway from this great case study.

Jason Busch

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