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Recent years have witnessed the continued exposure of product safety and environmental issues at home and abroad. As there is growing public concern for product safety, corporations’ supply chain are faced with higher requirements.

The term “Green Supply Chain” (GSC) was first coined by the Manufacturing Research Association of Michigan State University in a study of environmentally responsible manufacturing in 1996, also known as “Eco- Conscious Supply Chain” or “Environmental Supply Chain”. Based on the theory of Green Manufacturing and technology of Supply Chain Management, GSC aims at minimized adverse effects on environment and maximized utilization of resources during the whole process of product material acquisition, processing, packaging, storage, transportation, usage, scrapping, concerning suppliers, manufacturers, retailers and users.

GSC still remains a new topic for domestic enterprises and public. It is commonly perceived as healthy raw materials and reduced waste. In fact, GSC is a complex and systematic chain concerning every aspect of production and various stakeholders. Among all, supplier management is a crucial part. Therefore, this article would like to share with you some best practices in this field.

Supplier management can be like this…

It is prevailing among multinational companies to have Green Certification in supplier management, especially regarding long-term bulk purchasing. With a considerable quantity of suppliers globally, Wal-Mart is the largest retailer worldwide and has ample experience in managing suppliers. At present, Wal-Mart is using Sustainability Index in its supply chain management. Over 500 suppliers have taken part in Sustainability Index related activities. Wal-Mart wants to ensure that by 2017, 70% of its products will be purchased from those suppliers involved in the Sustainability Index project, who are obliged to conduct evaluation of their products according to Sustainability Index and to share the results with Wal-Mart. Besides, numerous enterprises have established rules governing green procurement to give suppliers assessments and grading. Purchaser will give favorable consideration to suppliers with higher rating. For Chinese corporations, it is not only a challenge but also an opportunity.

Looking forward, the demand for suppliers is far beyond green raw materials. Many companies have taken the issues of environment, health, security, labor and human rights into full consideration when selecting suppliers. For instance, Unilever started Supplier Ethical Trade Audit program in 2010 to ensure all the suppliers meet its business regulations. Such audits include forced labor, employee safety and health, child labor, minimum wage, working hours and discrimination. All these considerations show that companies want suppliers to be not just sellers but partners with shared value that can advance social responsibilities.

In supplier management along GSC, it is already too passive to set unidirectional standards on suppliers. Some companies encourage interaction with suppliers, motivating them to implement corporate social responsibility projects. For instance, Panasonic and its suppliers have been jointly promoting “ECO· VC” since 2009. In the year of 2011, Panasonic obtained 901 energy-saving ideas from its global suppliers, which were also shared on the partner conference with the aim of promoting more practice of energy conservation.

BASF: Let suppliers play a bigger role on GSC

BASF’s “1+3”program has brought supplier impact up to a new height, which means 1 member company of China Business Council for Sustainable Development plus 3 partnering companies on its supply chain (supplier, customer, contractor). BASF, as well as many other multinational companies and large domestic enterprises, has becoming that “1” to carry out corporate social responsibility projects. And more and more companies (“3”) that benefit from “1” have joined the “1” group, promoting the new “3” … The model results in a snowball effect. This is BASF’s way of conducting two-way communication with its business

partners. It helps to reduce risks, and more importantly, to enhance long-term strategic partnership and sustainability.

Chinese enterprises: Where is the way out?

From the cases above, it is safe to see that foreign companies are walking ahead in GSC supplier management. GSC has become Chinese companies’ disadvantage in international trade. For instance, European Union has carried out compulsory certification on imports regarding product safety and environment.

Encouragingly, some domestic enterprises that have cooperated with foreign companies or have engaged in international trade have acknowledged this and taken actions. Guangzhou Liby is one of the domestic enterprises motivated by BASF’s ”1+3” program. So far, Liby has achieved positive effects on environmental technology and employee working environment, etc. Besides, Lenovo, Centaline Group, PetroChina and some others are all leading domestic companies in terms of GSC.

Compared with advanced foreign companies, however, Chinese enterprises still have a long way to go. Hopefully, these best practices can shed some light.