Closing Remarks during the IBM Summit at Start “Smarter Supply

Closing Remarks during the IBM Summit at Start
“Smarter Supply Chains for a Sustainable Future”
Monday, September 13, 2010
London, England, United Kingdom
Wayne S. Balta
Vice President, Corporate Environmental Affairs & Product Safety
IBM Corporation
As Prepared
Thank you for the opportunity to speak with as you as we close out a very
insightful and robust day of discussions about sustainability in the supply chain. I
have thoroughly enjoyed participating with you during today’s dialogue.
I’d like to speak with you about some of the practices IBM has initiated over the
years in an effort to strengthen the environmental sustainability of our own supply
chain, and then offer some thoughts about areas for further innovation across
multiple industry sectors.
As you may realize, IBM is a company that operates quite a large supply chain
itself, one which includes all of the elements necessary for us to successfully
manufacture microelectronics and servers as well as support our software
development and the delivery of technology and business consulting services.
In fact, IBM's heritage as a manufacturer has caused us to consider
environmentally responsible and sustainable supply chains for many years.
• we've had experience from having once been predominantly a vertically
integrated manufacturer
• and experience in more recent years operating a global supply chain that
spends over $30 billion with about 28,000 suppliers in close to 90 countries
For these reasons, IBM has had early involvement which has expanded in scope
and impact over the years. Along the way, we have seen first-hand how our own
various initiatives make not only good environmental sense, but also good
business sense. That's not a supposition; it's a conviction.
So here are some key examples, from earlier decades through to today:
Almost four decades ago, in 1972, IBM established a corporate directive within
its management system requiring the environmental evaluation of suppliers
performing hazardous waste services. While it remains in place today, there
have also been two follow-up directives:
• in 1980, we expanded it to include certain production suppliers whose work
for IBM is particularly sensitive towards the environment; and
in 1991, we expanded it again to include our suppliers who are involved in
recycling or otherwise disposing of electronic waste
Although back in the early 1970s we were significantly motivated by limiting our
exposure to potential liability, it didn't take long to understand that focusing on
this element of our overall supply chain also brings business efficiency.
•
Then, in the early 1990s, when societal concern further expanded from
manufacturing processes to finished products, we established in 1993 the first
version of IBM's baseline environmental requirements for the parts and subassemblies provided to us by our suppliers. We update that document regularly.
By using it as a tool for dialogue and collaboration with our suppliers, we've been
able to voluntarily restrict or eliminate the use of various substances of concern
over the years. For example, we stopped using a couple of brominated flame
retardants 10 years before the EU's WEEE Directive required it. That was not
just good for sustainability, but also for our business.
Then, a few years later in 1998, we wrote to all of our global suppliers
encouraging them to align their own environmental management systems with
the ISO 14001 standard. A year earlier, IBM had been the first major company in
the world to earn a single global registration to ISO 14001.
As the first decade of this new century got underway, we expanded our thinking
about the supply chain and published -- in 2004 -- the IBM Supplier Conduct
Principles. They articulated IBM's overall social and environmental requirements
for IBM suppliers and launched an era of increasing follow-up via audits.
Immediately thereafter, we joined with several other companies in our industry to
create and launch the Electronic Industry Code of Conduct. This collaboration
within our industry sector has leveraged the best ideas from peers and
competitors to sustain uniform and clear expectations within our industry sector.
And that brings me to today, six years later in 2010. Earlier this year, we began
requiring our global suppliers to do three new things:
I.
define, deploy an sustain a corporate responsibility and environmental
management system
II.
set voluntary goals and measure performance
III.
publicly disclose results against those goals and other relevant matters
We believe this is the first time a company has required its suppliers to do these
specific things, particularly the aspect of public disclosure. Why did we do this?
We're interested in helping our suppliers build their own long-term capacities to
succeed, because when they succeed we succeed. And we're not asking any of
them to do anything we haven't already done ourselves.
So this is a brief outline of some of IBM's own initiatives with its supply chain over
the years. I hope you can see from these few examples that we've had reason to
address types of issues not just with clients, but also for our own operations.
Where do I see it all going? Well, you answered that question in a most robust
and compelling way today. I won't fully repeat everything you've already
summarized, but I’ll simply recap a few particular areas of interest.
One clear area for further innovation encompasses logistics operations across
different industry sectors. By this, I mean the way we choose to move everything
from parts to finished goods to food across supply chains. By integrating an
understanding of the existing logistics processes (i.e., routings) with expertise in
mathematics, we have the opportunity to optimize existing distribution practices
for genuine energy efficiency and reduced cost while continuing to deliver
customer satisfaction. Good old-fashioned math may, in fact, be the “secret
sauce.” In terms of sustainability, this is clearly an area worthy of a fresh look
and close examination.
Another area for further innovation will involve packaging. Although numerous
organizations continue to improve the way they protect their products during
shipment, I believe we’ve all encountered circumstances when we’ve wondered
why something has to be packaged a certain way and why it can’t be protected
during shipment with less material or more environmentally conscious materials.
Having mentioned logistics and packaging in the supply chain, there is one more
particular topic that I’d like to discuss for a few minutes. One topic I’m certain will
grow in importance, expectation, and the extent to which leaders will innovate is
Traceability -- also called track & trace. Why?
We must innovate for Traceability for at least three reasons:
I.
The concerns are all around us. Lead in the paint on children's toys.
Melamine in milk. Mad cow in beef. Bisphenol-A in consumer plastics.
Mercury in consumer electronics. Sourcing of palm oil that threatens
destruction of natural resources. Paper and wood-based products sourced
from old growth rainforests. Cadmium in earrings. Contaminants in
pharmaceuticals. Conflict minerals in jewelry and electronics. Need I go on?
You see these items in the news just like I do. People are increasingly
worried about these things. And what do you notice about them? They occur
across diverse industry sectors and they’re global in character.
II.
The second reason we must innovate for traceability is as follows. In a
globalized economy with a democratization of information, stakeholders are
demanding that businesses routinely possess the kind of knowledge that
comes from traceability. And what sustainable business wouldn't want to
know everything it can about the things it buys, makes, or sells? Think about
it. Who wouldn’t want to know about these things?
III.
Third -- as business, we're not going to be able to be efficient in terms of
cost or compliance or client satisfaction without it. The business processes
that will get put in place to support the acquisition, analysis, and dispersion of
traceability information will differentiate efficient, low cost providers from what
I believe will be increasingly endangered species.
I also said we can innovate for Traceability. We can do it based on three things:
I.
The underlying, enabling technology is available and affordable
II.
We understand the business processes that must accompany traceability
across diverse industry sectors – at IBM, our own operational experience can
also help inform that
III.
We can integrate the technology and the business process, and thanks to
Business Analytics, we can mine the acquired data and information to
routinely -- not episodically -- make better, smarter business decisions.
We've seen value in driving standards. We've led large scale collaborations
towards a common goal with diverse companies. We've routinely dialogued and
partnered with constructive NGOs to learn and calibrate our thinking. Going
forward, please know that IBM is ready and would be pleased to innovate with
like-minded leaders like you.